AIADA: On Scrappage, Congress Needs to Pick Up the Pace

It’s an all-too familiar refrain on dealerships across the country.

Customer: I love this car.

Dealer: It’s a great car.

Customer: And the price is good.

Dealer: Now is the perfect time to purchase! We’re doing all we can to move inventory.

Customer: I’m ready to buy . . . just as soon as I know whether the government is going to pay me to trade in my old car.

The above exchange is nothing unusual.  It has happened to me, and to dealers of both international and domestic nameplates, countless times this year. Since January 15, when a scrappage plan was first floated as both a boon to the environment and to the weak auto market, some media-savvy prospective customers have been reluctant to sign on the dotted line. 

And who can blame them?

Many people believe if they wait a few weeks, or months, the government might pay them thousands of dollars to trade in their old clunker for a new, more fuel-efficient car. And so they wait. And we dealers wait. And auto sales continue to stagnate. On this issue, Congress is acting with all the concentrated speed of drying paint. They’ve tried since January to develop a meaningful piece of legislation, and since April 30 to respond to President Obama’s call to institute a scrappage program. So why the lack of movement? 

Like so many ideas, Cash for Clunkers has become a victim of the Washington machine. A half dozen different permutations have been developed, debated, and shot down. And now, when we finally have it narrowed down to just a couple of possible bills, Congress is – where else? – back home in their districts.

So we wait. And we hope that when Congress returns to work on June 2 they immediately make scrappage a priority. These proposed bills may be imperfect solutions, but they are solutions! And at AIADA we are working with legislators to make them as dealer friendly as possible (for example, including language that would include leases under five years). The final program doesn’t have to be perfect, but it should be four things:

-          Simple. The more straightforward the better, for consumers and dealers.

-          Stimulative. The bill should include as many makes and models as possible in order to stimulate the auto industry and the economy as a whole.  Now is not the time to nit-pick consumer choice.

-          Swift. Dealers have enough out of pocket expenses as is.  Whatever the plan, lets ensure that dealers receive government funds in a timely manner, most likely through an electronic fund transfer.

-          Short term. Putting a time limit on the scrappage plan raises the urgency for consumers to make purchases.

The time has come for Congress to act. A well thought out Cash for Clunkers program has the potential to revive the retail sector of our economy. Who wants to wait on that?

 Russ Darrow, AIADA Chairman