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Econwatch
August 3, 2009 10:32 AM

Chrysler Puts Brakes on Clunker Incentive

By
David Morgan
Topics
Automakers
(AP Photo/Paul Sakuma)
The government's "Cash for Clunkers" rebate program to spur sales of more fuel-efficient cars has worked extremely well, with auto sales up. Some dealers, however, are complaining that they don't have the inventory to meet demand.

Now Chrysler is dropping its offer to increase the rebate offered by the government's Car Allowance Rebate System (CARS) program, which can be as high as $4,500 depending upon the car model purchased.

The Wall Street Journal's Kate Linebaugh reports today that Chrysler will drop its offer, started in July, to double the "Clunkers" rebate by adding up to $4,500 in incentives of its own for qualifying customers.

A Chrysler spokesperson told Linebaugh that the automaker is changing its message, focussing "less on the deal but more on the products."

Chrysler said its "double your cash" campaign succeeded at bringing buyers into dealerships.

But prolonged shut-downs of factories this year due to unsold cars as the company worked through its bankruptcy has depleted dealers' inventory, at least of cars that are eligible for rebates under the government program.

Pennsylvania car dealer Bill Rosado told the Journal, "I can't believe I'm saying this, I need more Chrysler inventory. My goodness, I've got to rehearse that line a couple times."

  • David Morgan

    David Morgan is a senior editor at CBSNews.com and cbssundaymorning.com.

Add a Comment See all 71 Comments
by mamajac64 August 4, 2009 5:29 PM EDT
How can I be a part of this program, I live in Ocean, New Jersey Monmouth County and need to know what dealers I can go to in my neighborhood.
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by pw08-2009 August 4, 2009 2:02 PM EDT
Another great Chrysler move.
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by fleabag75 August 4, 2009 10:13 AM EDT
Amazing people!!! One of the few, if only, government program to actually work beyond any and all expectations and some people are STILL whining about it! Okay folks,,,,,, let's skip helping the bottom feeders and just go back to bailing out the big boys!!!! Who the heck are these stupid everyday citizens that are expecting help? This should only be a CEO's only club!!!
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by Seola August 4, 2009 11:56 AM EDT
If your expectations are only an inch off the ground - it's easy to "exceed" them. If you think this wasn't all about bailing out the big boys - then where's the check for the rest of us? I'm an everyday citizen - military wife - just getting by, but making my payments somewhat. I've been slapped with 100 point lower FICO score due to the new regulation. I've been slapped with a 50% less value GM vehicle in the last year because of mismanagement. I've been slapped with higher taxes to fund Joe's new house and car. I've been slapped with higher interest rates on my credit cards, even though I've done nothing wrong to cover the irresponsible. Where's my bailout? Oh that's right - I get to pay HIGHER TAXES for this, because *I'm* a responsible 26 year old who takes care of my family, our bills and our home. Silly me.
by Seola August 4, 2009 5:48 PM EDT
Well Newster - for one, the past history my parents helped build as an authorized user stopped applying to long term credit, eliminating over 3 years of history. Second, that joint accounts no longer applied to credit ratings for both, but only the primary while both account owners were responsible for the balance. So I don't get the benefits of accounts with my husband unless *I* opened them, but still responsible for his debt. Maybe before knocking people around, you take a look beyond some internet news reports, and read press releases by places like Experian. No, it wouldn't affect everyone. Because I'm 26, taking 3 years of credit history is a HUGE thing for me. Because I'm married and many of my accounts are joint - it affects me before it would single people.

Your reading comprehension shows how little you can think for yourself - I didn't say I BOUGHT USED - did I? Make assumptions than attack the person - typical of the people who believe in these types of programs.

And for being so hot shot about taxes - INCOME TAXES went down to about FORTY DOLLARS a person - that did NOT APPLY TO OTHER TAXES. Yes, there's more than a single type of tax. I'm assuming you don't realize that. And I'm assuming you missed the statements coming from people in Obama's administration including Gates who have said that more tax increases are likely.

