Final weekend of clunkers program draws big crowds

EMILY FREDRIX / AP Business Writer

From Vermont to California, exhausted but appreciative car dealers watched their lots grow empty as crowds rushed to trade in gas guzzlers during the final weekend of the popular Cash for Clunkers program.

The hectic pace of the $3 billion rebate program accelerated in the final weekend, after the government announced the program would end at 8 p.m. EDT Monday, two weeks earlier than expected.

Adding to the urgency, some dealers had said they would stop Cash for Clunkers sales even earlier to make sure the government reimbursed them for the rebates — or because they didn’t have enough eligible cars left.

In the final hours, customers streamed in.

“We thought about it a couple weeks ago,” said Annette Palmer, 51, at Town and Country Honda in Berlin, Vt., on Saturday with her husband. They hoped to trade in a 1999 Jeep Grand Cherokee for a Honda CR-V.

“We kind of dragged our feet. Then we heard it was closing and we picked up our feet and ran,” she said.

Though short of some new models, such as the Ford Focus, Honda Civic, Toyota Corolla and Nissan Altima, many dealers were still selling as many cars as they could before Monday night’s deadline.

Standing outside one of his Hyundai dealerships in Appleton, Wis., John Bergstrom said customers traded in 100 clunkers throughout his fleet of 20 dealerships on Saturday and 100 the day before. They were his two biggest sales days during the clunkers program.

“That’s about as good as it gets,” Bergstrom said. “It’s going out with a bang.”

In all, Bergstrom said his dealerships — whose brands include Ford, GM and Toyota — sold 800 cars during the program, boosting sales 30 percent. He had to bring in extra staff to deal with the paperwork, but the sales were worth the hassle, Bergstrom said.

At Universal City Nissan in Los Angeles, Alberto Vasquez said keeping up with the pace of the program has taken a toll on employees. Some labored past midnight to wrap up last-minute deals.

“Are we tired? Definitely,” said Vasquez, the dealership’s director of training. “But it’s also bittersweet, because we’re happy that we’re selling cars.”

The dealership has sold more than 700 vehicles through the program and brought in extra staff to help enter information on the government’s reimbursement Web site.

Cash for Clunkers has been wildly successful in spurring new-car sales and getting gas-guzzling models off the road, though some energy experts have said the pollution reduction is too small to be cost-effective. Customers receive rebates of between $3,500 and $4,500, depending on the improvement in fuel efficiency from their old vehicle to their new one. As of early Friday, nearly half a million cars had been sold through the program.

But the new sales left many dealers worried about not being reimbursed by the government. As of Friday, dealers had been reimbursed for just a small fraction of the billions in sales.

Some dealers chose to stop participating over the weekend so they could have enough time to process and file the paperwork, including AutoNation Inc., the nation’s largest auto dealership chain.

At Toyota Direct in Columbus, Ohio, employees were told to double- and triple-check paperwork so it wouldn’t be rejected for reimbursement, said Jim Collins, the dealership’s assistant general manager.

Sales picked up on Saturday, though the dealership had only 20 new cars eligible for sale under the program. Sales employees sometimes jogged paperwork into the manager’s office to keep up with the pace.

The dealership won’t take any new sales on Monday so it can be assured of reimbursements, Collins said.

“We have quite a bit of paperwork, but is it worth the selling of a car right now? Absolutely,” he said. “We like to sell cars. That’s what we’re in business to do.”

Martin Main Line Honda in the Philadelphia suburb of Ardmore stopped its Cash for Clunkers sales at noon on Saturday. But by late afternoon there were still groups of people wandering the lot.

General sales manager Michael Freeman said the program had been “overwhelming,” with 115 clunker sales and big surges in customer traffic at the start and now at the end. He’s aiming to get the final stack of paperwork filed before Monday’s deadline.

“I have people upstairs, that’s all they’re doing — paperwork,” he said. “The backlog is a nightmare, and it’s starting to be a nightmare at the end.”

Customers were feeling the urgency, too.

In Appleton, Wis., April DeKeyser looked at her new Mazda 3 2010 and still had trouble accepting that it was hers.

The 22-year-old nurse from Brussels, Wis., had wanted to trade in her Chevy S10 truck as soon as the clunkers program began. But she had a hard time finding the car she wanted and had to run to numerous dealers.

DeKeyser said she knew she had to get the rebate this weekend. Without it, she wouldn’t have bought her new car.

“I would have waited,” she said. “Basically, I would have driven the other vehicle until it died.”

