Dealership group keeps its incentive going

 

Diana Kurylko

Automotive News -- August 24, 2009 - 4:27 pm ET

A group of 73 dealerships is continuing its own incentive program as the government's cash-for-clunkers plan is about to end.

The dealers' autostimulusplan.com program offers incentives between $500 and $4,500 for used and new cars and will run until Nov. 1.

"It is time for the private sector to pick up the baton," said Brian Benstock, general manager of Paragon Honda and Acura in New York. "Clearly the clunkers program was needed to jump-start the automobile industry. Now it is time for the dealers to drive it."

Benstock said his stores are doing three deals under the dealer program for every clunker deal. He expects to sell about 1,200 vehicles under the autostimulusplan.com program.

Fewer restrictions

The dealer program has fewer restrictions than the government plan. For example, it allows shorter leases than the 60-month minimum required by the clunkers plan. There is no limit on the price of a new vehicle; the government program set a $45,000 cap.

The dealers require that the vehicle being traded:

- Is older than the 2006 model year.

- Is in working condition.

-Has been owned and registered for at least six months.

There are no minimum miles-per-gallon requirements. The replacement vehicle must have a minimum improvement of 2 mpg.

The dealer program gives buyers a maximum of $4,500 based on a credit above the average trade-in value set by the NADA Official Used Car Guide. The credit is based on the miles per gallon of the replacement vehicle.

The trade-in bonus for a replacement vehicle that gets 2 mpg better is 10 percent and that increases up to 20 percent for a replacement vehicle with 5 mpg better fuel economy.

The dealers say their plan may vary in some states because of laws governing automotive advertising and promotions.

Big stores

The 73 dealerships participating are primarily large stores.

"A lot of the smaller stores have run out of inventory," said Sean Wolfington, co-founder of Level 5 and Tier 10 Marketing in Dulles, Va., which created the campaign and the Web site. "The program requires that a dealership be able to advertise and market the program -- and have enough inventory and stock."

The early numbers show response has been heavy, but the group hasn't had time to calculate how many vehicles have been sold because most dealers are deluged with cash-for-clunkers business and paperwork, Wolfington said.

Benstock said his used-car business also has benefited from the dealer program. "I have never had a better used-car month; we are the No. 1 Honda and Acura used car dealer in the country," he said.

Benstock said on a normal Saturday he sells 15 used cars. Because of the dealer program, he sold 29 used cars last Saturday.

"We learned one thing from cash for clunkers -- that the American public recognizes value. There is no recession when there is value."

Big weekend

John Malishenko director of operations for Germain Motor Co. in Columbus, Ohio, said last weekend was the biggest of the year for his group because of the dealer program.

"The phone calls and the lead activity," he said, were "also higher than anything we have seen -- even with cash for clunkers." Malishenko's group has 20 stores in Ohio, Florida, Arizona and Arkansas.

Germain Motor Co. sells Toyota, Scion, Nissan, Ford, Lexus, Cadillac, Mercedes-Benz and Smart vehicles.

"Our luxury-car franchises did not have qualified vehicles, but everyone saw lifts in traffic and volume -- all of it was driven by autostimulusplan.com," Malishenko said.

Malishenko said his entire advertising budget has now been shifted to promoting the dealer program.

"We stopped all of our creative and went exclusively to this. We will spend $100,000 in advertising the program," he said.

Wolfington said many dealers are still reluctant to publicize their involvement in the dealer program, fearing their government reimbursements may be jeopardized. One of the largest groups participating is the Rick Case Automotive Group, which has 16 dealerships in Ohio, Georgia and Florida.

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