From the office-cum-control room situated in the center of Capital Scrap Metals & Auto Parts in Santa Fe, owner Rob Witt moves a joystick to pan across his warren of salvage yards, car lots, crushers and recycling bins.
“There,” he says, zooming in on a cluster of approximately 150 neatly parked, relatively new cars in a back lot. Over the course of the month-long federal Cash for Clunkers incentive program, Capital Scrap took in 400 to 500 of New Mexico’s used cars, most of them later models, but “a lot have already been destroyed,” Witt says.
Upon closer inspection, the lot yields treasures: a red 1998 Jaguar XJS, late-model BMWs and Mercedes Benzes, now-passé but still perfectly functional Suburbans, 4Runners and Ford Explorers.
Cash for Clunkers, billed as a green-cars initiative, began in July. Through the program, people traded in their gas-guzzlers for a $3,500 to $4,500 government grant toward the purchase of a new, more efficient vehicle. Upon the program’s completion in August, President Obama declared it “successful beyond anybody’s imagination.” The real story isn’t nearly as rosy.
“The Cash for Clunkers program had a weird effect on the [automobile] market,” Jessica Caldwell, a senior industry analyst with edmunds.com, an informational website for all things automotive, says. The auto market was already showing signs of recovery this summer, she says, but “then you threw this program in the middle, and it caused things to go haywire.” Inventory shortages resulted in planning problems for automakers and higher prices for consumers, Caldwell says—even the ones who weren’t participating in the Clunkers program.
“The dealers were really getting the kickback,” Caldwell says.
In October, edmunds.com reported the Cash for Clunkers program cost taxpayers $24,000 per vehicle sold. The Obama administration got “a bit defensive” about the analysis, Caldwell says, because it’s “the beginning indicator of how the policy’s going to work.”
The heated criticism of edmunds.com’s findings from the National Automobile Dealers Association was understandable, Caldwell notes, because the ability to raise prices and get rid of inventory made them the most direct beneficiaries of Cash for Clunkers. “They would love to have this program every month, if the government’s going to pay the incentive,” she says.
But don’t the carbon savings make up for the cost?
Only partly, according to Therese Langer, director of the Transportation Program at the American Council for an Energy-Efficient Economy.
“There is no question this is an expensive way to reduce carbon,” Langer says. (One study, by University of California, Davis professor of economics Chris Knittel found the cost of reducing carbon emissions through Cash for Clunkers to be 10 times that of doing it through legislative initiatives such as the Waxman-Markey carbon tax bill.)
While the Cash for Clunkers program may have begun with the greenest intentions, Langer says it didn’t end up that way.
“This was basically an economic recovery bill and, in particular, it was a bailout for the [car] manufacturers,” Langer says. “There is no way that when this actually came to a vote it was being evaluated on cost per ton of CO2.” Still, that an environmentally motivated program effectively drove consumer choice means manufacturers might be encouraged to build green in the future, she says.
But at Capital Scrap, there’s a whole other reality on the ground. The program mandated that the engines of the “clunkers” be immediately destroyed and the car itself crushed within 180 days. Approximately 80 percent of carbon emissions occur during a car’s use cycle, but it still seems like a waste to junk running cars, especially when there are people who might need them.
“It’s definitely going to affect those people,” Caldwell says, “because now those vehicles are out of circulation.”
In New Mexico, where more than 3,000 cars were traded in, Witt says it’s tough to find a good used car these days; most are in places like Capital Scrap, being scoured for ignition switches and seats before they’re crushed and sent to Texas.
In the corner of one screen, Witt watches as a man named Edwin opens one, then the other door of the Jaguar and lets out a low whistle of appreciation.
“They got rid of real good cars,” Witt says, gazing at the neat rows of crippled clunkers. “There’s a lot of people who would like to have a car like that.”