Tulsa Salvage Operator Questions 'Cash For Clunkers' Program

Wednesday, July 29th 2009, 5:59 pm
By: News On 6

By Emory Bryan, The News On 6

TULSA, OK -- The government's Cash for Clunkers program is helping dealers sell new cars, but it might cut down on the supply of used cars and used car parts.

Michael Hibbs runs Square Deal Auto Salvage in Tulsa and he thinks it's a shame that all the Cash for Clunkers cars will be crushed.

"The way the law reads, we have to crush them.  So, we'll bring them in, drain them and get ready to crush them," said Michael Hibbs with Square Deal Auto Salvage.

Hibbs makes a living selling parts that are sometimes hard to find.  He figures crushing 250,000 drivable cars will make good parts even harder to find.

"They'll still be plenty of cars for inventory, but they'll be harder to find parts, prices will skyrocket on those," said Michael Hibbs with Square Deal Auto Salvage.

Meanwhile, new car dealers are promoting the program and making sales.

"It's a way for people to come in with a car that's worth maybe $1,000 or $1,500 and turn around and see $4,500 for that vehicle," said Keystone Chevrolet's Roy Jenkins.

Keystone Chevrolet has sold a dozen new cars under the program and more to people who came in, but didn't qualify.

While the program is clearly increasing the sales of new cars, it's too early to tell how it will impact used car sales or salvage yards.  At least on the new car side, it appears to be working the way the government wanted it to.

While some of the clunkers are clearly junkers, others could have some life left in them, but not for long.

"The dealerships have to go in and destroy, put stuff in the engine, in the transmission, in the rear end to destroy them and make sure they can never be used again," said Keystone Chevrolet's Roy Jenkins.

By definition, the clunkers have to be drivable, and for salvage yards, that's a car with value.  And, there's another concern that since the program subsidizes the sale of new cars it will impact used car dealers, too.