January 06, 2010

Gillibrand To Feds: Extend Deadline To Recycle Clunkers

Six Month Deadline Not Enough Time for Scrap Yards Inundated With “Cash for Clunker” Trade-Ins

Washington, DC – To give scrap yards the time they need to properly recycle vehicles that were traded in during this summer’s successful Car Allowance Rebate System (CARS) “Cash for Clunkers” program, U.S. Senator Kirsten Gillibrand urged the National Highway Traffic Safety Administration (NHTSA) to extend by an additional 90 days the original 6-month deadline to destroy traded-in vehicles. Scrap yards were inundated with trade-ins as a result of the popular “Cash for Clunkers” program and are now struggling to recycle cars and car parts in time to meet the 6-month deadline imposed on them. The majority of cars would need to be scrapped before May.

In a letter to Ronald Medford, Acting Deputy Administrator for NHTSA, Senator Gillibrand wrote, “The spirit of the CARS program was to help the environment while at the same time creating jobs and rejuvenating the automotive industry in this country.  These scrap yards simply need more time to process these old cars, so they can harvest a higher percentage of the salvageable parts.  This recycling process is environmentally friendly and good for the economy. While helping the part sales industry, it will also save car owners money by supplying them with used parts at a fraction of the cost of new parts.”

CARS was a program where old, inefficient vehicles could be traded in with a discount for a new, more efficient car as long as it met certain requirements. Initially, the program was to dedicate $1 billion for rebates, which could reach up to $4500 per vehicle. The program was so successful that it was extended by an additional $2 billion. This extension increased the number of cars in the program by approximately 200 percent.

One of the stipulations in the program is that cars turned in via CARS would need to be scrapped within 6 months of their trade-in date. Since the original program was tripled, scrap yards have been unable to process the influx of vehicles that were traded-in within the time frame originally set. In addition, used car parts dealers store the harvested used parts inside the car until the time of sale.  This caused a substantial storage shortage.

A 6-month extension would give scrap yards and used parts dealers the time they need to process these cars and more time to sell the parts.

Senator Gillibrand’s full letter is below: 


Ronald Medford
Acting Deputy Administrator
NHTSA Headquarters
1200 New Jersey Ave, SE
West Building
Washington, DC 2059

Dear Administrator Medford,

I am writing to you regarding the Car Allowance Rebate System (CARS) program, specifically the provision that mandates that recycled vehicles be destroyed within six months of their trade in date.  I have spoken to multiple scrap yard owners in my state and around the country that have expressed their concerns about this six month deadline.  To me, it is clear that this deadline creates an artificial capacity and man power shortage for scrap yards that can be easily remedied by a 90 day extension, increasing the total time that salvagers have to scrap these vehicles to 270 days.

These scrap yards have received many more vehicles via CARS then they had previously anticipated.  This is no fault of their own, as their estimates for the original $1 billion program were correct.  When CARS was subsequently extended and granted an additional $2 billion expansion, the influx of cars inundated scrap yards across the country and created a backlog of clunkers to scrap.  The salvageable parts of these cars amount to assets for these scrap yards.  Often times, parts salvaged from vehicles are stored in the vehicles themselves.  This short deadline of six months would effectively diminish the storage capacity of these scrap facilities, and would require them to fabricate additional storage space.  Storing parts in the vehicles they are harvested from is no longer feasible because of the dual forces of market saturation and a lack of storage space imposed by this six month deadline.  The CARS program dramatically increased the supply of used auto parts, as it heavily incentivized the scrapping of old, inefficient vehicles, while simultaneously reducing demand for parts, as these same cars were the types scraped.  The combination of a lack of storage space coupled with increased inventory and low demand is a costly and inefficient arrangement.

Many scrap yards have experienced such a drastic shortage of storage space and salvage capacity that they have discarded fully intact vehicles, scraping valuable assets in the form of used parts.  This practice is wasteful and unwise, as it cost not only the businesses participating in this program, but increases the prices of used auto parts for consumers, as they are less readily available. 

The spirit of the CARS program was to help the environment while at the same time rejuvenate the automotive industry in this country.  These scrap yards simply need more time to process these old cars, so they can harvest a higher percentage of the salvageable parts.  This recycling process is environmentally friendly and good for the economy as it will help the part sales industry and will save car owners money by supplying them with used parts at a fraction of the cost of new parts. 

I urge you to consider granting a 90 day extension to scrap yards participating in the CARS program as it is economically sound and environmentally friendly.  Thank you for your attention to this critical issue.