Many 'Clunker' Dumpers Buy Foreign
By Dana Hedgpeth and Sholnn Freeman
Washington Post Staff Writers
Wednesday, August 5, 2009
Four of the five top-selling cars in the government's "Cash for
Clunkers" program are made by foreign automakers, according to new data
released Tuesday by federal transportation officials.
The trade-in program has proved so popular that the government is in
danger of running out of money for the rebates; Senate leaders said they
plan to schedule a vote this week to boost funding.
Transportation Secretary Ray LaHood said 157,000 trades had occurred as
of Tuesday morning, eating up $664 million of the $1 billion
appropriated for the effort.
More than 80 percent of the vehicles turned in were trucks and
sport-utility vehicles, the government said. The top-selling new car is
the Ford Focus, followed by the Toyota Corolla, Honda Civic, Toyota
Prius and Toyota Camry. The new vehicles on average get 25.4 miles per
gallon, compared with an average of 15.8 mpg for the trade-ins.
The clunkers program was meant to stimulate sluggish auto sales and spur
people to buy more fuel-efficient cars. Congress approved it in
mid-June, and the program was supposed to last until Nov. 1 or when the
funds run out. However, on Friday the House hastily moved to add $2
billion to the program by using money intended for energy loan guarantees.
Eric Fedewa, an analyst with the consulting firm CSM Worldwide, said it
is logical that foreign names would top the car-buying list because most
of the smallest and most fuel-efficient vehicles in the market are built
in Asia. But he said the program is a hit because it is stimulating
demand for all vehicles -- foreign and domestic.
"In dealerships nationwide, the showroom traffic is unbelievable right
now," Fedewa said. "Even if people don't qualify, they are still being
enticed to go look at vehicles."
LaHood said the $2 billion approved by the House would probably last
until Labor Day, assuming the Senate goes along. Senate Majority Leader
Harry M. Reid (D-Nev.) said a vote should come before the August recess
begins Friday. Several prominent opponents said they would not stand in
the way of a vote.
"We'll pass cash for clunkers before we leave here," Reid (D-Nev.) told
Auto dealers across the country have been pushing congressional leaders
to keep the program going. Under the deal, people can turn in their
gas-guzzling cars and trucks for a voucher worth up to $4,500 toward a
Some dealers have complained about the government's administration of
the program, saying they've had trouble processing paperwork and getting
their reimbursements for trade-ins.
LaHood said the agency has fixed problems with its Web site. He said
that Citigroup, which is helping manage the clunker program, also beefed
up its staff on the project to 300 workers from 100.
The jolt in sales has left some dealers with dwindling inventory.
Allen Foster, general manager of a dealership in Madison, Wis., said his
sales lot holds 600 cars but he's down to 150 and trying to get more
cars from manufacturers and other dealers. He has 100 people waiting for
the Toyota Prius.
"This is a pretty big swing from two months ago, when we had a lot more
supply than we had demand," Foster said.
Still, some dealers and manufacturers worry whether sales will return to
their sluggish pace once the trade-in program runs its course. Toyota
said Tuesday that it lost $819 million for the quarter as its global
sales continued to drop.
But Roy Bavaro, director of corporate marketing for DCH Auto Group,
which owns 27 dealerships in Connecticut, New York, New Jersey and
California, remained optimistic. He said his company has taken in more
than 1,000 clunkers.
"This might start to trigger some consumer confidence to go back into
the market and purchase a vehicle," Bavaro said of the clunker program.
"I don't know if it is the silver bullet that's going to turn this whole
thing around, but this might be a good jump-start."