Not all auto recyclers are relishing the government’s new “cash for clunkers” program, which requires car dealers to destroy the gas-guzzlers they get as trade-ins from new-car buyers.
Used engines and drivetrains are a big part of recyclers’ income from each scrapped car, but under the federal program, those engines must be destroyed. The idea is to promote fuel efficiency and help automakers, but it comes at a time when more than a dozen U.S. auto- parts suppliers have filed for bankruptcy this year.
“Why throw away good parts when the supply chain is in jeopardy? It doesn’t make a whole lot of sense,” said Michael Wilson, executive vice president of the Automotive Recyclers Association, based in Manassas, Va.
Engines and drivetrains account for 60 percent of recyclers’ revenue from a used vehicle, Wilson said.
Under cash for clunkers, the government is advising car dealers to replace a trade-in’s engine oil with a sodium silicate solution and run the engine to ruin it before giving or selling the car to a scrap dealer.
The Automotive Recyclers Association says that can damage otherwise sellable parts like pistons — and mean smaller profits for scrap yards, considering it can cost $700 to $1,200 to process a car, including transport and removing toxic items like mercury, Wilson said. Recyclers’ profits vary but can reach several hundred dollars for a 6-year-old car.
“I haven’t decided that I want the cars,” said George Clark of Western Auto Recycling in Denver. Still, he said, he might make money crushing clunkers if he doesn’t have to buy them from dealers.
The Colorado Automobile Dealers Association estimates the $1 billion program could boost sales 10 percent or so for its roughly 260 dealers before it ends Nov. 1 — earlier if the federal money runs out.
Some recyclers say cash for clunkers will hurt lower-income buyers who can’t afford a new car, even with a federal credit.
They also claim that destroying vehicles will increase prices for spare parts that lower-income customers depend on to keep their cars running.
About the program
MODELS: Cars and trucks must be 1984 models or newer.
MPG: Eligible vehicles must get 18 miles per gallon or less.
PAPERWORK: Owners need to show dealers their vehicle, title, proof of registration and proof of insurance.
CAR REBATES: $3,500 if the new vehicle gets at least 4 mpg more than the trade-in and $4,500 if it gets at least 10 mpg more than the trade-in.
TRUCK REBATES: For SUVs, pickups or minivans, a $3,500 rebate if the new vehicle gets at least 2 mpg higher than the old vehicle or $4,500 if it gets at least 5 mpg higher than the trade-in.
