"Cash for Clunkers" wins over U.S. drivers, dealers

By Tim Gaynor

PHOENIX (Reuters) - Having driven the equivalent of six smoke-belching laps of the planet, Tony Metzler figured his aging Chevrolet Blazer SUV would not make a good trade for a new car. Until now that is.

With a $1 billion federal "Cash for Clunkers" program that pays consumers $3,500 or $4,500 in credit to swap aging gas-guzzlers for new, more fuel efficient models, he made the plunge.

"It ended up being right place, right time for me," said Metzler, 42, who traded his eight-year-old sport utility vehicle for a new Chevrolet Equinox this week. "It seemed like a good opportunity."

The program signed into law by President Barack Obama in June offers a trade-in credit of up to $4,500 to owners of cars built since 1984, with fuel economy of 18 miles per gallon or less.

It also applies to SUV, vans and pickup trucks. Participating dealers assess the discount, apply it to the new vehicle, and then obtain reimbursement from the government. Details of eligibility are available at www.cars.gov.

Metzler, a Phoenix-valley insurance executive, had racked up 150,000 miles in his old SUV that averaged 17 miles per gallon. He got a $3,500-credit toward his new car, which gets a slender 3 mpg improvement.

The program, which backers hope will arrest the auto industry's slide and sell 250,000 new vehicles this year, runs through November 1 or until funds are exhausted. It has been broadly welcomed by auto dealers across the country.

"It's a wonderful program. It helps out the environment, it helps out the customer, and it gives a jump to the automobile industry when it needs it the most," said Scott Gruwell, sales director of Courtesy Chevrolet, the Phoenix-based General Motors dealership that sold Metzler his Equinox.

Cliff Johnson, president of Texas Motors Ford, agreed.

"Are we excited about it? Absolutely! We think it is a great opportunity for people to get rid of their clunkers," said Johnson, whose dealership in Fort Worth has about 250 vehicles on its parking lot.

Some dealers felt it also fostered environmental consciousness among consumers.

"It is very unique in the way it's positioned. The buyer becomes very environmentally sensitive and responsible," said Bobby Cavender, a partner with the Cavender Auto Group in San Antonio, Texas.

The program, which could be extended by lawmakers, is the latest of a variety of enticements offered to car buyers in the downturn.

A federal plan in March allows buyers to deduct state and local sales taxes in their 2009 tax returns, while automakers themselves offer a plethora of cash-back and cut-rate financing deals. Taken together, they stack up, analysts say.

"If you need a car, or are close to needing a car ... This is shaping up to be a good time to do it," said Phil Reed, senior consumer advice editor at Edmunds.com.