Thursday, June 4, 2009

Auto Dealers Believe the 'Cash for Clunkers' Bill Will Help Revive U.S. Auto Sales

RJ Note: If the auto dealers think that a voucher for $4500 will improve car sales, then why aren't they providing them now? Why wait for the government handouts? Will $4500 off the price of a car really encourage more people to go into debt if their present car is already paid off?

/PRNewswire/ -- The nation's auto dealers, pummeled by auto sales that are the lowest in 17 years, are optimistic that the "Cash for Clunkers" bill now moving through Congress will positively impact U.S. auto sales. However, dealers are also concerned that sales are being frozen while the bill is being debated because consumers are waiting for vouchers to become available for trade-ins before purchasing a new car.

These are the results of a national survey of U.S. auto dealers conducted this week by Dealix, a division of Cobalt, and the leading provider of new car and used car automotive sales leads for dealers and OEMs. The Senate is poised to consider a version of the bill, which will provide consumers credits of up to $4,500 if they trade in cars with low mileage per gallon for more fuel efficient vehicles.

Dealix, which counts most of the nation's auto dealers as customers, sent the survey to general managers, dealer principals, Internet managers, and other sales professionals at the majority of the nation's roughly 20,000 franchised dealerships. In their responses to the survey, dealers expressed strong hopes for the legislation:

-- Over 85% said the legislation would stimulate car purchases to some
degree, with over 26% of that group saying it would increase purchases
"a lot."
-- And, almost 60% believe the program will help the environment.

While optimistic about the impact, dealers are also concerned that, in the short-term, anticipation of the bill is decreasing sales. Nearly 60% of dealers responding indicated that some or a lot of consumers are delaying their purchases until the bill is passed.

Dealers are watching the legislative process closely, with 84% of respondents reporting a familiarity with the proposal. These dealers also had strong opinions about some of the most hotly contested elements of the competing Senate and House bills:

-- More than 6 out of 10 responding dealers believe the program should
apply to the purchase of a used car; not solely to new car purchases.
-- The majority - over 70% - do not believe vouchers should be applied
retroactively to purchases made before the bill is passed.

Dealers are anticipating that they will play a role in educating customers about the specifics of the bill. Nearly 70% are planning marketing campaigns to explain that vouchers are available and how they will be used.

"Consumers will need help from dealers to understand how to use the Cash for Clunkers program, and they'll also turn to independent sources to research their car choices," said Anna Zornosa, general manager of Dealix. "During 2008, as consumers responded to increases in gas prices by considering new fuel efficient vehicles, they turned to the Internet for help in significant numbers. We expect independent Internet research sites to play this same vital role as consumers take advantage of the vouchers."

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