Dealers, Junkyards Concerned About Future Effects of “Clunkers”

From complex paperwork to transporting reclaimed car metal, complications of Cash for Clunkers have raised concerns in several participating business sectors.

Dealers, Junkyards Concerned About Future Effects of

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Although the government’s Cash for Clunkers program concluded Aug. 25, the real work has only begun.  From complex paperwork to transporting reclaimed car metal, complications have raised concerns in several participating business sectors.  Parts dealers, disposal directors and government officials say they’re concerned about procedural snags.

One of the most common issues following completion of the $3 billion program has been the hesitance of car dealers to disable the clunkers they’ve collected.  Despite a stipulation that cars were to be disabled almost immediately after collection, most dealers WFIU spoke with say they have yet to disable at least a quarter of the trade-in vehicles.

Michael Wittman is the Business Development Manager at Fusion Pontiac Buick Cadillac and GMC Trucks in Terre Haute.  He said none of his 20 trade-ins have been disabled yet.  While he said he’s confident he’ll get his money, Wittman said he won’t disable any vehicles until he’s got cash in hand.

“Cash is king,” he said.  “We want the money in our hands before we destroy a vehicle.  We believe them, but it’s just a matter of when.  And if for some reason, we wouldn’t, at least we’d have some of this inventory to offset our loss.”

The government requires engine disabling within seven days of reimbursement.  As hardly any federal dollars have trickled into Indiana dealerships, many dealers seem to be using Wittman’s strategy — holding onto the cars, just in case.  Scott Jaeger of Terre Haute Toyota said another concern for many dealers has been confusing paperwork which has led to consumer errors.

“You have a lot of paperwork you have to send into the government to get payment on these claims,” Jaeger said.  “And if there’s one piece of paperwork that’s wrong-let’s say for instance-an individual brought in a proof of insurance and the insurance card VIN number didn’t match the vehicle that was actually traded in, and the government rejects that claim and then you go back to the customer and say, ‘Hey Mr. Customer, we need to get the correct insurance card from you.” And it turns out he says, ‘Oh, I don’t really have insurance on that vehicle.’”

Even a small mistake can nullify a trade.  And if the engine on the trade-in has already been disabled, the dealer cannot cancel the trade — since there’s effectively no car to give back.

In addition to business hurdles, the multi-stage recycling process which will actually dispose of the clunkers begs questions of the program’s environmental impact.  After a vehicle is disabled, it is delivered to a salvage yard, where six months are allotted for parts removal.  The vehicles are then transported to a junkyard to be smashed.  Many Indiana clunkers are shredded and their constituent metals separated before being taken to Gary to be melted down.  Finally, the various metals are shipped as far away as China to be made into new products, such as washing machines or train tracks.

Michael Murvis is the director of Murvis Industries, which operates Terre Haute’s Goodman and Woolf recycling center.  Murvis said he has concerns about what the process means for the Earth.

“I think there’s a question as to whether putting more vehicles on the road just to get some degree of gas savings is truly better for the environment than making sure we are using existing materials longer,” he said.  “What’s the cost in what it took to make the steel?  What’s the cost it took to forge all the parts for that car?  What can be reclaimed from it and what’s just going to be lost?  Are we really moving ahead with this program environmentally?  I don’t have an answer for that.  I’m not sure that environmentalism was the driving force behind this.”

The U-S Department of Transportation says dealers should have their reimbursements by the end of the month.  It could take many more months before it becomes clear if the program was a temporary jolt to the economy or a sustained octane boost to the auto industry.

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