Dealers, consumers say delay of cash-for-guzzlers bill hurts sales
Kathy Jackson
and Chrissie Thompson
Automotive News
June 4, 2009 - 9:33 am ET
UPDATED: 6/4/09 3:49 p.m. ET
LOS ANGELES -- U.S. consumers are waiting to buy new vehicles until Congress reaches a decision on the cash-for-guzzlers bill, two automotive companies' surveys have shown. Hyundai Motor America today released a survey of licensed drivers showing 11 percent of potential car buyers are delaying purchases until Congress either passes or defeats the legislation, which would give cash to consumers who trade in aging vehicles for new ones with better gas mileage. The Korean automaker says this represents as many as 100,000 lost sales each month over the summer selling period. And sales lead provider Dealix's survey of dealers showed nearly 60 percent believe consumers are waiting to buy until Congress decides. "With sales in the U.S. auto industry forecast at the lowest levels in 26 years, it's imperative that we move forward with this stimulus bill," Hyundai Motor America President John Krafcik said. The legislation most likely for a full vote -- an iteration of the fourth such bill introduced this year -- would offer customers $3,500 vouchers if they trade in cars that get less than 18 mpg for new vehicles that get at least 22 mpg. Vouchers of $4,500 would be awarded if the new cars get at least 10 mpg more than the old. The vouchers would be awarded to up to 1 million customers at a cost to the government of $3.5 billion to $4.5 billion. The new cars to be purchased could be assembled anywhere in the world. The bill requires the trade-in vehicles to be scrapped. Senate vote imminent A Senate vote on the bill could take place as early as this week. On Monday, President Barack Obama encouraged lawmakers to pass the measure. "Any stimulus to the auto industry will make a major improvement in the overall U.S. economy, which remains severely depressed," Krafcik said. The Hyundai survey was conducted by Hall and Partners, a brand and communications research company in Los Angeles. It polled 2,145 adults with driver's licenses between May 13 and May 29: 62 percent of respondents said they either were unaware or not sure if they were aware of the bill; 11 percent said they would delay a purchase until the bill was either passed or defeated; 12 percent said they were unsure of the personal impact of the bill; 15 percent said the bill would have no impact on whether or not they would purchase a car. "The longer this bill, which is so important to the U.S. economy, remains stuck in Congress, the greater the pressures placed on all aspects of the U.S. automotive industry -- from suppliers to manufacturers to dealers," Krafcik said. "We urge Congress to move quickly so that American consumers can benefit from this program during the peak summer selling season." More than two-thirds of the 400 dealers Dealix surveyed Tuesday and Wednesday said they were planning marketing campaigns that would advertise the cash-for-guzzlers bill, if it passes, Dealix said today in a statement. But more than 60 percent of dealers surveyed said they thought the vouchers given through the legislation should also apply to used-vehicle purchases, said Dealix, a division of digital marketing company The Cobalt Group, of Redwood City, Calif. Growing support Hyundai joins "all manufacturers" in supporting the current legislation, said Charles Territo, spokesman for the 10-member Alliance of Automobile Manufacturers. Automakers "have participated in these programs in other countries and have seen how effective they are," he said. In Great Britain, a scrappage requirement has boosted sales by 35,000 vehicles since its introduction in April, the government said on Friday. Scrappage programs have also boosted car sales in France, Germany and Italy. But the Association of International Automobile Manufacturers Inc. -- which has 13 members, most of them Asian -- has one concern about the current legislation, said spokesman Kim Custer: It requires participating new-car leases to be at least five years long. That eliminates three-year leases, which typically make up at least 60 percent of the leasing market, Custer said. "That essentially says leases are out of the picture, period," Custer said. "We don't think that is right, and we would encourage them to include three-year leases." Reuters contributed to this report. |
You can reach Kathy Jackson at kjackson@crain.com.
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John Krafcik: Pass the cash-for-guzzlers bill. |
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