US scrappage scheme gathers pace
The US version of the UK scrappage scheme seems to be finally kicking into gear as thousands of dealers have been sent federal letters telling them how to register electronically for the “cash-for-guzzlers” (aka “cash for clunkers”) program, rules for which will be issued July 24, a U.S. Transportation Department spokesman said.
The government said definitively for the first time that not only will regulations be available next Friday (24th July), but dealers can also file claims at that time for federal reimbursement of payments made to consumers under the program.
“We have full confidence that we’ll be able to put this together by then,” announced transportation spokesman Rae Tyson.
The agency is adding server capacity next Friday so that expected heavy traffic volume doesn’t crash its Websites, Tyson said.
Only dealers who register can participate in the new program, aimed at spurring US car sales by offering credits of up to $4,500 to customers who swap their old vehicles for new, more fuel-efficient cars and light trucks.
The program calls for dealers to provide the credits to customers, and then to file with the government for reimbursement. Dealers will also have to dispose of the engines and drive trains of the old vehicles to keep them off the road in an effort to improve the fuel economy of the U.S. Tyson said the new federal rules are aimed in part at preventing fraud in dealer disposal of used vehicles.
In preparing the letters, the government asked car companies for the names and addresses of all current dealers, including those slated for termination by General Motors, Tyson said. There were more than 19,000 dealerships as of the end of June, according to National Automobile Dealers Association data.
US President Barack Obama signed the “cash-for-guzzlers” legislation last month, and dealers were allowed to begin selling cars under the program on July 1st. However, dealers couldn’t file for federal reimbursement until the rules were announced, nor could they be sure they were complying with the yet-to-be-released standards (and we though our bureaucracy was bad!)
Both the government and NADA urged dealers to wait until the rules were out, but a number of dealers have already sold cars under the program. It’s these dealers that the Transportation Department worries may overload its systems next Friday with reimbursement claims, Tyson said, adding the Transportation Department is urging dealers to space out their claims.
The program has already drawn extraordinary interest among both dealers and consumers. The cars.gov site has been heavily trafficked since it was launched less than a month ago, Tyson said. He said the agency’s hotline fielded about 2,300 telephone queries yesterday, more than 400 from dealers.
Source: Automotive News
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I am a little sceptical about the scrappage scheme. I assume that if you offer a qualifying vehicle for the £2000.00 on offer in part payment for a new model then all other buying incentives will not apply e.g. If I were to thrash out a deal with a dealer for xxx amount off of a new car and then say ‘ Right, here is my old banger I want another £2000.00 off please’ I am guessing that would not be acceptable.
Will the scrappage scheme be a ‘NOT AVAILABLE WITH ANY OTHER PROMOTION’ scenario. If that is the case, and I hope it isn’t, then intelligent people must surely see through it.
Well Mike, I work for a Hyundai dealership, and before the scrappage scheme, we were selling i10s without any discount at all.
Now, they have £2100 off them if you are lucky enough to have a qualifying scrapper.
You are indeed right that scrappage deals are stand alone, but also be aware that the UK govt is only putting £1000 into the scheme, all other money comes from the car maker and/or the dealership.
I can of course only speak for my dealership, but it has been an amazing 8 weeks, since the launch of the scheme, and so far we have sold 293 cars against probably 50 or so in the same time period this time of year.
Kev
it maybe the case that the cars that people are most interested in are generally the cheapest,meaning presumably where the small;est profits are for the dealership,therefore to expect much more of a discount would probably be met with a firm no way! esoecially like kev says that they are selling like the proverbial hot cakes.I however would still ask the question because if the government and manufacturer are sharing the £2000 incentive then surely the dealer can afford a bit of leeway as well,i bet before this scheme was launched dealers would be only to willing to give a £1000 discount and perhaps more
Hi Tony,
Again I can only speak for my own dealership, but as I already said, there was no discount off any i10 (or i20 come to that) models prior to the scrappage scheme.
On bigger models, there was of course more money off, but now under scrappage those cars now have much larger allowances. For example, the i30 now has £3500 off under scrappage, not just the £2000.
I can not really reveal how little we make on an i10 or i20 under scrappage (and I doubt you would believe me anyway), but after paying for the PDI, and some fuel, and giving the salespeople some money, I can promise you no one is getting fat on it.
Kev
Thanks Kev for the reply and explanation.
It does beg the question though, why weren’t you offering an incentive of £1000.00 before the scheme began to boost sales. That is in effect what you are doing now, isn’t it?
That is a very good question, but one Hyundai would have to answer, not a humble dealer
My own theory is that Hyundai see this almost as an ad campaign, i.e the publicity it is generating is worth the cost.
Our market share is amazing right now, and I have heard that at one point this month we were registering more cars than Ford, which should be completely impossible!
It will be interesting once it all ends (if it does!) if we can carry on offering a £1k discount.
Kev