Cash For Clunkers Worthless For Most Auto Recyclers

Early reports suggest the Cash For Clunkers program is creating some new cars sales, but it's also creating questions: are there incentives for recyclers? Can you strip down your own car? Is the CARS Act "horseshit beyond repair" for recyclers?

According to the law, there are approximately 7,700 car recyclers who have the ability to process cars because they are part of a government program designed to remove mercury switches safely from vehicles. If they wish, they can apply to be Cash For Clunkers vehicle recyclers and contract out with dealerships.

Here's where the law gets tricky. These are the individuals who can process cars under the law and, from what we can tell from the three we've talked to, they have started to sign up with dealerships. Because this happened so quickly, it's unclear to us, and to them, whether or not there is a great deal of money it in for them to do so.

This is because the law requires destroying the engine and the transmission, which makes up to 60% of a vehicle's salvage revenue according to the Automotive Recyclers Association. Being unable to sell these parts means the value has to come from the scraps and whatever parts they can strip for sale within 180 days of receiving the vehicle. After this period they are required by law to destroy it.

Bruce Luther of Rock And Roll Auto Recycling in Pleasanton, California says the "The CARS act, as written... is horseshit beyond repair" and points out 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.

Other recyclers we've spoken to have similar estimates of the cost and say, for the most part, it depends on the condition of the cars turned in because nice aluminum wheels and other parts (motors, controls) on the car can be worth anywhere between $2 and $10 a piece.

Jim Butler of Butler Auto Recycling in Pensacola, Florida, said he's participating in the program not because of the promise of a big payday, which he admits is unlikely, but in order to "do a favor for the dealerships who have to get rid of these cars and hopefully build some relationships." His company currently has 25 contracts to remove cars.

We've also spoken with the NHTSA about whether consumers are able to do some of the scrap recycling yourself to try and make a little extra money before trade-in on their vehicle. According to a National Highway Safety Administration spokesperson:

"There is nothing from a federal standpoint to stop a consumer from removing the radio, doors, etc."

Of course, few people want a stock radio according to scrap experts and there are certain parts of a car you can't remove and sell yourself without a proper license in some states. Among the parts of some value you can turn in from a car into the program and qualify for include spoilers, nice wheels (assuming you turn it in with some wheels at all), aftermarket radios, rare pieces and back seats.

"I think you're representing a very small minority of people. I think the vast majority of people aren't going to take the time to remove a part," said Luther.

If anyone does end up taking matters, and doors into their own hands, please take a photo of it at the dealership and add them to this post. Maybe we need a contest for the most stripped clunker, eh?

Photo Credit: THEO HEIMANN/AFP/Getty Images