After selling new cars into the pre-dawn hours at a breakneck
pace for the past month, Gilroy’s auto dealers caught their breaths
this week as the nation’s Cash for Clunkers program ended and they
awaited payment from Uncle Sam.
After selling new cars into the pre-dawn hours at a breakneck pace for the past month, Gilroy’s auto dealers caught their breaths this week as the nation’s Cash for Clunkers program ended and they awaited payment from Uncle Sam.
“The last days of the program were like Christmas Eve. I’m fried, and I sold every new car on the lot and 85 percent of my new trucks … This has just been the most amazing thing I’ve seen in my life, but it’s a real pain in the ass trying to get paid,” said Troy Pelzl, general manager of Gilroy Chevrolet Cadillac. “My fear is that we pulled too much from future business, and used car sales have practically stopped.”
Pelzl said he’s waiting for a $148,000 check from the government, which will likely take a while given glitches on government servers and other electronic hiccups dealers experienced as they rushed to file paperwork by Monday’s deadline. Nationwide, exhausted dealers submitted 690,114 deals under the program, claiming $2.877 billion – just under the $3 billion set aside by Congress for the plan. While the plan successfully boosted U.S. auto sales from their deepest decline in four decades, its hangover could depress sales for the remainder of the year.
Completely sold out of new inventory and running on fumes after a month of late nights and red tape, Pelzl and other general managers spent this week reflecting on the unprecedented market fueled by government subsidies. Washington’s financial aid-motivated customers – mostly seniors in the local area, according to dealers – who would have otherwise kept their so-called clunkers that ran the gamut from BMWs to Ford Explorers.
Rather than greeting 20 or 30 people over the weekends, local dealers had staff working overtime to handle hundreds of customers, some of whom tried to trick dealers with “clunkers” that didn’t qualify, and others who fought fellow customers for vehicles.
While Chevrolet’s sales were up 250 percent in August compared to July, Gilroy Toyota and Honda – with more fuel-efficient new models compared to their American counterparts – appeared to reap the most from the Cash for Clunkers program. Frank Bolea of Gilroy Toyota sold 34 new cars in one weekend last month, with most people eyeing the Prius, Corolla and Camry models, he said. This week he had 10 new cars on his lot, down from the 180 he’s used to, he said. The last time he moved that much inventory was seven years ago, and he hoped the government would generate a new, similar program this winter to help middle- and lower- class Americans after they paid trillions of dollars to bail out the nation’s largest financial institutions, he said.
“There were so many customers pent up and ready to buy because the crush rate in this country has been higher than the manufacturing rate,” Bolea said. “It was just a matter of time, and now we’re screaming for cars.”
As for used cars sales now, Bolea said, he expected them to slow down, “but I didn’t think it would stop,” he said, adding, “Business is back to normal, and normal wasn’t good before.”
While the federal program cut into used car sales because it required traders to purchase new cars – cutting used sales at Toyota by two-thirds, Bolea said – Honda appeared to be the only dealer to experience an uptick in both new and used sales.
The sheer increase in foot traffic contributed to the uptick, and Honda sold more new cars under the Cash for Clunkers program than any other Gilroy dealer, 101 – an 80 percent increase over previous summer months – Gilroy Honda General Manager Mike Luner said. The Honda Civic and Accord were the most popular models, he said.
“This program brought people out who weren’t in the market for a new car before,” Luner said.
Luner had 55 new cars on his lot Friday, down from the 125 he said he normally has.
The showroom at South County Chrysler Jeep Dodge sat empty Friday because General Manager Lem Hymes has not had enough time to restock after selling 21 new cars thanks to the national program. Next door at Gilroy Nissan, his sister dealer, they sold 45 new units, he said.
“We just ran out,” Hymes said, looking out over a lot of 33 new cars compared to 140 normally. “It was a super program that cleared out a lot of inventory.”
General Motors, Ford Motor and Chrysler Group accounted for 38.6 percent of sales under the program, compared with their market share of 45.3 percent through July of this year. Meanwhile, Asian automakers outperformed, with Toyota Motor and Hyundai making the largest market share gains. Chrysler’s share of 6.6 percent left it trailing Nissan Motor and Hyundai.
The top 10 vehicles purchased under the program were, in order, the Toyota Corolla, Honda Civic, Toyota Camry, Ford Focus FWD, Hyundai Elantra, Nissan Versa, Toyota Prius, Honda Accord, Honda Fit and Ford Escape FWD.
