The economy of Cash for Clunkers: How it Affected the Auto Wrecking Business
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Recent changes in the economy have affected businesses across all industries worldwide. In North America people have had to adapt in many ways. As the economy soured, many Americans started to cut back on their spending. This caused the housing and automotive markets to take one of the hardest hits of all. In response to the drastic slump of the automotive market, the government decided to launch the cash for clunker program. Some viewed this as wildly successful while others viewed it as a complete failure. Regardless of these opinions, the program had a “trickle down” affect that the majority of people aren’t aware of.
The cash for clunkers program was initiated to stimulate the U.S. economy and automotive dealers and manufacturers while aiding the environment. The program worked as follows: consumers could bring in their old vehicles and receive a voucher toward a new more fuel efficient car.
Car dealers were required to disable all of the trade in vehicle’s engines and the vehicles had to be disposed of to a NHTSA approved disposal facility. This means that the facility must hold an automotive salvage dealer license. Auto salvage yards all over the country had the opportunity to work with car dealers to buy cash for clunker cars for scrap metal. The total number of vehicles traded in topped off at 680,000. The majority of these vehicles ultimately landed at an auto wrecker.
Although the program was a success among auto dealers, it posed a unique challenge for auto salvage yards. Most yards were not prepared for the vast number of cars that needed to be picked up and disposed of. Towing companies, car dealers, and auto salvage yards all worked together to meet government deadlines and pick up and dispose of the clunker cars efficiently.
The benefits that were largely unseen by your average consumers were the infusion of available late model used car parts and volume of scrap metal. These two things stimulated business for junk yards all over the country. Some of these outcomes were also somewhat paradoxical by the mere fact that so many late model cars were taken off the street, while all the parts off of the cars were made readily available to car owners who didn’t trade their cars in during the cash for clunkers program.
Regardless of whether the outcomes were intentional or not, the program had a large effect on