Business

Clunkers mean business for Federal Way's Jet Chevrolet

The recently renewed Cash for Clunkers program is a huge success at Federal Way's Jet Chevrolet.

The CAR Allowance Rebate System (CARS), also known as Cash for Clunkers, began as a $1 billion federal government program to help consumers buy or lease a more environmentally-friendly vehicle when they trade in a less fuel-efficient one.

The program looked like it would be face its demise last week, but instead the effort was extended, with another $2 billion dedicated to the program. Cash for Clunkers will continue until November or until the funds supporting the program are depleted.

In Federal Way, Jet Chevrolet's business is booming. Much is owed to the program. There has been a noticeable increase in customers and sales, general manager Don Thompson said. The first week of August brought 60 percent the number of sales completed for the entire month of July, Thompson said.

"We're going to be up 100 percent this month in car sales," he said.

Vehicles of all kinds are being traded in for newer, more economical models. Business is so well, the dealership is having a difficult time keeping up with customers' demands.

"The only problem we have right now is we are getting low on new car inventory," he said.

Because discounts are taken off at the point of sale, more customers are able to qualify for loans, Thompson said. The few thousand from Cash for Clunkers, paired with deals extended by Jet Chevrolet, leave much less to finance, he said.

"Surprisingly, most of the people have been able to buy," Thompson said.

Jet temporarily loses some revenue each time it sells a new car that replaces a clunker, Thompson said. The $3,500 or $4,500 discount is covered by the dealership. The federal government will repay dealerships that take part in Cash for Clunkers.

Thompson said his company is expecting reimbursement any day now. But if the money does not come until fall, the dealership is doing enough business to stay afloat, he said.

"We're not alarmed right now," Thompson said.

Clunkers left behind as part of the program spend their last days in a wrecking yard. The dealerships empty the gas guzzlers of oil, pour in another solution and run the vehicle until the engine seizes. They are then hauled off at the dealerships' expense. Car dealers will get $30 per disposed car, Thompson said.

Jet Chevrolet's clunkers are scheduled to go to Kitsap Truck and Auto. The wrecking yard has contracts with about 12 dealerships to receive clunkers, president Dave Currier said. He is unsure how many vehicles his business will see as a result of the program, but expects half will be immediately crushed and the others will be scrapped or parted out. There will be a lot of product to handle in a short amount of time, he said.

"There is going to be a lot of work involved on our end," Currier said. "I think it's going to be a profitable project, but not a home run in any stretch of the imagination."

The program seems profitable for dealerships such as Jet Chevrolet, but it's uncertain how it will affect wrecking facilities. If wrecking yards are inundated with clunkers, the prices of scrap metal and car parts could drop, Currier said.

"I'm apprehensive," he said.

Learn more

Here's some qualifying basics on Cash for Clunkers:

• A vehicle must be a 1984 or newer model to qualify.

• Only new vehicles qualify as clunker replacements.

• Trade-ins must have been registered and insured continuously for the past year prior to trade in.

• For passenger cars, if the mileage per gallon difference between the clunker and new vehicle is between 4 and 9 mpg, customers receive $3,500 off the new vehicle at the point of sale.

• If the mileage per gallon difference between the clunker and new vehicle is 10 mpg or greater, customers receive $4,500 off the new vehicle at the point of sale.

• For small trucks and SUVs, if the mileage per gallon difference between the clunker and new vehicle is between 2 and 4 mpg, $3,500 comes off the price of the vehicle.

• If the mileage difference is 5 mpg or greater, $4,500 comes of the price of the new truck or SUV.

• Work trucks older than the year 2000 qualify for a flat $1,000 discount, regardless of the miles per gallon improvement.

Visit the U.S. Department of Transportation's Web site www.cars.gov for more information.

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