Auto auction houses also are getting into the act. Manheim's Total Resource Auctions, for instance, is planning a special clunker sale next week at its Elkridge lot just for salvage businesses. Bill Tiedemann, the firm's vice president and general manager, says he already has 1,000 clunkers to move at just two of his 60 auction sites around the country.
But some scrapyard operators say they won't be able to make as much money from clunkers as they could from other wrecks they normally get, mainly because of the ruined motors. Recycled engines are valuable, as are parts from them - worth perhaps 70 percent of all the money that can be earned from salvaging a car or truck.
"The engine is generally a big part of what we try to acquire to resell," explains Joe Duff, owner of Crazy Ray's.
The auctions also bother junkyard operators, who complain that having to bid for dealers' clunkers will only squeeze what they can earn from salvaging parts. The law says dealers must pay customers the estimated salvage value of their trade-ins, and dealers get to keep $50 for processing the car. The typical vehicle is worth only about $200 when recycled for its steel, junkyard operators say. So if a vehicle sells for more than that at auction, who's pocketing the difference, they ask.
"There's a whole lot of confusion out there," says Crazy Ray's Duff.
"It's a free market," responds Rae Tyson, spokesman for the National Highway Traffic Safety Administration, which runs "cash for clunkers." "The dealer in the course of making a sale is negotiating a salvage value of the [customer's old] car. It's up to the dealer to recoup as much of that as possible."
Bill Miller, owner of Redmonds Auto Parts in Pasadena, says he's buying clunkers, though it leaves him with a bad taste.
Besides having to forgo reselling the vehicles or their engines, Miller says he is unable to guarantee to buyers that the automatic transmissions from clunkers work. His people can't start the engines as they normally do to test the transmissions, he says, and the frozen motor even complicates removing the equipment.
Plus, Miller complains, the government's requirement that all "clunkers" be crushed and shredded within six months means he can't keep the hulks around as long as he sometimes does in case someone wants a hard-to-find part.
"Don't take it out on our industry," he says. "We're bottom feeders."
