The Car Allowance Rebate System, also known as Cash for Clunkers, ended Monday, but not before increasing sales for many Columbia-area car dealerships.
The Cash for Clunkers program was passed by the federal government to provide economic incentives to purchase new, more fuel-efficient vehicles when trading in older, less fuel-efficient ones. The program received an initial grant of $1 billion from Congress, which was supposed to last from July 24 until Nov. 1. When the funds dried up by July 30, Congress approved an additional $2 billion the next day, which was exhausted by Aug. 24.
New inventory sales increased an estimated 65 percent at Jim Hudson Pontiac GMC on Garners Ferry Road, according to general sales manager Larry Kalin.
"Overall it looks like it was a success," said Kalin, who has worked at the dealership since 1988. "It drove the market considerably and got some older, higher-mileage vehicles off the road and put some new ones on the road."
For a vehicle to be eligible for federal credit, it had to be less than 25 years old and have an Environmental Protection Agency rating of less than 18 miles per gallon. A new car bought under the plan must have had a suggested retail price of no more than $45,000 and a fuel economy of at least 22 mpg.
Eligible customers received a voucher for either $3,500 or $4,500 toward a new car, depending on the difference in fuel economy between the purchased vehicle and the trade-in vehicle. Kalin said the deal turned a predominantly used-car market into a new-car dominated market.
"Six months ago things were totally different," Kalin said. "Now, with Cash for Clunkers, we're seeing people look towards buying a new car a lot more."
But the program wasn't just a good deal for consumers and a boost for car dealerships. Scott Rhodes, general manager at Galeana Chrysler on Greystone Boulevard, said the federal money will be funneled into extra revenue for school districts and property and sales taxes.
"A lot of people don't realize that a lot of that money that these customers receive for their clunker goes right back to local and state school districts and to increase tax revenues," Rhodes said. "I think it helps the local communities, the state budgets, county budgets, they're all a recipient of this money. It ripples throughout the economy."
Rhodes also said the program would help car manufacturers, and that they would be working full-force over the next 90 days to replenish emptied car lots nationwide. He appreciates the effort of the government to help struggling car dealerships.
"I think it's going to do a lot to be a very successful stimulus program," Rhodes said. "At the end of the day it's going to be one of the most successful things our government's done in a while."
In the past few days since the Cash for Clunkers program ended, Rhodes said sales at Galeana have unsurprisingly decreased.
"We're not selling at the rates before we were during the program," Rhodes said. "We kind of expected it to drop down to where we were before the program, which is about what we're doing."
But it's still going to be a while until car sales were back to pre-economic slump levels.
"I don't think it's fixed the economy yet," Rhodes said. "It's going to be a long time before the stimulus money gets down into the economy and car sales in general pick up."
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