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Have you seized the moment? Are you capitalizing on the opportunity? Now a few weeks into the Cash for Clunkers program, you should be witnessing renewed consumer interest, increased foot traffic, and ultimately, an increase in sales-if you've been following the advice I laid out in my last newsletter, that is.
For whatever reason, if you weren't able to implement any of my tips, and your showroom floor still longs for the hustle and bustle of days gone by, never fear. There is STILL TIME to take simple, effective measures that will help your dealership achieve its sales goals and let you leverage the unique opportunity to carpe clunker.
This issue of the Edmunds Dealer newsletter is dedicated to pulling it all together for you. Listen up. Here we go!
Dealers can wait until they've received cash back from the government before they kill vehicle engines
Dealers have been concerned, and salvage yards also, with the procedures in "clunking" a car, paperwork and applicable charges. Dealers have "hair" on deals sometimes, from factory incentives to the financing of the deal from banks. It is a concern that dealers will not be funded for a car they've "clunked" either because there is a problem with the paperwork or that the program will run out of funds. Waiting to "clunk" a vehicle until it is funded makes sense.
The CARS.GOV site says DO NOT refer to the original ELVES list and to refer only to their list. This, coupled with the "refresh" of EPA MPG ratings on over 100 makes and models, has left dealers with the task of managing uncertainties surrounding how to qualify a deal and how to get reimbursed for the monies they are fronting by putting the new cars on the road.
Money received from the program counts as taxable income
This is actually no surprise. The surprise would be if they didn't take some of the profitability back as ordinary income. Certainly, if the profitable dollars lie in the "clunker" trade, they would be liable to federal tax. The questions will come in the form of the state tax liabilities and corresponding write-offs for the business as they seem to have yet to be vetted in most states.
Dealers are still encountering registration issues
In the first part of this newsletter I made it clear that, notwithstanding the broader macroeconomic issues surrounding this program, showrooms will be full of customers. How the government could announce this program months in advance while drumming up hype, green-light deal making three weeks BEFORE the details of the plan are released and dealers can even register is plain NUTS! There are dealers still wrestling with their factories to get the right codes, and many are still unable to register.
From the consumer's view, the CARS.GOV site seems to be populating the dealer listings that are "in program" with the corporation name, not the DBA (doing business as) name. So, when the customer sees "440 Jericho Turnpike Auto Sales" how would he know that that is Ford Lincoln Mercury of Smithtown? Thanks for the listing!
"Listen to me very carefully. There are three ways of doing things around here: the right way, the wrong way and the way that I do it."- Ace Rothstein (Robert DeNiro) in Casino, 1995
Now is the time to look at your stores and put it all together, integrating all you've learned to maximize results. Here are some ideas. Please pardon the self-evident and just consider them reminders:
First - Be sure to familiarize yourself with all of these programs and your current factory incentives as they relate to your store and all its departments:
Second - Prepare your marketing to piggy-back on the hype.
Third - Showroom presence. Here is what I think is most important. It's "let's make a deal" time! Have your inventory broken out in a number of ways ahead of time:
Prepare your dealership to welcome in customers. Separate yourself from the pack with some curb appeal that speaks to these federal programs. Make it New Year's Eve every day during the program.
Call upon the best of your ideas, experience, and knowledge and use this unique point in automotive marketing history to jumpstart you dealership. I believe car dealers can make much more of this than is being forecasted, which is why I vehemently disagree with the pundits.
So, if you haven't done so already, take action! Now is the time to be proactive and seize those new car sales. Edmunds is scheduling webinars and face-to-face seminars for associations and dealer groups as part of our Dealer Outreach program to further assist with program details and strategies. There is no charge for participation in these Edmunds events. Feel free to contact me directly with any questions.
Cash for Clunkers Stimulus Bill
Curious about the Cash for Clunkers Bill that passed Congress? We take a closer look at the program in our Cash for Clunkers Stimulus Bill page.
Cash for Clunkers Calculator
Does the Cash for Clunkers program make financial sense for you? Use our Cash for Clunkers Calculator to find out.
Eligible Vehicles List
Want to find out if your vehicle is eligible for the Cash for Clunkers program? Take a look at our Eligible Vehicle List to find out if you qualify.
Cash for Clunkers FAQ
What are the restrictions and requirements of the program? We have spelled out the answers in our Cash for Clunkers FAQ section.
Good Purchase Candidates
Wondering what type of vehicle can replace your clunker? Check out our list of Eligible New Cars to help you decide.
John Giamalvo, Director, Strategic Marketing
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