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Demand for 'Cash for Clunkers' outpaces inventory

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Demand for 'Cash for Clunkers' outpaces inventory
Detroit Lakes Minnesota 511 Washington Avenue 56501

After Cash for Clunkers' wildly successful first week, Congress funneled an additional $2 billion into the national program hoping to continue the momentum, but in Detroit Lakes, sales have slowed down considerably -- partially because there simply aren't enough new cars for people to buy.

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At Norseman Motors, sales manager John Sauvageau said they haven't had as many sales from the "initial spurt."

"I'm down to three new cars. I've just about sold out my inventory," he said. "The big problem is that GM shut down for two months and we couldn't get anything. Most dealers I know didn't have a big stockpile of inventory to begin with."

While manufacturing hiatuses contributed to the lack of cars, so did the time of year -- August usually means reducing inventory to make way for 2010 models, said Brock Webber at Detroit Lakes Ford-Chrysler-Dodge.

"If this program would have come out when inventory was up anyway, it would probably be better," Webber said. "The excess inventory wasn't out there to be sold, so this really depleted what we had."

At R&G Subaru, sales manager Drew Larson said they completely sold out of all their new cars during the first week of the program.

He's gotten a couple more in since then, and said they're still doing deals, but one of the other big problems is the lack of approved deals.

Although some Twin Cities dealerships have reported a few cleared deals, dealers in Detroit Lakes are at a standstill waiting for a process that was supposed to take a matter of days rather than weeks.

Norseman has seven pending, R&G Subaru is waiting for nine, and DL Ford-Chrysler-Dodge has 15 deals waiting for approval.

None have been approved.

"The government is taking quite a bit longer than what it would take," Webber said. "We thought we would have approval in two days, and have the whole transaction completed in seven to 10 days."

Still, Sauvageau said he's glad the program was extended.

"I think (Congress) was under pressure to do something, since nothing has happened with original stimulus package, and this was one way to say they actually spent some money, since it's their shining star," Sauvageau said. "They're saying positive things about the economy now, and new car sales have been good for us, so hopefully it's turning around."

Under the program, the trade-in vehicle has to be manufactured after 1985, generally get an average fuel economy under 18 miles per gallon, and be continuously registered and insured for the past year.

The $3,500 or $4,500 is added as a credit at the time of purchase, depending on the fuel economy of the new car.

The traded in vehicle is scrapped.

For more information on program specifics, go to CARS.gov.

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