By Randolph Heaster, The Kansas City Star, Mo.
Jul. 25--Say farewell to the Beast. It's headed for the clunker graveyard.
Say hello to the Smell -- of a new Mazda minivan, that is.
Maria Smiddy and her husband, Michael, of Sugar Creek, have been happy with their 1996 Ford F-150 pickup, affectionately called "The Beast." But after 230,000 miles, signs indicate the end is near: It's hard to start in the mornings, fluid leaks, and exhaust fumes waft through the cab.
"It's been a good truck for us, but it's in the beginning phases of becoming a complete clunker," said Maria Smiddy, whose family has bought three used vehicles in the last year that have conked out. "We got a great deal on this Mazda, and I'm very much looking forward to that new-car smell."
Great deal, indeed. With a big assist from the federal government's "Cash for Clunkers" stimulus program, the Smiddys soon will trade in their F-150 for the more fuel-efficient 2009 Mazda 5 compact minivan they have reserved at Northtowne Mazda in Gladstone. By qualifying for a $4,500 federal voucher and getting an additional $1,500 off thanks to a relative who works for Ford Motor Co. (Ford owns part of Mazda), the Smiddys will pay about $12,000 for a vehicle normally costing $18,000 or more.
"Financially, things are getting better, but it's still pretty tight for us," Maria Smiddy said. "But because of the deal we got, it was hard not to take advantage of it."
Automakers and dealers hope many others feel the same way. The number of people who qualify for and participate in Cash for Clunkers may end up being relatively small, generating only about 250,000 new-car sales, industry experts said. But the heavy interest in the program could be the impetus for more people to start kicking tires again, even if they don't have a clunker to trade.
Cash for Clunkers has been the most-searched automotive term on the Internet in recent weeks, and car-buying Web site Edmunds.com has had about 1 million hits on its Cash for Clunkers area in the past three months, according to Jeremy Anwyl, president of Edmunds.
Furthermore, it appears the program will fuel additional incentives to get more people to car-shop. Chrysler said it would offer "up to $4,500" in cash savings on its new models, even for those who don't qualify for Cash for Clunkers. For those who do, Chrysler said it could offer $4,500 off in addition to the federal program's $4,500 voucher.
"That's very smart of Chrysler, and I think most manufacturers will follow suit," Anwyl said. "The Cash for Clunkers program is getting people looking at buying new cars, and now the dealers have to be equipped with the tools to make a good deal even for the people who don't qualify."
Given the early consumer interest, analysts believe the $1 billion in federal funding probably will run out before the program expires in November.
Boosting auto sales and protecting the environment by retiring a lot of gas guzzlers were the ideas behind the legislation that went into effect July 1. New passenger cars purchased through the program must have a combined fuel economy of at least 22 miles per gallon, and light trucks and sport utility vehicles must get at least 18.
The subsidies can be worth $3,500 or $4,500 off the purchase price, depending on the fuel savings between the old and new vehicles.
Because the final regulations were not published by the government until Friday, some dealers have been allowing qualified customers to put a deposit down while they wait for the program to officially begin Monday.
While Cash for Clunkers sounds like a great idea, many consumers may be in for a disappointment. For the deal to make economic sense, a clunker should have a low trade-in value. So if the trade-in value of your vehicle is more than the maximum $4,500 government voucher, this program is not for you. Even a well-maintained older car may have a trade-in value higher than the government subsidy.
And while you may be dreaming of a new, fuel-efficient ride, keep in mind that a new car is a big expense. Ask yourself whether you can afford the monthly payments, insurance and other costs associated with new-car purchases.
Used-car purchases do not qualify for clunker vouchers.
Many dealers are starting Cash for Clunkers promotions, in part, to educate shoppers. Larry LeFever, the owner of Mazda Northtowne, said he was surprised by how few people were familiar with it.
"I've been underwhelmed by how few people have known about it when visiting our dealerships," said LeFever, president of Northtowne Automotive Group, which operates six Northland dealerships. "Some of the customers (like the Smiddys) know about it, but we're educating way too many people about Cash for Clunkers when they walk in."
Dealers don't know all the rules either. For example, what are the details for scrapping the trade-in vehicles, and will dealers be charged fees to have them hauled away? While some parts can be removed by scrap-metal facilities, the fuel-inefficient cars probably will be crushed, including the engine and drive train.
"The government has given us no indication of how we are supposed to have these vehicles destroyed," said Dustin Bailey, Internet sales manager for W-K Chevrolet-Buick-Pontiac-Cadillac-GMC in Sedalia, Mo.
And like many government programs, it is complicated with rules and stipulations.
"Trying to understand the rules is like trying to fill out your federal income tax," LeFever said. "But Cash for Clunkers is friendly for the customers in that the dealers have to do all the paperwork."
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Run the numbers Maria Smiddy of Sugar Creek is trading in her 1996 F-150 truck with 230,000 miles, above, under the "Cash for Clunkers" program, in which older, inefficient vehicles can be traded for up to a $4,500 credit on a new ride. Smiddy is getting a new Mazda 5 compact minivan, right, at a Northland dealership. In the truck bed is her daughter, Michael-Elise, 9.
The trade-in 1996 Ford F-150 pickup
Trade-in value:
$1,000
Combined miles per gallon:
14
The new vehicle 2009 Mazda 5 compact minivan
Suggested retail price:
$18,000
Combined miles per gallon:
22
"Cash for Clunkers" rebate:
$4,500
Additional company discount:
$1,500
Total purchase price:
$12,000
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How it works --Consumers trading in vehicles made since 1984 can qualify for a $3,500 or $4,500 voucher that would be applied to the new vehicle's purchase price. The vehicle being traded in must be in drivable condition and must be registered to and insured by the same owner for the past 12 months.
--The trade-in car must have low fuel economy -- 18 miles per gallon or less. The trade-in pickup or SUV must get 16 miles per gallon or less.
--The new passenger car must get at least 22 miles to the gallon. If the new car gets 4 to 9 miles per gallon more than the old one, the voucher is $3,500. If it gets 10 miles per gallon or better, the voucher is $4,500.
--A new light truck or SUV must get at least 18 miles to the gallon to qualify. The $3,500 voucher is for a new truck that gets 2 to 4 miles per gallon more than the old one. The voucher is worth $4,500 for the new truck or SUV that gets 5 miles per gallon or better than the trade-in.
--To find out the combined city/highway fuel economy for your current vehicle or the new one you are looking to buy, go to www.fueleconomy.gov/ feg/sbs.htm or www.cars.gov.
To reach Randolph Heaster, call 816-234-4746 or send e-mail to rheaster@kcstar.com.
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