The government program to get drivers to trade in gas-guzzling vehicles for new cars has helped car makers and dealers, but others in the auto industry say it is hurting their business.
Cash for Clunkers, now known as CARS or Car Allowance Rebate System, offers owners of old cars and trucks $3,500 or $4,500 toward a new, more fuel-efficient vehicle. The government provided $3 billion for the incentives. More than 350,000 deals have been made so far.
But it’s what happens to all the clunkers that has some worried.
Under the program, the drive-lines from the cars and trucks that are traded in must be destroyed and the vehicles shredded or crushed.
Even though the idea behind Cash for Clunkers is recycling, the destruction of all those used parts is raising concerns for auto repair shops.
Some of my x-competitors and friends (I sold my transmission shop 3.5 years ago) have been fixing cars for as long as forty years. Some of the owners believe the government program is wasteful, throwing away hundreds of thousands of perfectly good cars and used transmissions.
“There’s a good used engine that we’re able to buy for $600. Now that used engine is not there. So if you lose the engine in your car, you’ve gotta opt for a remanufactured engine that’s going to cost you two to three thousand dollars,“ said Brian Hanson, owner of North Americas largest transmission supplier, GotTransmissions.com, adding “with not as many used parts available, not as many people will be able to afford to fix their cars”.
I know folks in the used car business who buy used cars and fixes them up for sale, but they say there will be fewer of those out there for his business. Craig from Midway Motors says “We’ll buy that car and we’ll go through it bumper to bumper and re-sell for twenty-five hundred, three thousand dollars. Now those cars are gone“.
He said in these economic times, people are having a hard enough time affording used parts. Now those used parts might not be available when you need to have your car fixed.
“You can buy used transmissions for $400. Now you have to rebuild that transmission, $2,000. So you’re really putting an undue hardship on people trying to fix up their old cars,“ Craig says.
Car dealers have to pay for these rebates out of pocket, then wait to be reimbursed. However, processing of the payments has been slow.
At this point in time, Hanson of GotTransmissions.com says he started stocking up on used transmissions as soon as the program started to look like it would become reality. Trust me, In the time I have known Hanson, he is the type of person who will use his natural instincts to continue to deliver the best and most affordable transmissions to all who own a clunker. He is more interested in the customer experience than any other part of the business.
