Dealerships Forced to Shell Out Cash After Clunkers Program

By Jon Jordan, NEWS 9

OKLAHOMA CITY -- Many car dealerships appear to be struggling following what some are calling a "Cash for Clunkers" hangover and are now being forced to dig deep into their own pockets.

A month following the clunkers program, nearly every major car company reported losses. Now in an effort to turn things around, dealerships are trying to use incentives to draw in customers.

Len Billett may have missed out on the national "Cash for Clunkers" program earlier this year, but luckily, the program has been extended until the end of the year at David Stanley Chevrolet.

"We're still extending the $3,500, $4,500 depending on the gas mileage increase," said Matt Baker, David Stanley Chevrolet general sales manager.

But unlike two months ago when taxpayers were paying for the "Cash for Clunkers" program, the money is now coming directly out of the dealerships own pocket. It's a big cost but something, Baker said, "Cash for Clunkers" forced them to do.

"We knew we were going to have to do something to keep the market stimulated and that's why we did it," Baker said.

The auto market has been slipping ever since the "Cash for Clunkers" program came to an end in August.

Honda, Chrysler and Toyota all saw their new car sales drop. General Motors, which fell the farthest, saw sales drop 42 percent from August. That's a trend dealerships like David Stanley are hoping to turn around even it means offering big incentives to do it.

"Although we've taken some hits, the customers are showing they will spend the money whenever they get it," Baker said.

Experts said in a post "Cash for Clunkers" world, dealerships will have to continue increasing their incentives at least through the end of the year if they plan to keep selling cars.