Why the Automotive Stimulus Plan is a Scam

The Pitch

As senators get ready to vote on whether to add $2 billion to the ballyhooed Cash for Clunkers program, some of the nation’s largest dealerships have created a private stimulus package of their own, offering prospective car-buyers from $500 to $4,500 in incentives on top of the federal program. The dealer funded Automotive Stimulus Plan was designed to complement the government’s program and to compensate for some of the gaps that don’t allow consumers to purchase pre-owned vehicles or chose a short term lease.

“The government program has been fantastic for business but some of our customers have been disappointed because the programs rules left them behind,” said Scott Gruwell from Courtesy Chevrolet, one of GM’s largest dealers and one of the retailers participating in the Auto Stimulus Plan. “Letting consumers lease a new vehicle or buy a pre-owned vehicle makes it affordable for a lot of people who could not participate otherwise.”

The dealers’ package begs the question: Do taxpayers really need to kick in an additional $2 billion for the federal program now that private dealers are offering a similar — or even better — deal? “If the auto industry can afford their own $4,500 per car auto stimulus, why are taxpayers being forced to foot the $3 billion bill on clunkers?” Sen. Jim DeMint, R-S.C., told FOXNews.com.

[ For those of you, who have been brain dead for the past couple of weeks, I have been saying we would be footing the bill for this. Cash for Clunkers is not a free ride.]

The dealers’ program, dubbed the Automotive Stimulus Plan, was slated to start on August 15th, 2009 but participating retailers decided to launch the program this week because of the instability of the governments program. Unlike the federally-funded program, the dealers are declaring all vehicles older than 2007 models to be eligible for trade-ins, and they are allowing the money to be used to buy or lease both new and used cars.

“We have invested hundreds of thousands of dollars to attract consumers to the dealership and we don’t know if the government will have the money to fund the program,” said Brian Benstock from Paragon Auto Group, one of the participating dealers in New York City. “Now we are prepared to help our customers even if the government program runs out of money. Our motto is ‘no customer left behind’.”

http://www.AutoStimulusPlan.com goes live on Tuesday August 4(th).

The Automotive Stimulus Plan is a private sector program funded by retailers to provide incentives to consumers that will help the economy and the environment at the same time. To qualify for an incentive, a consumer must select a new or pre-owned vehicle that gets 2mpg better mpg than their current vehicle, which is the same requirement the government program has for SUV’s, but this applies to all vehicles under the dealers plan. If a consumer does not have a trade, they can participate if they select a vehicle with 2mpg better than the government’s mpg requirement of 17mpg. “The mpg requirements are lower because our primary goal is to help consumers that don’t qualify for the governments program and to stimulate the economy through improved sales, jobs and spending,” said Gruwell. “As a result, the environmental benefits will not be as big as the government program, but it will help more customers get into more fuel efficient vehicles.”

“We have customers who measure their vehicles mpg weekly and they get 12mpg, but the government’s calculator says they get 19mpg so they don’t qualify. Our program makes it easier for them get into a more fuel efficient vehicle by not having a mpg requirement for their current vehicle,” said Benstock. “Under our stimulus program a customer can get a new Accord for $5 a day which means they can drive a car for practically free when you deduct the gas savings,” said Benstock.

The Automotive Stimulus Plan incentives vary by state and the make and model of the vehicle they select.

Automotive Stimulus Program Requirements:

  1. Current vehicle is a 2006 or older
  2. Current vehicle is operable
  3. Current vehicle has been owned for a minimum of 6 months
  4. Current vehicle has been registered for a minimum of 6 months
  5. Current vehicle has been insured for a minimum of 6 months
  6. The replacement vehicle has to be more fuel efficient
  7. Incentives vary based on current vehicle and desired vehicle
  8. Incentives vary by State, Make and Model. Incentives may vary in some states due to state laws that regulate to automotive advertising and promotion.

The Auto Stimulus Plan will end on November 1(st) and will continue if the government’s program expires before that date.

Participating dealers are eager to get the stimulus plan started ahead of schedule because of the recent turbulence with the government program. “We intended for our Stimulus Plan to compliment the government’s program, but now it may have to take its place when the government funds run out,” said Vince Sheehy from Sheehy Automotive Group in Washington DC, Virginia, Maryland and Baltimore, one of the participating dealers.

The Switch

Consumer Affairs said to be aware of scams in the Automotive Stimulus Plan.

Automotive Stimulus Program Requirements:
1. Current vehicle is a 2006 or older 2. is operable – this clearly means they intend the car for resale. Under the cash for clunkers plan, the dealer has to scrap the car, not resale it. This clearly shows they want to have $4,500 value out of the car, regardless of what incentive you receive.

5. The replacement vehicle has to be more fuel efficient by a minimum of two mpg – by this fuel efficiency, they won’t have to worry about vehicle emission standards and they can immediately resale the car.

6. Incentives vary based on current vehicle and desired vehicle – this means they can literally deny your trade in car if they feel they are not going to get that $4,500 value out of it, for resale.

7. Incentives vary by State, Make and Model. Incentives vary in some states due to state laws that regulate to automotive advertising and promotion. – this would mean that California auto dealers would be hard pressed to find qualifying cars, due to higher emission standards, promotional advertising regulations, etc. You would be hard pressed to find a deal from this package in California or somewhere like it. This means they can revoke your trade in, in such a state and hopefully this language will calm you down, so you can simply buy a new car on your own, without trade in.

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Ex law school student. I was kicked out for revealing I had a heart actually beating inside. I used to be in a modern dance company. I'm working on my 7 miracles to be proclaimed a saint by the pope. #1 is really hard, but once i get over that hump the other 6 will be a cinch.

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