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Northland auto dealers push 'Cash for Clunkers' trades

Minnesota car dealers are expecting about 4,000 car sales thanks to the federal government's "Cash for Clunkers" program, which will help car owners who want to unload their old, gas-guzzling cars for up to $4,500 in credit to purchase a new, more fuel-efficient model. The U.S. Department of Transportation program is expected to get under way Friday. McClatchy-Tribune file photo

We've all shrugged off advertising pressing us to "act now before this one-time offer ends!" but the upcoming Cash for Clunkers program has some prospective car buyers lining up for an offer of federal money that really is expected to end soon.

Many Duluth-area dealerships are assisting drivers who want to unload their old, gas-guzzling cars for up to $4,500 in credit to purchase a new, more fuel-efficient model. Some, such as Kia of Duluth, Krenzen and Luther Chevrolet, are running big ads offering to prequalify potential buyers for the program.

The CARS program (Car Allowance Rebate System, also known as Cash for Clunkers) has $1 billion available, or about 222,000 deals at $4,500 available nationwide. The U.S. Department of Transportation program is still under final development but is expected to get under way Friday for those who meet the requirements.

"It's an extremely good deal, a once-in-a-lifetime deal," said Mark Fitzpatrick, sales manager at Kia of Duluth. "For all intents and purposes, it's a chance to trade in a car that's worth nothing. Let's say they spent $500 on a car a year ago and now the government will pay them $4,500 to buy a new one."

About 4,000 transactions will take place at Minnesota dealerships, according to an estimate from the Minnesota Automobile Dealership Association.

"We think it will spur interest in sales, and we are excited for the program to come about," said Scott Lambert, executive director of the association.

Cash for Clunkers is a welcome program for a struggling industry, dealership sales managers said.

"My comrades in the business have said that 20 percent down [in sales] is the new up," said Brad Nelson, Kia of Duluth general manager, although he said his dealership's sales are on pace with last year's.

To garner sales, dealerships have helped prospective customers determine whether they are eligible under the preliminary requirements and then are lining them up for a deposit on a new car.

Kia of Duluth will order about 200 more vehicles for this program, Nelson said. He estimated more than 200 inquiries have come through the dealership, but he declined to say how many have been pre-approved or have put money down on a new vehicle.

Krenzen also has seen increased interest in new car sales because of the program.

"We've definitely noticed an uptick in traffic," said Brent Baker, sales manager at Krenzen. "Business has picked up anyway, but this has helped people who may not be able to afford a new car."

The Minnesota Automobile Dealership Association is stressing caution to its 400 statewide dealerships to not finalize new car sales before the final federal rules are announced later this week, Lambert said.

"It's really important dealers don't make a $4,500 mistake," Lambert said. "What I mean by that is it could be awfully hard to undo deals. We are urging caution."

Nelson said Kia of Duluth has clauses in the pre-approvals where if the rebate isn't allotted to a buyer "we will give the down payment back."

Your clunker should qualify if you've owned and insured it for at least a year and it gets 18 miles per gallon or less.

Dealers are advertising impressive deals to go with the federal incentive. Krenzen, for instance, is offering a $16,000 Pontiac G6 for less than $9,000 after the factory rebate, dealer discount and Cash for Clunkers voucher are applied.

The program is authorized to run through November, but dealerships said the money could be exhausted within one month, so, if you're interested, act now before this one-time offer ends.