Dealers in neutral as Senate debates 'clunkers'

Dealerships and car shoppers alike are waiting for the Senate to decide the fate of "cash for clunkers."

Many dealerships have stopped selling cars and trucks through the program while Washington decides whether to approve more money for it. In some cases, salesmen are only taking deposits and not letting customers drive new vehicles off the lot.

Other dealers say the confusion is great for business, enticing customers afraid to miss out on a bargain.

"We're selling cars like candy bars," said Bobby Soldano, general sales manager for Arrigo Dodge Chrysler Jeep in the Miami suburb of Sawgrass, Fla., who was flooded with phone calls and messages Tuesday from customers worried they were too late.

"I hope they keep it going," he said. "The only problem is, we need to get more inventory."

Senate Majority Leader Harry Reid signaled Tuesday the Senate will vote to extend the program, which pays Americans up to $4,500 to trade in their old cars and trucks for new ones that get better gas mileage, before senators go home Friday.

The White House had warned the program could end Friday if the Senate did not add $2 billion to the program. Its original $1 billion is quickly running out because Americans have rushed to take advantage of the rebates.

Meanwhile, some car dealers are in something of a holding pattern. Some are refusing to finalize sales.

"We'll take the deposit, we'll hold the car and if the Senate passes the money and we're told we're good to go forward, we'll call them back and continue through the process," said Bill Colgate, president of Brown's Volkswagen in Richmond, Va. "There's just no way for us to do it otherwise."

John McEleney, chairman of the National Automobile Dealers Association, said Monday was the last day his two dealerships in Iowa completed a "cash for clunkers" transaction. He accepted deposits from 10 customers who want to trade in.

McEleney said his organization was encouraging dealers to be cautious, warning them there were no guarantees they would be reimbursed for sales they make this week.

At dealerships still honoring the program, business is brisk.

Bill and Jessica Dietrich of Dundalk, Md., were shopping around Baltimore-area showrooms for something to replace their 1990 Ford E150 van. Bill said he felt a sense of urgency to buy because of the program's uncertain future.

"They want to give me $4,500? I'll take it," Dietrich said. "That's why we're hurrying up." But he was frustrated with the selection: "Everybody's out of everything."

Soldano said he sold 54 vehicles to buyers taking advantage of the program just this weekend, after the future of "cash for clunkers" became uncertain. The government estimates 250,000 vehicles will be traded in under the original $1 billion.

"The confusion is probably helping sales," said Mike Meagher, general sales manager at Lexus of Towson in Maryland. "It's spurring people to do it now."

The Chrysler dealership in the Minneapolis suburb of Roseville, Minn., isn't selling any more cars under "cash for clunkers" until the government pays up for the cars already sold, said general manager David Golinvaux. He said the dealership is due $250,000 worth of rebates.

"I wake up in the middle of the night thinking about having to get these cars back, and that scares me," Golinvaux said. "These people may have been in the car for a week depending on how long the government keeps us hanging, and we may need to make that phone call saying we need to get the car back."

Chrysler Group LLC told its dealers that they should continue processing "cash-for-clunkers" transactions through Tuesday, but after that should turn to the government for guidance.

Ford Motor Co. has told its dealers to voice their opinions to their local members of Congress, but did not make suggestions on whether they should continue with "cash-for-clunkers" deals.

Car companies say the program is helping their bottom lines. Ford reported sales were up in July from a year ago, the first time in 20 months that's happened. Chrysler posted a smaller sales drop than in previous months.

Presidential spokesman Robert Gibbs said 83 percent of the vehicles traded in have been trucks or SUVs, while 60 percent of the vehicles purchased were passenger cars, for an average increase in fuel efficiency of 61 percent.