LEWISTON — Local used-car dealers say that while new-car dealerships will benefit from the Cash for Clunkers program, small used-car dealerships will be hurt if it continues.
On Thursday night, congressional leaders announced the program will be suspended as of midnight Friday because the program is quickly burning through the $1 billion set aside for it.
Cash for Clunkers, officially known as the Car Allowance Rebate System, allows consumers to trade in a vehicle that gets less than 18 miles per gallon for $3,500 or $4,500 in credit toward a new, more fuel-efficient vehicle, according to the program's official Web site. The federal government set aside money in hopes of putting more than 200,000 environmentally friendly vehicles on the road between July 23 and Nov. 1.
According to The Associated Press, through Wednesday nearly $96 million had been spent for 22,782 new cars. It was unclear whether the program would be reinstated.
Richard Blais, owner of the RJB and Son Motor Co., a used-car dealership in Turner pointed out that used-car dealers are big business for the state. "How is it going to help a used-car dealer whatsoever?" he asked. "If used cars start disappearing, you know it's going to affect business."
Blais anticipated profits may go down if consumers decide they can get more value for their cars through the CARS program than by selling them to local used-car dealers. "Some of them are clunkers, yes. But some are decent cars. Anything that we're going to try to buy is going to disappear."
Allen Wheeler, owner of AC Auto Sales in Leeds, believes the program may drive up costs for used parts and cars at local auctions because fewer cars and parts may be available when the trade-in vehicles get destroyed. "It's going to affect a lot of used-car dealers because it takes away a lot of their cars," he said.
James Joys, general manager at K&R Auto Sales in Auburn, had a different take. "We're only talking about 200,000 cars. A lot of people driving these cars aren't in the position to buy a new car," he said.
He believes the effect of the program will be minimal as monthly payments on new cars may still be too high for many consumers. "Who can afford a $500 monthly payment for a car, especially in this economy?"
Al Donovan, owner Donovan's Car Dealership in Greene, did not attribute the suffering used-car industry to the CARS program. Car manufacturers producing 10 million fewer cars over the next few years is primarily to blame for the spike in used-car prices, Donovan said. "Until supply is more than demand, we're just in trouble."
Donovan said the CARS program would benefit the economy and the environment as long as consumers can afford the monthly payments on their newer models. His only criticism: "They need less complicated paperwork."
Joys believes the program would be more effective and economically sensible if people were allowed the option of using their credit toward purchasing a fuel-efficient but slightly used vehicle.