Regional Report Charlotte March 2010
If you failed to trade in that gas guzzler for an Earth-friendly fuel sipper in a deal greased with federal money, don’t despair. The car dealer who claims credit for last summer’s “Cash for Clunkers” program is angling for an encore, though the main reason for it might no longer exist.
Bruton Smith, CEO of Charlotte-based Sonic Automotive Inc., hopes to persuade Congress to push though “Cash for Clunkers No. 2” this year. Last summer, Smith says, he drafted the bill that his friend Harry Reid, the Nevada Democrat who is Senate majority leader, shepherded through Congress. Smith also is CEO of Speedway Motorsports Inc., which owns Las Vegas Motor Speedway. The government paid $3 billion in incentives to get people into more fuel-efficient cars, partly to reduce fuel consumption and automobile emissions but mainly to increase auto sales. “In just a few short weeks, nearly 680,000 older vehicles were replaced by new, more fuel-efficient vehicles,” says the federal Transportation Department’s report to Congress.
That benefited Smith and Sonic, the nation’s third-largest automotive retailer with 148 franchises. The program accounted for more than a quarter of the new cars Sonic sold in July and August. It also helped other North Carolina car dealers. Registrations for new vehicles statewide jumped 31% from July to August, when Cash for Clunkers shifted into high gear. Smith says he had been working on the idea for a decade, but conditions weren’t right until last year. Now, he wants $3 billion more.
But with so much of the economy still hurting and government resources stretched thin, do auto dealers deserve another stimulus program? Car registrations statewide were up 23% in December over November and 8% from a year earlier. Smith told WBT radio talk-show host Keith Larson — who dubbed the new plan “Cash for Bruton 2” — that Sonic had one of its best months in December. “People are buying cars again, and that indicates to me that this economy is turning around.”
Ralph Byrns, an economics professor at UNC Chapel Hill, says a repeat doesn’t make much sense because the automotive sector is doing better. “The automobile industry is not in great shape. But for that matter, the heavy-equipment industry is not in great shape. Why don’t we have a Cash for Construction Equipment program to bail out Caterpillar, John Deere and other companies?”
Smith says a second round would improve road safety by getting old cars off the road, help poor people who otherwise couldn’t afford a better car and reduce fuel consumption and auto emissions. But he worries about political climate change in Washington. “This second go-around will be more difficult than the first. I’m hopeful we’ll get it done, but I have no guarantees.”