Homeless, poor among losers in "Cash for Clunkers" deal

The new Cash for Clunkers program allows people
to trade in their old "beaters" for a $4,500 voucher
toward a new car. This successful program has
helped stimulate the auto industry, but their
are some losers, namely independent auto
shops, used car dealers and the homeless.
(Photo by guillaume jautzy)

People are lining up for the “Cash for Clunkers” program.

The Cash for Clunkers program offers vouchers of up to $4,500 to vehicle owners to trade in their old, gas-guzzling cars and trucks for newer, more fuel efficient vehicles.

So many people have lined up that the program is running out of money and needs another $3 billion dollars to keep going strong.

Though cash for clunkers seems like a good thing—and it is—stimulating and boosting the sales of the United States’ automotive industry, there are some down sides.

The most obvious being the affect of the program on independent auto repair shops, used car lots and junk yards.

As people trade in their clunkers, there won’t be an immediate need for non-warranty repairs, so that counts the mom and pop shops out.

And if people can get a new car with government help, why buy a used one?

As people trade in old cars for new, car dealerships have to render the clunkers inoperable, often by using sodium silicate to lock up the engine.

Neil Kopit, of Criswell Chevrolet in Gaithersburg, Md., told NPR that, even if they are used cars, it’s hard to get rid of your bread and butter.

"We sell [cars] for a living," he said. "It's like shooting a horse; you don't feel good about it, but sometimes that's what's got to be done."

After the auto dealerships disable the cars, the junk yards get them.

These places often have those hard to find parts that allow people to keep patching up their clunkers to get from A to B.

But under Cash for Clunkers, the mandate to disable a clunker’s engine and transmission decreases the salvage value of a vehicle by as much as 60 percent, according to the Automotive Recyclers Association.

Bruce Luther of Rock And Roll Auto Recycling in Pleasanton, Calif. told Jalopnik.com that “the current scrap value is $140 a ton, which means a two-ton vehicle is only worth $280 as scrap. Subtract out the estimated cost of $200 to detox the vehicle as required by law and the total value is only $80 per car if nothing can be sold on it.”

Besides these obvious short-term losers in the Cash for Clunkers program, there’s another group that will lose out—the homeless.

"One man's clunker is another man's coat" said Ron Marlette, executive director of Mission Solano.

Mission Solano operates a charitable car lot on North Texas Blvd. in Fairfield, Calif.

In exchange for tax write-offs, people donate their old vehicles to the organization. The mission then sells the cars to fund its homeless outreach.

"It is too early to know how much we will be hurt by the Cash for Clunkers program, but we know we can't compete with the government's checkbook" said Marlette.

"Our donations were already down due to the economy as people are driving their old cars longer or brokering a sale themselves. The Cash for Clunkers program could shut us down."

In addition, Marlette pointed out that since the Cash for Clunkers requires that donated "clunkers" be destroyed, options for cash-strapped buyers looking for low-priced transportation will be lessened.

"We often sell our cars to individuals who cannot afford anything else,” he said.

“In some cases these are men and women who have been helped off the streets by the mission. Now they have a job and need cheap wheels to get there. They can't buy a new car. What are they supposed to do?"

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Also posted here: http://theundergroundsite.com/index.php/2009/08/homeless-poor-among-losers-in-cash-for-clunkers-deal/