Posted on 12/06/2009 8:22:30 PM PST by Darnright
A deadline looms for businesses to glean usable parts from hundreds of automobiles.
Last summer's Cash for Clunkers program has clogged auto salvage yards with a glut of trade-ins that are too damaged to drive but too good to be sent directly to scrap.
The less glamorous side of the auto industry is having trouble digesting the byproducts of the buying frenzy that put nearly 700,000 new automobiles on the nation's roads -- and took the same number off.
The future of millions of usable auto parts is in limbo as a critical deadline looms this winter under the federal program, which had unexpected success on the front end and its funding tripled to $3 billion.
Several salvage yards in the Roanoke and New River valleys are filled with valuable alternators, starters, air conditioning compressors, wheels, body parts, seats and other major interior parts.
But they are still connected to the 1,500 or so used automobiles traded in through the less-than-eight-week program that expired in August.
And many may go to waste if a federal deadline to conclude the program is not extended.
Benny Cunningham, a principal of Rustburg-based auto recycling company Cunningham Brother's Used Auto Parts, said his three-location company processes about 2,500 junk cars a year.
Cunningham said his business received 1,250 automobiles in just 45 days as a back-end participant in the clunker program.
"There is absolutely no way that we can process these vehicles and recycle anywhere near their potential," he said.
He said the volume of trade-ins flooding the salvage industry is three times what the industry expected when it agreed to support the program and to process the trades within six months. With only four months left on many of the clunkers he bought, he's so far only covered his costs to buy the vehicles for about $225 apiece and get them towed to his facility.
Were these normal trade-ins, the unwanted vehicles could simply be sold to new owners. In this case, the engines were destroyed under a federal mandate to take relatively low-mpg vehicles off the road.
But virtually every trade is loaded with fully functional parts. This represents an opportunity that the auto recycling industry wants to tap -- if given enough time.
As it stands now, however, salvage yards say they can't possibly process the vehicles received under the clunker program by their deadline.
If the yards don't get an extension, the vehicles will have to be scrapped before there is a chance to take off all of the parts, cutting short the program's potential economic and environmental effect, Cunningham said.
The rules say salvage yards, which also include Bill's Used Auto Parts near Christiansburg and East Coast Auto Source in Moneta, must see that each clunker is crushed or shredded within six months of arrival.
While the Cash for Clunkers program caused new automobile sales to surge in the Roanoke and New River valleys, the impact was brief.
According to Cross-Sell, a Lexington, Ky., automotive market analysis company, sales for August and September jumped 16 percent in the New River Valley and 3 percent in the Roanoke Valley, compared with last year.
However, the help was only temporary. Deep declines in sales continued at the program's close. For the first 10 months of the year, sales of new automobiles are down 21.5 percent in the New River Valley and 24 percent in the Roanoke Valley.
Officials say they want some kind of deadline for reasons that they say include preventing fraud. There is also the practical need to return employees temporarily borrowed from other federal agencies to their regular jobs.
But there may be wiggle room.
After initially sticking to the deadline, officials at clunker headquarters at the National Highway and Traffic Safety Administration last week said they now agree that salvage yards need more time.
If a proposed extension is approved, the vehicles could remain available to mechanics and consumers looking for spare parts for an additional three months.
If not, "we're going to have to get rid of stuff that we don't want to get rid of," said John Walrond, who owns Shenandoah Auto Parts in Roanoke with his family.
Shenandoah Auto Parts estimates that it has sold at least one part off of about 80 percent of its clunkers. They are a long way from picking all the meat off the bone. A vehicle has perhaps 1,000 parts, though a much smaller number of top sellers.
While the obvious solution to the problem at hand might seem to be to strip the clunkers and put the parts on a shelf until a buyer comes along, few shops have the time and storage capacity for such a harvest.
They often keep their autos whole or mostly whole and remove a bumper, rearview mirror or the like when someone asks for them.
Why waste any part, recyclers argue, especially when the traded-in vehicles turned out to include a large number of quality machines?
