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Cash for your clunkers

Today, it's as though every owner of gas-guzzling rust buckets in the country got a coupon in the mail from Uncle Sam. "Up to $4,500 off your next purchase of select vehicles. Expires Nov. 1, 2009. Valid only at participating locations. Limit one...

Today, it's as though every owner of gas-guzzling rust buckets in the country got a coupon in the mail from Uncle Sam.

"Up to $4,500 off your next purchase of select vehicles. Expires Nov. 1, 2009. Valid only at participating locations. Limit one coupon per buyer. Offer may be subject to restrictions. See Cars.gov for more details."

This latest economic stimulus program even has a cute advertising-jinglelike nickname: "Cash For Clunkers." Its real name is "car allowance rebate system," which appeals to politicians fond of cute acronyms.

For drivers like Denise Johnson, who's been driving her parents' '95 Dodge Caravan for seven years, it just sounds like a real good time to trade in. "I was tired of driving the old family van."

The Kelley Blue Book says she could expect to get a few hundred out of the dealer, so getting $4,500 back for a brand-new Ford Fusion is a pretty sweet deal.

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For auto dealers in the region, it's pretty sweet, too -- they report getting a lot of calls from customers -- but there are so many unknowns that even they don't know how it will work until the government's rules come out today.

Dave Dahlstrom, a manager at Dahlstrom Motors in Oslo, Minn., said the government requires him to destroy the trade-in vehicle but doesn't say what exactly has to be destroyed.

The law says he has to tell the customer the scrap value of the vehicle -- essentially, he'd be buying scrap from them, not a used car -- but that value is going to be different depending on whether the car is completely crushed or if some parts can be recovered for resale.

"The customer probably has a better view of it than we do," Dahlstrom said.

Here's the deal

It's much simpler for the consumer.

They need only check the government Web site Cars.gov to see if the vehicle they want to get rid of and the vehicle they want to buy qualifies. One of the government's goals is to improve gas mileage nationally, which means you have to own a gas guzzler to start with. For car owners, your car has to get 18 miles to the gallon or less.

Consumers also could check the Blue Book at KBB.com. If your vehicle is worth a lot more than $4,500, this government deal may not be much of a big deal.

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They'll also want to make sure they have the title of the vehicle, which owners sometimes leave with the bank. Banks can't always produce the titles in a short time, so buyers would want to think ahead.

Dealers say another factor is in play, as well, which is demand. Congress allocated $1 billion, and when it runs out, there will be no more cash for clunkers.

"How long is the money going to last? One month? Two months? A week?" Jeff Wahl wondered. The general manager of Lake GM Chevrolet Auto Center and Lake Toyota in Devils Lake said he figures $1 billion will be good for about 250,000 cars.

That's less than a percent of passenger vehicles on American roads and about 3 percent of total car sales as of 2007, the year the latest federal statistics are available.

So, if more than 250,000 car buyers get involved in Cash For Clunkers, the 250,001st might be out of luck unless Congress agrees to more funding.

The unknowns

The supply of vehicles can be limited, too.

GM dealers, for example, may be challenged by the beleaguered auto company's cost-cutting measures.

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"With factories cutting back on production, we're getting everything we can get," Wahl said. Sales at his GM dealership been ahead of 2008's pace, he said, and he's seen his inventory drop from 140 last year to 54.

At Eide Suzuki, the problem is the unknowns.

Jay Potulny, the general manager, said he doesn't want to order dozens of vehicles to be ready for Cash For Clunkers because he's not sure how long that $1 billion will last. "Once the money's gone, it's all over."

The worry for him is he'd be sitting on a lot of excess inventory and the program ends early.

Other unknowns include what kind of paperwork is needed, who pays for destruction of the used vehicles, what will happen to any toxic chemicals in those vehicles and so on. Dealers won't find out until they can register today.

"I talked to several friends who deal with government contracts," Dahlstrom said. "Needless to say, they were very skeptical everything would run smoothly." The government has never done anything like this to his knowledge, he said, and dealers have never dealt with it.

As Potulny said, "It's a once in a lifetime deal."

In more ways than one.

Reach Tran at (701) 780-1248; (800) 477-6572, ext. 248; or send e-mail to ttran@gfherald.com .

Reach Tran at (701) 780-1248; (800) 477-6572, ext. 248; or send e-mail to ttran@gfherald.com .

Related Topics: DEVILS LAKEOSLO
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