Salvage yards won't necessarily mind if the Cash for Clunkers program dies. The highly popular government program, which could soon receive an additional $2 billion in funding, is a direct competitor to salvage yards that want the clunkers for parts.
The clunkers have to be destroyed under the federal program, so salvage yards can't keep any parts. The Cash for Clunkers program may make used parts more expensive, salvage yard owners say. Moreover, yard operators say that if the government program really were successful, it would create a shortage of used but serviceable parts for older cars.
Auto recyclers also say that reusing parts is a "greener" alternative to President Barack Obama's plan [PDF].
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The Associated Press reported:
"Used engines and drivetrains are a big part of recyclers' income from each scrapped car, and 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."
Al-- Part of the problem with the C4C Program is...
