Cash for Clunkers and ability to negotiate.

MeetJoeAsian

Having a clunker or not, does not make a difference in the the final negotiated price. By doing what you said can actually backfire and you can end up paying more without even knowing it. A lot of people come in to us wanting to negotiate "DRIVE-OUT". Drive-out includes TT&L for those of you who don't know. Then if you try to throw in the clunker, we may tell you "Well, your drive out is $20,000 and you qualify for $4,500, so subtracting $4,500 from $20,000, your new drive-out is $15,500". Depending on the state and the law, you can get a tax credit for your clunker. In the state of Texas, automobile sales tax is 6.25%, and you get tax credit for your trade in and rebates. Therefore, if you negotiate a drive-out, then throw in a trade-in or a rebate (CARS program), well, most people won't know, but they will lose $281.25 in the tax savings, which allows the dealership to sell the car for an additional $281.25.

The reason why the dealerships are not discounting cars isn't because of the clunker program. It's because of supply and demand. Right now, there isn't an exact date to when this program will end. Initially, they projected that the initial funds will last through the end of the year, and that each dealership in the US will do an average of 12 clunker deals under the ENTIRE program. We sold 16 cars the FIRST day of the launch. They stopped the program that Thursday because they ran out of money because the response to the program was so massive. They got the approval to keep it going and they are projecting to end it around Labor day, well, the money probably won't last thru Labor day.

Dealerships across America are running out of cars to sell. We normally stock about 600-700 cars on our lot at ALL time, and for the past few weeks, we've been sitting between 150-200 cars. We're on track to sell about 1200 cars this month at my dealership, but that's "projected" numbers IF we have the inventory. Dealerships are not discounting because they will sell out of these cars regardless. And it may sound cocky, but the people with clunkers who are not buying are risking losing out on the program if the program ends ANY DAY now. I have customers coming into the dealership who have been to 2-3 other dealerships pissed off cuz no one is discounting cars. And the more they shop, the more they will spend because all the cars with the cheaper packages are moving first, and the ones that are loaded out are the only ones left...and again, not to sound cocky, but they can either buy it now, or they will lose out on the rebate.

In Texas, we've had a similar program going for the past year called Texas Aircheck where you can apply and get between $3000-$3500 rebate for a 10+ year old car. Well, the federal program and the state program can be combined, thus some of our customers are actually getting $8000 total in rebate. That's insane.