Anchorage car dealers feel the 'clunker' crunch

August 4, 2009 

Anchorage car buyers have joined the mad rush to get a piece of the federal Cash for Clunkers trade-in deal before the money disappears, and dealers, scrambling to keep up with demand, are wondering when the plug will be pulled on this boon to sales.

Customers wait in lines. Salesmen spend hours trying to file applications onto an overwhelmed federal Web site. And around Anchorage, new-car dealerships look more and more like empty parking lots. Corollas, PT Cruisers, Jettas -- popular models are selling out.

"It was like locusts coming through the lot," said Kendall Toyota salesman Jerry Cagle, describing the Fifth Avenue dealership.

On Tuesday, he pointed out his office window to the lot where Priuses normally sit. "Gone. All gone. No more for another six weeks," he said.

Customers who can't get their first-choice cars have been settling for their second and even third choices because of the lack of inventory, said Lithia Hyundai's general manager Jim Benkert. They are afraid if they wait for their perfect car, the deal may no longer be available, he said.

In little more than a week, Cash for Clunkers has nearly run through the $1 billion Congress originally allocated for it.

While the U.S. House has approved another $2 billion toward the program, dealers and customers were still waiting for the Senate to endorse the extension before adjourning for summer break on Friday.

Around Anchorage, fear of the money running out had some dealers wary about continuing to offer the discounted new cars.

The Kendall Auto Group, with several dealerships, said it would stop making clunker deals today until the Senate approves the additional money.

Lithia Auto Group, like others, said it would continue to sell cars under the program as long as the federal government was still taking applications -- which the group is interpreting as a guarantee of getting its money, said spokesman Robert Sacks.

The clunkers program, approved in mid-June by Congress, was meant to stimulate slow auto sales and get consumers to buy more fuel-efficient cars. Under the program, consumers turn in their gas guzzlers for a voucher worth up to $4,500 toward the purchase of a new car. The old car must be destroyed.

Dealers handle the transactions, and while hundreds of Alaska applications have been made and accepted, and those Alaskans are driving around in their new cars, dealers were still waiting on Tuesday for the federal reimbursements.

The program already owes Kendall $2 million from the 375 cars it has sold in Alaska, Oregon and Idaho, said president Dave Blewett. As of Tuesday morning, the company was eagerly awaiting the direct deposit, Blewett said.

"The bureaucratic system still seems to be stumbling," said Rick Morrison, owner of Morrison Auto Group and a board member of the Alaska Automobile Dealers Association.

One Morrison employee recently spent four hours on the phone waiting to talk to someone in the program to get help, he said. That was after spending 12 hours online trying to register as a dealer.

But "we are going ahead and marching forward. I think the extra money will come through," he said.

No one seems to have a handle on how many Alaskans have so far taken advantage of the program. But dealers say it's sent a booster shot through the Anchorage new-car market. Benkert said his Hyundai store has sold 40 cars under the program. "We've been pretty frantic since last Monday," he said.

Chuck Ossenkop, owner of Northwest Auto Parts, a salvage yard in Muldoon, said he has about 100 clunkers waiting to be destroyed in his lot and thinks maybe another 500 are being stored in the back lots of auto dealers around Anchorage.

On Tuesday afternoon, behind the Lithia Hyundai store and out of customer view, the clunkers were parked bumper to bumper, like a mass grave for unwanted Ford Explorers, Tahoes and Jeeps. Scrawled on each's window: the defamatory "clunker."

Benkert said he hasn't turned over the beaters to the scrap yard yet because he hasn't gotten reimbursed from the federal government.

The cars parked behind his store are all still operable. They have to be to qualify for the program. That has some in the Anchorage car world upset.

Ossenkop criticizes the program because he thinks only the middle class and wealthy can afford to participate. Lower-income people can't afford to finance a brand new car, he said. And the cars being turned in are good cars that some Anchorage residents would love to have, he said.

"There are people who really need these," he said, surveying his salvage yard full of the program clunkers. Instead, they are being melted down and sent to China, he said.


Find Megan Holland online at adn.com/contact/mholland or call 257-4343.

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