Keep drinking your Kool-Aid - ignorance is bliss isn't it?
by Zowwyy August 4, 2009 9:22 AM EDT
First of all why are ALL car dealers included in this program? I thought it was to help our big 3 US companies! I spoke to a salesman at a Honda dealership and was told their buisness is fine and they don't need this program.
Second I also heard the car dealers are misusing the program. For example, if I go to dealer A and start the process that card dealership is submitting the paperwork and getting "their goverment money" even though I don't purchase a car. If I then go to dealer B and purchase a car we will be rejected because my name is on record as buying a car at dealer A. Obviously the goverment needs to step in and stop this abuse now!!!
Reply to this comment
by Seola August 4, 2009 11:54 AM EDT
Or, the fact that dealers are selling their own used cars back to themselves, applying for the credit, then reselling the new car - thereby making not only the rebate cost, but doubling up on the resale of the new car again!
by GSmythe August 3, 2009 11:00 PM EDT
Re: The comments about "Buy American"
Honda, Nissan and Subaru all have manufacturing plants on US soil. My Ford was made in Mexico.
So here is thew enigma...Do we buy products of American companies that were built on foreign soil by foreigners to boost their profits, or do we buy products that were made with American labor whose profit goes to a foreign company?
Reply to this comment
by techtronicsinc August 3, 2009 10:58 PM EDT
The clunkers bill will not affect car sales dramatically since many older cars already get over 18 MPG which makes them ineligible for the rebate. This bill is just another environmental junket for the liberals and won't really help the US automakers. The people who can afford to buy a new car won't be eligible while the ones who need one, won't be able to afford one. This bill is keeping the car prices up not letting the market control pricing.
Reply to this comment
by mecury69 August 4, 2009 11:06 AM EDT
Dealers are selling OUT of qualifying cars. How does that not help US automakers?

You can't buy ANY car. The ones that are driving sales are the lower end, fuel efficient car like the Ford Focus. Most people can afford these vehicles given the clunker money and matching dealer rebates.
by Seola August 4, 2009 11:53 AM EDT
mecury - if you make 20 chocolates in January and you give them away in August. You have no more chocolates. You make 20 more and in December, you cannot give them away for free - you still have 20 at the end of the year with a blip in sales because the government paid for you to give those chocolates away. At the very least, it will over inflate the price of the qualifying cars after this month for supply and demand and for the rest of us 200 million people, deflate drastically the price of our used cars.
by robham777 August 3, 2009 10:05 PM EDT
good for the auto industry, good for consumers and good for the environment. There are no downsides to this enormously successful stimulus.

Good for nothing! The government has no money to reimburse the participants of this program unless they take it from you and me. Now my hard earned dollars have gone to the auto industry twice, to the banks who are raping average Americans through fees and exorbitant interest rates and to fat cat politicians who promise a better standard of living for the working class. I just can't understand how America seems to be so blind when 10% are unemployed and most of the rest of us are scared, yet we still believe after years of being hosed that the beltway has our interest at heart. The only difference I see in Washington is that more people than ever are buying what they are selling!
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by JayAdlerMusic August 3, 2009 8:10 PM EDT
I must say that Chrysler to their credit is making an attempt to amplify quality over price. In any sale of a business or service a knowledgeable vendor will never sell on price. Our name designers, our Coach bags and our Bally and Allen Edmund's shoes all are very expensive goods but buyers from all over the place pay the freight to purchase quality merchandise. In previous commentary I have disagreed wit the lack of forecasting and other problematic issues for the dealers themselves. Anyway, look how much money we have poured into the auto industry including the Clunker deals. They are after all big boys who should be able to take care of their own shops, the American people individually should come way ahead of big corporations.
Reply to this comment
by Rick007 August 3, 2009 7:06 PM EDT
Well in a few weeks the real cost will be uncovered. My guess would be about $15,000.00 per car.

Im 70 I worked hard all my life and payed my own way. Now I have to raise alot of usless ******** because they are to lazy to get a job. Oh the irony.
So from my experience I will tell people not to work and let sombody else pay your way!!!!!!!!!!!!!!!!!!!!!
Reply to this comment
by Rick007 August 3, 2009 6:14 PM EDT
Do you know that GM is using your tax dollars to have UAW workers take early retirement????????
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