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Cash For Clunkers Program Boosts Auto Salvage Companies

Though the popular CARS program, known as "Cash for Clunkers" ended in August, business is just picking up for auto salvage yards across the United States. That's because many automobile dealerships that accepted "Clunkers" wanted to hold onto them until they received the government reimbursements, which they are only receiving now. One Illinois salvage company is dealing with the pros and cons of the program, which comes with strict requirements for recycling the remnants.

Dave Anderson represents the third generation of Andersons operating the I-55 Auto Salvage yard in Channahon, Illinois.

"Most of the yards that are in business today are truly auto recyclers. And we are probably the best thing going for the environment because we reclaim the fluids, we save on the cost of new parts to manufacture, and give people the opportunity to save money," he said.

Thanks to the Cash for Clunkers program, this could be the busiest time in I-55's half century of recycling automobile parts.

"We're guessing approximately between 400 to 500 cars from the different dealers that we deal with in the area," Anderson said.

That could easily double the number of vehicles on Anderson's lot.

More cars on the lot means more revenue. Anderson makes a profit by selling usable parts and recycling the metal and pieces that are left.

But a government requirement of the Cash for Clunkers program requires dealers to permanently disable the engines before the vehicles are sent for salvage. That eliminates the most lucrative part of an automobile.

"It has to go the shredder from us and [to] be crushed with the motor in it," Anderson explained, "And we'll document that, that it's been done within 180 days."

Without the engine, that leaves bits and pieces, such as windows, radios, and headlights, for salvaging. It's too soon to tell how much profit can be made on those parts.

Anderson says one benefit, from his perspective: he'll have more parts to sell that are in good condition, because most Cash for Clunker vehicles are intact.

But once he salvages the parts, there may be no market for them, because many of the cars that would need them are no longer on the road. Again, thanks to the Clunkers program.

"That is limiting the percentage of what's out there to sell parts to," Anderson noted, "I know that I've had some repair shops concerned about that."

Salvage yards across the United States are dealing with the short-term pros and cons of Cash for Clunkers. But many benefits, like cleaner air and less dependence on petroleum, are not yet realized.

The U.S. Transportation Department says it paid out $2.9 billion in rebates to consumers who traded in their clunkers. They bought about 700,000 more fuel-efficient vehicles. The program also created or saved about 42,000 jobs in the United States.

One of those jobs is at the I-55 Salvage Yard. Anderson says he is so busy, he is hiring at least one temporary worker to help process his newest Clunkers.