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A group of auto dealers is trying to keep the momentum going that has been generated by the Cash for Clunkers program.  This week a number of press releases have hit the automotive news wires as the marketing campaign for the “2009 Automotive Stimulus Program” kick off.

A group a car dealers have decided to pool their marketing dollars to create their own private branded stimulus program with the hope of franchising the concept to other dealers.  The program offers consumers a bonus or “stimulus” above the fair trade value of their car as established by Kelly Blue Book.

The automotive group cleverly purchased a “.org” domain which is normally reserved for non-profit organizations for their commercial car marketing program.  Their website located at www.automotivestimulus.org sports the familiar green theme established by the NHTSA CARS website.

According to the Automotive Stimulus Program website:

“Leading U.S. Automotive retailers are participating in the New Dealer funded Auto Stimulus Plan to provide up to $4500 of additional trade-in value towards the purchase of a New or Used vehicle. This new stimulus plan was created for consumers who don’t qualify for the governments program. This new stimulus plan is not a government funded program and has no affiliation with the government’s stimulus plan.”

The program, as stated above, is not a government program and is run by dealers that include Paragon Honda of New York, Rick Case Automotive Group of Florida and Courtesy Auto Group of California.

Automotive Marketing Post Clunkers

This is an interesting marketing program hosted by an automotive marketing company and underwritten by a group of car dealers.  The program rules make it easy for consumers to qualify but their upside benefit is nothing near to what consumers were afforded with the Cash for Clunkers program.

In fact, although this program’s marketing materials indicate that this program will help consumers locked out of the Cash for Clunkers program, its benefits are targeted to a more affluent consumers. 

From the data in the chart below, you can see that the average consumer responding to the former Cash for Clunkers program, would not achieve the maximum stimulus money available.  

Automotive Stimulus Calculator 

The website does not have a firm stimulus rebate of $3,500 or $4,500 like the CARS program. The wording of their marketing materials says that consumers can get up to $4,500 in incentives toward the purchase of a car based on a formula. According to their website:

Eligible consumers will receive additional trade-in value calculated as a percentage of the Kelley Blue Book Fair Trade-in Value of their vehicle. The percentages are based on the following mpg improvements:

2 mpg improvement = 10% of additional trade-in value above KBB’s Fair Trade Value

5 mpg improvement = 20% of additional trade-in value above KBB’s Fair Trade Value

Is It Enough To Attract Dealers To Participate?

Free money will bring people into a dealership and to that end, the program is a good idea.  However, the practical benefit for most consumers that were considering the CFC program under this stimulus plan, will be minimal free cash.

If you read the comments from thousands of consumers on these forums, we do not come to the conclusion that giving consumers an extra $200 or $400 on their trade would have made them come out in the numbers that we saw from Cash for Clunkers.

If consumers are driving around in a true “clunker” that is worth $2,000, then dealers will have to “bank on”  that this consumer will be motivated under this stimulus program to get a car loan and purchase a new car based on a $400 cash savings.  

Getting  ($400 + $2,000) off a new car is not as motivating as getting $4,500.  The extra $2,100 that could have been offered under the CARS program for many American’s could be a deal breaker.

In the end, let’s watch and see how this commercial stimulus program rolls out.  I’m not sure if dealers will think that the benefits offered by the program  are something they can easily offer without a franchise/program participation fee. 

If it works, it will be a unique national co-op marketing plan that goes across brand lines.