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Associated Press writers Alex Veiga in Los Angeles, Andrew Welsh-Huggins in Columbus, Ohio, Ron Todt in Philadelphia and David Gram in Berlin, Vt., contributed to this report.

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Detroit News Online

Saturday, June 6, 2009

Analysts: Penske could give Saturn the life that General Motors couldn’t

Robert Snell / The Detroit News

Detroit auto icon Roger Penske could succeed where General Motors Corp. failed by giving Saturn attention and resources that were inconsistently doled out after GM launched the brand in 1985.

Penske also will save huge overhead costs by concentrating on sales and distribution instead of manufacturing, industry experts said. And by returning the brand to its independent roots, Penske can establish a new Saturn and focus on selling and marketing instead of spreading resources among multiple brands, as was the case at GM.

“He’s got a good chance of making it work,” said analyst Joe Phillippi of AutoTrends Consulting Inc. in Short Hills, N.J. “He can make a good return — it’s going to depend on the vehicles he’s selling — but he’s not going to be making the kind of money that you would make as a manufacturer. The flip side is you don’t have all the costs of a manufacturing company.”

Penske faces challenges executing and integrating the brand into his company’s portfolio.

“It is occurring at a time when auto sales are at extremely low levels and the U.S. auto industry remains under stress in the current economic environment,” Moody’s Investors Service wrote in a note Friday as the ratings agency put Penske Automotive Group on review, saying its direction was uncertain. “It is also noted that Penske’s existing auto dealership business has been under pressure due to the weak macro economic environment.”

A deal to sell the Saturn brand and dealer network to Penske capped a frenzied week for bankrupt GM, which is shedding Saturn, as well as Saab, Hummer and Pontiac, in a court-ordered restructuring that will leave the automaker with four core brands: Chevrolet, Cadillac, Buick and GMC.

Penske has signed a memo of understanding to acquire Saturn and its dealer network, with a due diligence period of 60-90 days.

The deal will preserve 13,000 jobs and could close late in the third quarter, Penske told reporters Friday. Terms of the agreement were not disclosed.

The deal includes the Saturn brand, the parts operation based in Spring Hill, Tenn., and a network of about 350 dealerships.

Penske said GM will supply the Saturn Aura sedan and the Vue and Outlook SUVs on a contract basis for at least two years, after which he envisions importing vehicles. He could form a venture with Nissan Motor Co., the Japanese affiliate of Renault SA, according to a source familiar with the talks.

Automotive News, an industry trade publication, has reported that Penske plans to import vehicles made in South Korea by Renault Samsung Motors and sell them through the Saturn dealership network.

With Saturns eventually being made by foreign automakers, Penske will benefit from lower overhead and likely will offer fewer incentives and fewer variations of the same vehicle, industry experts said.

“A typical corporation’s got major, major investments in production facilities and they need to keep those things running so we’ve seen them pump out more cars than the market will bear,” said Jack R. Nerad, Kelley Blue Book’s executive editorial director and executive market analyst. “That results in the need to do incentivizing and make major fleet sales, which has a negative effect on resale values. Penske won’t be burdened by that. This is blazing a new trail that’s an exciting one. He has a very good chance.”

Ultimately, Penske wants to build Saturn vehicles in the United States.

It is unclear what will happen to the plants that assemble Saturn’s three models. The Aura is built at GM’s plant in Fairfax, Kan., while the Vue is built in Mexico. The Outlook is assembled at the Delta Township plant near Lansing, where GM is moving the production of the Chevrolet Traverse crossover SUV.

Saturn General Manager Jill Lajdziak will be offered a role in the new company, and Penske wants to offer a job to former Chrysler LLC Vice Chairman and President Tom LaSorda, a lean manufacturing expert who served as a consultant to Penske on the Saturn deal.

Penske expects to offer Saturn’s U.S. dealers a new franchise agreement and said it was a priority to determine how many Canadian dealers would be part of the new company.

Penske said he was attracted by Saturn’s strong network of dealers and pool of 3.5 million customers.

“We need to sustain that and reach out and get repeat referral business,” Penske said. “At this time in the world, to be a part of the reorganization of General Motors is a great honor for me.”

Penske is the head of Bloomfield Hills-based Penske Automotive Group Inc., which operates 310 franchises in the United States and internationally, selling 40 brands. Penske also distributes the Smart car, made by Daimler AG.

The Smart car and Saturn vehicles will be sold in separate dealerships, Penske said.

rsnell@detnews.com (313) 222-2028

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