According to Cunningham, "the real clunker junker smoker" is still going down the highway because its owner could not afford the payments for a new car.
What got traded in for the most part were "very nice cars, very above-average. I had Lexuses being traded in," he said. "Eighty percent of the cars that were traded in, easily, would have went straight into the wholesale market to be resold with absolutely no problem getting rid of them."
But without functioning engines and engine replacement forbidden by the guidelines, the industry has turned to what it calls parting the vehicles out.
Salvage yards are finding there's plenty of demand, but they need time for purchasers to show up. Many highlight their inventories on the Web and wait for a potential customer -- a mechanic or do-it-yourselfer -- to come through the door, call or send an e-mail.
Michael Wilson, executive vice president of the Automotive Recyclers Association, said he would have liked a six-month extension but finds three months a valuable proposal the association will support. A decision is due by Feb. 1.
Wilson said the participating auto recyclers are likely to make money for their role in the clunker program, though "who knows?" he asked.
Since 84 percent of the trades were SUVs or trucks, a supply glut could depress prices, he said.
In addition, taking 700,000 vehicles out of service is likely to somewhat reduce the demand for the very parts salvage yards now have in ample supply, he added.
Moreover, selling the discarded vehicles for scrap at the end of the process is not as lucrative for salvage yards as it once was because of a severe drop in scrap prices that coincided with the financial crisis, he said.
That said, if all goes well, the piecemeal dismantlement and sale of clunkers might fetch $2,000 for the salvage yard involved, a nice return.
At Shenandoah Auto Parts, which has 80 clunkers, there is a red Jeep Cherokee that's being slowly devoured by the demand for good, affordable spare parts. Its rear end and front bumper were sold and put on operable vehicles, saving the owner the cost of buying a new part.
"There needs to be more of 'em done like that," said Tony Walrond, John's son.
And even MORE proof that bHo and co. are incapable of thinking ANYthing all the way through.
Whenever the government is involved, you can bet that it will be screwed up much worse than if they had done nothing.
There used to be a saying that in 25 years airplanes will no longer have pilots, just a man and a dog in the cockpit. The man’s job is to feed and care for the dog. The dog’s job is to bite the man if he touches anything.
I wonder if we can borrow some of those dogs and take them to DC.
So, hold on a moment here... These back end lots paid $225 for each clunker to who exactly? And where was this accounted for in the 3 billion dollars spent on the program?
>So, hold on a moment here... These back end lots paid $225 for each clunker to who exactly? And where was this accounted for in the 3 billion dollars spent on the program?<
Ya got me. It sounds, though, like these salvage lots are only renting the car for the $225.00, at least the parts of it they can’t find buyers for within the allotted time.
If this doesn’t highlight the stupidity and ineptitude of our government, I don’t know what will.
What’s the probability that anyone who drafted the program actually knew anybody who knew anything about working on cars, the used car market, the salvage market?
Ship them to China...I’m sure they can make something of them.
Nothing to see here except the law of unintended consequences at work again.
We are governed by morons who are our enemies.
This guy has a point: According to Cunningham, “the real clunker junker smoker” is still going down the highway because its owner could not afford the payments for a new car.
“Ending is better than mending”
The more stitches, the less riches.
The fallout from the cash for clunkers program is indistinguishable from the pinheaded idiocy of the Soviet Union.
Bureaucrats are pin headed by definition.
One divided by infinity
Hold on a sec
I drive a Suburban and the Cash for Clunkers program included almost all Suburbans
I needed a cheap plastic part that at the dealer was over $ 50.00
At the salvage yard it was $ 1.00 and the Tajoe it came off of was labeled “Cash for Clunkers”
WE paid for the Cash for Clunkers program, the clunkers got sold to scrap yards, and the parts are being paid for by us again.
The ENGINES themselves are unusable as they were fried by over revving but the rest of the vehicle is getting back on the streets
I have heard that is exactly what is happening. The scrap metal is sold and shipped to China. I wonder where that money is ending up.
Didn’t another dimrat president sell a bunch of scrap iron to another oriental country, like in the late 30’s? How’d that turn out?
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.