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Cash for clunkers: Auto sales soar in Utah as hundreds ditch heaps, grab rebates

Last summer, when the price of gas hit $4.22 a gallon, Craig Sullivan parked his 1995 Chevrolet Suburban, which averaged 12 mpg.

"I couldn't afford to drive it," said Sullivan of Sandy. "Every 12 miles, I lost four bucks."

Sullivan wanted to get a smaller sports-utility vehicle but was looking for a bargain. It came in the form of the U.S. Department of Transportation's Car Allowance Rebate System, or "cash for clunkers."

On Monday, Sullivan traded in the Suburban for a tax rebate of $4,500 to purchase a Chevrolet Equinox, a midsize SUV that Sullivan hopes will average about 25 mpg on the highway.

Hundreds of Utahns have new wheels as part of the program, which almost ended last week when the Transportation Department alerted lawmakers that its $1 billion budget had nearly been exhausted in one week.

On Monday, the Obama administration pressured the Senate to approve another $2 billion for the program quickly, pointing to environmental gains made during the first week of the program and news that Ford Motor Co. reported its first U.S. sales increase in nearly two years.

"It's good for consumers. It's good for dealers and auto manufacturers," White House spokesman Robert Gibbs said. "It's good for our energy security and our environment."

Gibbs said if the Senate fails to provide the extra money, "it's unlikely that we'll make it to the weekend with a program that can continue." He estimated the additional $2 billion would allow consumers to take advantage of the incentives through September.

Although the House approved the funding by a nearly 3-to-1 margin last Friday, conservatives who have criticized it as another taxpayer bailout for the auto industry have much more leverage to block it in the Senate.

There's little time left on the calendar — the Senate plans to take a four-week recess beginning Friday after it votes this week on Sonia Sotomayor's nomination to the Supreme Court.

As politicians debate in Washington, local businesses — and not just car dealerships — are benefitting from the program. Chris Mantas, chief executive officer of Tear A Part auto recycling company on Redwood Road, said he has seen his business increase. Mantas has received about 150 clunkers in the past week.

"Most of the dealerships are sitting on close to 70 to 80 each," he said. "A lot of them are sitting on quite a bit of cars."

Most of the vehicles Mantas has received are what he calls "sleds."

"We call them sleds because they're big gas guzzlers," he said. "Let's say a car dealer had 80 — three are decent, the rest are garbage cars. Really old, lots of mileage."

Jerry Seiner Salt Lake has sold about 25 vehicles under the program, said the dealership's executive general manager, Chris Hemmersmeier.

"People are buying mostly cars," Hemmersmeier said. "They're buying Aveos, Cobalts, Malibus, Kia Fortes and Spectras, and small SUVs like the Equinox.

"We knew the money would not last until November," Hemmersmeier said. "But we were surprised the money went as quick as it did."

In addition to promoting fuel efficiency, the program will result in safer cars, Hemmersmeier said. For instance, he described a couple who traded in a 1991 custom van that didn't have air bags for a Chevy Malibu with driver and passenger air bags.

"The nation would benefit from having half a million, three-quarters of a million of these vehicles off the road," he said.

Among Mark Miller's three Salt Lake County stores, the dealer has sold or leased 100 vehicles under the program.

"This is about someone who has a car that isn't worth very much getting government assistance to get a new car," he said. "It's probably a lot of people who've never bought a new car."

Miller doesn't think the program will necessarily result in people purchasing greener cars in the future. Most customers who have come into his stores say their primary reason for participating in the program was the tax rebates. But he did say many customers have gotten the Toyota Prius, a car that is green but also popular. Also popular is the Toyota Yaris, which can be leased after the clunker trade-in for $89 a month.

John Garff, chief executive officer of Ken Garff Automotive Group and president of the New Car Dealers of Utah, said one in 10 people work directly or indirectly in the automotive industry nationally.

Over the past six months, the automakers in Detroit and other places have closed plants or reduced shifts in plants. Americans bought only 10 million vehicles in 2008, down from 16 million in 2007. Since then, dealers throughout the United States have been selling excess inventory. The cash for clunkers program will create demand and plants will have to start up again, Garff said.

"Now it's time to start making cars again," he said, "and get people back to work."

Contributing: Associated Press

e-mail: lhancock@desnews.com

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