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Cash for Clunkers drives traffic to Tampa Bay's foreign-car dealers

A CLUNKER CRISIS: The government’s Cash for Clunkers program was nearly ruined by success, blowing through its initial $1 billion budget and leaving dealers panicked over whether rebates would materialize. Washington scrambled Friday to avert a collapse; the House voted to replenish the program with $2 billion, setting up likely Senate action next week.

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A CLUNKER CRISIS: The government’s Cash for Clunkers program was nearly ruined by success, blowing through its initial $1 billion budget and leaving dealers panicked over whether rebates would materialize. Washington scrambled Friday to avert a collapse; the House voted to replenish the program with $2 billion, setting up likely Senate action next week.

The Cash for Clunkers program, the federal car buying subsidy approved in the wake of General Motors' and Chrysler's financial collapse, has been a hit in the Tampa Bay area.

But it has mostly been a home run for Japanese and Korean automakers.

Dealerships offering a full range of inexpensive economy cars — a speciality of Asian manufacturers — appear to have profited the most from the trade-in rebates of up to $4,500.

The program pays out only if customers trade in an older, low-gas-mileage auto for a new, higher mileage car. With their reliance on fuel-chugging pickups and SUVs, American companies couldn't take full advantage.

"It typically benefits Honda, Toyota and Hyundai dealers, where 90 percent of the vehicles are fuel efficient," said Jim Crow, general manager at Ernie Haire Ford, which has sold about seven cars through the program. "They benefitted much more than the domestics did."

Crow could be talking about Friendly Kia on U.S. 19 in New Port Richey. In July, owner John Gilliss had a banner month. Cash for Clunkers accounted for 40 percent of sales, most of them Korean imports. He has had a hard time keeping models like the Soul crossover vehicle and the Optima sedan on the lot.

It has helped that nearly Kia's entire lineup sells for less than $20,000. With the $4,500 subsidy and another $4,000 in factory rebates, many of the cars are bargain-priced.

''It's going to be the best month I've had in the past year and a half,'' Gillis said. "There's a lot of big GM and Ford stores in town we're outselling.''

The program officially started July 24, but dealers pitched the subsidy earlier and pre-sold cars on the assumption the money was coming. That explains why after just four days this week, Cash for Clunkers had exhausted the $1 billion set aside for it. Congress scrambled Friday to find $2 billion in new financing for the popular program.

Though popular, the program's impact is limited. The government said it was established to stimulate car sales and remove gas guzzlers from the roads. Auto sales in the first half of the year were down about a third from the same months in 2008. The roughly 250,000 autos sold nationally so far through Cash for Clunkers accounts for less than 2 percent of last year's sales.

What sort of clunkers are customers trading in locally? Gilliss' haul included several Ford Explorer and Expedition SUVs, a couple of Cadillacs, a Mercury Sable and Grand Marquis, and an aged Volvo.

But domestic automakers haven't been left in the cold. Elliot Andrews, owner of Dayton Andrews, a Chrysler Jeep Dodge dealer on U.S. 60 in Clearwater, vouched for at least 40 sales from the program. A popular seller has been the Jeep Patriot, which gets about 24 miles per gallon.

"There's no doubt the imports are doing extremely well, but I have no complaints," Andrews said Friday afternoon. "We've got a showroom full of people. We sold 12 yesterday."

Michael J. Jackson, chief executive of Fort Lauderdale's AutoNation Inc., reported lower corporate profits on Friday but boasted that Clunkers has increased dealership traffic about 36 percent. AutoNation owns about a dozen stores in the Tampa Bay area.

"There's a very compelling case the government should put more money into it," Jackson said. "It's a great stimulus to the economy."

Gilliss got reassurance from his Kia superiors that the company would be rushing imports through the Port of Jacksonville to supply Tampa area demand. He has sold dozens of cars through the program over the past two weeks. His feast is a comparative famine for domestic auto dealers.

"A preponderance of their vehicles are trucks," Gilliss said of GM, Ford and Chrysler. "That's what contributed to their downfall."

Cash for Clunkers drives traffic to Tampa Bay's foreign-car dealers 07/31/09 [Last modified: Friday, July 31, 2009 9:29pm]
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