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Home / ‘Cash for clunkers’ good, not great, for area auto recyclers
Gas guzzlers traded in under the “Cash for Clunkers” program are not exactly a bonanza for area auto recyclers, who are just seeing the tip of a junker iceberg coming their way.
“It's going to produce a LOT of vehicles,” said Joel McCaw, general manager of Ace Auto Recyclers, 2752 Riverside Drive, Iowa City.
McCaw would ordinarily be excited to see a lot of vehicles being scrapped, but under the circumstances, he's just glad. That's because he won't be able to recycle the engines of the vehicles, which must be disabled by the dealer under the program. In addition, the law allows auto recyclers only six months to strip off the valuable recyclable parts from vehicles before the bodies must be crushed. Ace Auto Recyclers typically keeps a wrecked car body for about 18 months.
Another problem is the kind of vehicles being turned in - generally older sport utility vehicles, pickups and minivans. Demand is lower for parts from older models, so Ace Auto Recyclers doesn't keep them unless they are for a valuable model.
Because of those factors, most scrap dealers are only paying $100 to $200 for discarded cars under the Cash for Clunkers program, McCaw said. That's significantly less than they'd pay for even a wrecked newer vehicle.
McCaw has sent about 50 percent of the vehicles he's received straight to the crusher, including most models 1998 and older.
The story's pretty similar at Sunline Inc., 4000 Sixth St. SW, which has received about 30 gas guzzlers traded in under the program for new vehicles with higher mileage rates.
“A lot of them are just crusher bait,” Sunline owner Gary Wendel said, “and scrap metal prices aren't very good right now.”
Because they cannot make as much money off the gas guzzlers, auto recyclers are paying less for them than they usually would pay for a recent-model wrecked vehicle. A price of $100 to $200 is relatively common, Ace Auto Recycling's McCaw said.
Ace Auto Recycling ordinarily sends crushed vehicle bodies to Gerdau Ameristeel in Wilton, where they are shredded for use in Gerdau's steel mill. But that facility is temporarily closed because of the recession, so Ace is sending crushed bodies to a Mason City shredder.
The remaining vehicles are kept for parts, which Cash for Clunkers limits primarily to body panels and some suspension parts.
The most valuable parts are front ends of popular models, such as the Jeep Cherokee, which are most likely to be in demand by collision repair centers.
“Some of the newer composite (front ends) can cost $1,000 new, and even a used headlight can go for $100 or $150,” McCaw said.
Auto recyclers say most of the clunkers are still sitting on auto dealer lots. Many dealers aren't in a big hurry to disable the engines and ship the vehicles. They want to be sure the government will pay them first, said Wendel, owner of Sunline.
Wendel and McCaw said they support Cash for Clunkers despite its administrative details.
“When I sit down to talk with my group of auto dealers, it's good to see the smiles on their faces,” Wendel said. “They've been having a tough time.”