To strike fear in auto dealer's heart, just mention 'clunkers'

Belleville News-DemocratDecember 7, 2009 

Jamie Auffenberg sold 281 cars in about four weeks last summer with help from the government.

But don't ask him to do it again.

Auffenberg owns a number of dealerships in Belleville and O'Fallon and said all of the deals were induced by the Car Allowance Rebate System, better known as the "Cash for Clunkers" program that was the Fed's initiative to boost auto sales for lagging industry and struggling economy.

He said the government was supposed to process each sale rebate in 10 days, but it ended up taking two months after a surge in consumers arrived on dealership lots and bought up inventory and left unwanted cars, trucks and vans behind for scrap, and many dealers in an more even precarious position. He has not been compensated for four sales he made in that span, from late July to late August.

"The risk was intense," he said. "I think we got paid for 98 percent. That was a pretty good batting average compared to where we thought we were in the middle of the program."

Auffenberg and fellow metro-east dealers say it sounded like a good idea at the time: Trade in your old, sputtering, gas-guzzling vehicle for a more fuel-efficient one and receive a rebate worth $3,500 to $4,500 while removing fuel-inefficient cars, trucks and vans from U.S. roadways.

The program that was originally supposed to last four months and conclude at the end of this month was abruptly halted after just a few weeks. What was initially budgeted for $1 billion was twice boosted to a total of $3 billion to meet the demand.

"It was probably pretty costly for taxpayers," said Larry Wehmeyer, vice president and general manager of Cassens & Sons Chrysler-Dodge in Glen Carbon. "I'm not sure if you can say it was absolutely successful from that standpoint, but we certainly noticed an influx in business."

The mass rebates that were processed caused a massive traffic jam for government workers given the task to process each transaction. Many were not correctly filled out and further delayed the process.

By the time the program was cut, Weber Chevrolet in Granite City, Columbia, Waterloo and Creve Coeur, Mo. had sold 400 vehicles. But sales manager Skip Weber said the dealership had only been paid on 12 of them by that point.

"I was super, super nervous," Weber said. "That $1.6 million was not profit. It was $1.6 million that we were literally waiting on from the government to pay for our payroll. It was very stressful. We never delayed anything, but it was still always a worry."

Read more at bnd.com

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