Clunkers were coming in by the dozens to new car lots during the Cash for Clunkers program last year. Drivers who traded in a gas guzzler got either $3,500 or $4,500 off the cost of a new car. But consumers may have been eligible for a few hundred dollars more.
According to the rules of the clunker program, dealers had to determine the scrap value of the clunker being traded in. Dealers were allowed to keep $50 of that but any extra had to be negotiated between the consumer and the dealer.
According to the Houston Auto Dealers Association, most local dealerships set the scrap value for all clunker cars at $50. That's how Monument Chevrolet handled scrap values
"We found and I think pretty uniformly found around the country was that these cars didn't have any value," said Monument Chevrolet owner Carroll Smith. "Maybe there was one that you could have gotten $200 for some reason, at some place, but we didn't find that."
Smith he says a flood of scrap cars drove prices down and $50 was about all the dealership could get for a clunker trade in.
"We did not get any scrap money," Smith explained. "We found someone to take the car for the car. There was no money."
But not every dealership set a standard scrap price. At Gillman Honda the scrap value was determined by calling a salvage yard. Some cases the scrap value was $200 or more. Gillman then negotiated with consumers over how much of that scrap value the buyer would receive.
Owner Ramsay Gillman explained, "If the consumer did not get the check back, he was getting the benefit of that being part of the deal."
We spoke with one of the salvage yards that bought the clunker cars. Officials there said scrap value is primarily determined by weight and demand does play a role. He added some dealerships were selling all clunker cars for $50.
In Oregon, two dealerships actually had to give money to consumers after the attorney general there found the dealerships actually kept the scrap value instead of sharing it with consumers. In Texas the Department of Motor Vehicles is the place to file a complaint if you think your scrap value was kept by the dealership. Dealerships we spoke with said they did not keep any scrap money. They said that $50 was the going rate, but others did provide a more detailed scrap estimate.
