JULY 2009

Cash for Clunkers bill creates more problems than it solves

The “Cash for Clunkers” bill, passed by Senate on June 18, has a catchy name and to many, it sounds like a good idea for helping Detroit and stimulating the economy. Unfortunately, when you take a closer look, it quickly becomes apparent that passage of this bill will create more problems than it solves. For that reason, the United Recyclers Group (URG) opposes the Cash for Clunkers bill because it contains clauses that will remove auto parts and components such as engines and drive train parts from the inventories used by millions of middle class Americans to repair their cars.

“The Cash for Clunkers bill is supposed to help Detroit sell more cars,” said Michelle Alexander, executive director of URG, but she added that “any gains made by the Big Three as a result of this bill will come at the expense of many regular people who are just trying to keep their cars running and cope with the current weak economy.” She continued, “the auto recycling industry will feel the pain almost immediately, because our supply of auto parts will decline, and that means prices will climb and the cost of auto repairs nationwide will be driven upwards. Surely that isn’t what congress wants to happen.”

“The inspiration for Cash for Clunkers is coming from overseas,” said John Fischl, president of Riteway Auto Parts, and a URG manager. “Driving a car is more of a privilege in Europe than it is in America, and the Europeans take measures to keep any car more than a few years old off the road. In Europe cars are completely recycled after a few years, whereas here in America we have a different process, reusing many parts from a car being scrapped, and recycling what remains.”

Fischl continued, “By stipulating that engines and drive trains cannot be resold, Cash for Clunkers will negatively impact the supply chain for these part categories. As the inventory of these targeted used parts available for repairs declines and then disappears, many Americans who depend on cost-effective repairs and cannot afford a new car may be forced to go without their transportation!”

“The average Joe is going to be hurt by the Cash for Clunkers bill because it will remove the average cars they drive from the road” said Bill Abold Jr., owner of A&P Auto Parts. He runs an auto parts business and an auto salvage operation, and sells both new and used parts, so he sees both sides of the issues. He said that “A lot of people simply can’t afford to repair their cars using new parts. They certainly can’t afford to buy a new car right now, even with a federal voucher for a few thousand dollars. So if these millions of middle class Americans can’t afford to fix their cars or buy a new one, where does that leave them? If it passes I predict that this bill will have many unintended negative consequences.”

Desperate to keep afloat, the Big Three auto manufacturers and labor unions are pushing hard to get a version of this bill passed. “The environmental costs of new parts manufacturing are far higher than the use of green parts, which are reused,” said Richard Filley, executive director of the GreenCARR Foundation, a not-for-profit organization promoting the use of green auto parts, green automobile usage and green auto industry practices such as recycling. Filley said that, Cash For Clunkers runs roughshod over the environment by removing earth-friendly green parts from the supply chain and replacing them with new parts and new cars made at a high cost to the environment, in terms of the energy used, increased CO2 carbon emissions, natural resources consumed and more. Cash for Clunkers is clever marketing but bad for consumers.”