Auto, Car Parts Recyclers lose Money in Cash for Clunkers Program

The Cash for Clunkers program has been a resounding success. As Congress rushes to come up with another $2 billion to keep the incentive going, let’s turn our attention to those who found the program not so pleasant to deal with.

One group that has not warmed up to the program is the auto recyclers. Now one may think that the auto recyclers would be jumping for joy because the old clunkers being traded in have to be destroyed.

But according to the San Francisco Chronicle, recyclers don’t just crush cars, they also salvage parts of the cars for re-sale. This can include the engine, drive train, larger parts and more. But according to the law, many of the salvageable goods have to be destroyed too. They cannot be sold.

It is said that the re-sale of engines and drive trains account for about 60 percent of a recycler’s revenue from used vehicles. The government is asking car dealerships to destroy the engines of old clunkers by running a sodium silicate solution through them before handing the car over to a recycler.

It seems that recyclers don’t make much money by taking on the old cars. And it costs them $700 to $1,200 to process a car including transporting from the dealership, removing toxics like mercury and more. So many recyclers are still deciding if they want to get involved.

Recyclers also say that the program will hurt poor people who can’t afford to buy a new car. These groups would be buying the very cars that are being destroyed, they say. In addition, recyclers also say that destroying cars will cause the price of spare parts to increase and lower income people depend on these parts to keep their cars going.

Dealers could send the old clunkers to auctioneers who serve as the middleman for scrap or junk yards. So many recyclers, despite the disadvantages, are asking dealers to give them the cars.