Dings in clunkers' shiny finish?

Cash for clunkers crossed the finish line Monday, but was it a winner?

That depends on whom you ask, how you ask and even when.

Rolled out July 24, the federal government's new-car rebate program stopped accepting new deals at 7 p.m. CDT Monday, because officials said the $3 billion that Congress devoted to the effort would be exhausted. Auto dealers were given a few more hours — till noon today — to submit their claims because the computer system handling the crush became overwhelmed, the Department of Transportation said.

“A wild success,” the department proclaimed the program. “It has not only helped tens of thousands of consumers purchase new, more fuel-efficient vehicles” — 625,000 rebates claimed as of early Monday — “but has provided a boost to our economy and is helping create jobs at dealers and automakers across the country.”

But the joy is not universal.

Like a freshly waxed hood with bird droppings, cash for clunkers has some blemishes, according to area people involved in the program. And its ultimate stimulus effect on the economy — its main rationale — remains uncertain.

Consider:

** The government has finished processing only a fraction of the clunker deals submitted. Dealers are still waiting for their money on the rest.

“Yes, absolutely, a great program” — assuming that the deals all go through, said Kevin Ryland, general manager of Performance Toyota in LaVista. He said only 19 of the dealership's 140 clunker sales — each representing a $3,500 or $4,500 rebate — were complete at midday Monday.

Ryland said his dealership could stand the wait, but others with tight cash flows might suffer. He voiced hope that the program's end would at least speed government progress against the backlog.

** Used-car dealers and buyers have taken a hit.

“There's been a huge effect on the supply,” beginning when cash for clunkers was just talk in Congress, said Jason Fett, owner of Good Cars 4 Nice People, near 42nd and L Streets. “Our sales have been cut by 50 percent. ... It's hard to get good inventory.”

Like other used-car dealers across the country, he predicted that the market would take time to recover, perhaps one to three years, and said prices would stay higher until it does — an extra burden on consumers who can't afford to buy new.

For example, Fett said, a friend with a sizable family asked him a couple of months ago to look for a Chevrolet Suburban, “but I've been having a heck of a time finding a decent one.” He sees plenty of candidates — waiting to be destroyed on other dealers' lots under the clunker program.

“It is frustrating,” he said. “I'm going to find him a Suburban, but it's going to cost a bit more.”

Moreover, Fett said, used cars and their would-be buyers have suffered a psychological blow, now that a demeaning label has been attached to a certain class of vehicles.

“Nobody likes to drive a ‘clunker,'” he said, and the government has now in effect defined it: a vehicle worth less than $4,500. Buyers used to talk of needing a “hooptie” or a “work car” or a “beater with a heater,” he said, but now other drivers will point and say the c-word.

** Repair shops, which if not for cash for clunkers might be fixing those cars for years to come, also might suffer. But it's probably too soon to see such an effect, and the picture is not so clear-cut, said Gary Jeck, owner of Amtech Auto Care Center, a six-person shop near 48th Street and Giles Road.

“I'm not too worried,” he said, adding that his neighborhood-rooted business has survived 20 years of ups and downs.

Dealerships' repair operations might even benefit from the clunker program because of warranty work on the new cars sold, Jeck suggested.

** The macroeconomics are still murky.

Economists agree that the clunker program has stimulated car sales, and most say those sales are, in effect, borrowed from the future. They are cars that might have been bought next year or the year after but instead are bought now.

So what happens when the future arrives? No economist will give a guarantee, and they gauge the risks differently.

“It is interesting how fast it sold out,” Eric Thompson, who directs the University of Nebraska-Lincoln's Bureau of Business Research, said of the clunker program.

“That says there's some buying power out there. ... There are people who have the capacity to spend if they're inspired,” which is the purpose of stimulus programs, Thompson said. The recovery, he said, should be strong enough to tolerate whatever car sales have been advanced from 2010 and 2011.

Ernie Goss, a Creighton University economist, agreed that the clunker program was stimulating the economy but said that nagging questions remain: Will the sacrificed future car sales really be of negligible effect? What about the used car market? What about charities that rely on donations of old cars?

And, Goss asked, “how much does this cannibalize other retail sales?” Recent numbers, he said, suggest this “is definitely a potential problem” as new car buyers reduce their spending elsewhere.

** The environmental benefits are smaller than the program's officials have trumpeted, both Thompson and Goss said. Although it targeted guzzlers getting less than 18 miles per gallon, the program awarded rebates for as little as a 2 mpg improvement.

Contact the writer:

444-1140, roger.buddenberg@owh.com

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