Spokane7
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August 4, 2009 in City
Some businesses say ‘clunker’ program will hurt
Price of scrap, supply of affordable used vehicles cited
Forklift driver J.T. Thrall moves a “clunker”, a car traded in under the federal program known as “Cash for Clunkers,” Tuesday, Aug. 4, 2009, at Spaulding Auto Parts in Spokane Valley.
(Full-size photo)
The federal government’s “cash for clunkers” program could end up hurting some local small businesses by driving down the price of scrap and parts and making it harder for low-income people to find an affordable used car, several business owners said Tuesday.
The idea of giving between $3,500 and $4,500 off the purchase price of a new vehicle has been a boon for Detroit’s automakers. But many of the so-called clunkers — which must have their engines destroyed as part of the transaction — are nicer vehicles than those driven by Steve Spaulding’s employees at Bill’s Auto Parts, Spaulding said. “This is a bad program,” he said. “It’s going to hurt so many people. It’s going to kill the scrap market … and the guy who wants to buy a $4,500 vehicle, because they are going to be gone.”
Jennifer Johnson, owner of Jennifer’s Auto Sales & Service at 15020 E. Sprague Ave., said her used-car sales died the first three days the program became available.
“It’s going to put a big hole in the industry in a lot of ways,” she said. “I don’t know where we are going to get the $3,000 and $4,000 cars that parents want to buy for kids when they go back to school. People will be paying a lot more for used vehicles or they will be taking the bus.”
The intent of the program is to boost consumers’ willingness to purchase more fuel-efficient vehicles. But the program may have the effect of eliminating three or four other transactions that keep local businesses open, said Spaulding, whose company is located at 4203 E. Weile Ave.
When someone buys a new car or truck, he or she typically trades in an older vehicle. Dealers then sell that used car or send it to auction, where it’s purchased and sold by a used-car lot. When the next person buys that trade-in, they typically trade in another car of lesser value, thus making an ongoing market for ever-cheaper cars.
But the federal program requires that the “clunker’s” engine be destroyed, leaving a hole in the used-car market that can’t be replaced, Spaulding said.
“The only thing you helped was the guy on commission at the dealership,” Spaulding said. “I think it’s going to hurt the small dealerships. And they’ve had a really bad year.”
Johnson said the program serves to give people enough money to convince them to go into debt for five or six years.
“I thought the whole point was to get people out of credit problems,” she said. “We wave a big carrot in front of their nose and people want something new, but can they really afford it?”
She also believes the program was designed to get rid of unwanted junkers, “but unfortunately, we are seeing some beautiful trade-ins destroyed,” she said. “It’s just a huge waste of inventory that could be re-used and re-sold.”
Russ Spaulding, who owns the 50-acre Spaulding Auto Parts in Spokane Valley, said his business has already purchased about 50 of the local trade-ins from cash-for-clunkers sales. He expects that number to reach about 300 within the next two months.
While the government originally called for the entire car to be destroyed, it changed course to allow parts to be sold. As a result, anyone trying to fix an older car during the foreseeable future should expect to find the cheapest parts in decades, Russ Spaulding said.
“We are going to receive these vehicles sooner or later, but we are now getting them sooner. And they are not something you would find beaten up on the side of the street. We are getting a lot of nice vehicles right now,” said Spaulding, who is Steve Spaulding’s brother.
Cheaper parts will help the owners of older cars eke out a few more thousand miles before the grim wrecker comes calling, Steve Spaulding said — especially important if used-car prices climb, as expected.
“When things are good, people buy third or fourth cars,” he said. “When times are bad, they keep things running.”
Doney’s sentence upheld 
Jaspear on August 05 at 9:33 a.m.
The picture at the top of this story says it all. That the word “clunker” is in quotes is wholly appropriate. And don’t feed me that “it’s good for the environment line” yet again. I’m sick of it and so are millions of others.
As for this being “a boon to Detroit”, four of the top five cars sold under this program are made by Toyota and Honda, so when this government distorted “boom” in sales is over and the inevitable bust follows, at least Detroit won’t be hurt as bad. Nice going Pelosi, Reid et al.
johnclarke on August 05 at 9:58 a.m.
Omg, this program will hurt the scrap industry? I swear, if someone were paying for dog poop, then there would be complaints that it hurts the yard cleanup industry. The bigger picture is the car industry is at least moving some vehicles, salesmen are making commissions and families are getting fed. This program, while far from perfect - is popular for a reason. If anyone thinks they will not be able to find a used car, maybe take a drive past some car lots. They are still full of cars for sale.
Megan_B on August 05 at 11:07 a.m.
There is one major restriction on this program, and that is that the car one turns in has to be over 15 years old. So that leaves used car lots plenty of cars from 15-years ago and on. Most college students and high school graduates don’t want to buy anything made before 1994 anyway. Also, this is a way to ensure that used car lots are selling more top-quality cars. As someone who has been cheated by a used car lot (twice!) and roped into buying a no-warrany in-house financing car for over 3k only to have it die a month later, I finally gave in and bought a new car after the second used car keeled over. Hopefully this new program will allow the competition between new cars and used cars to up what used car lots have to offer.