Cash for Clunkers Dealers Must Destroy Engines to Prevent Fraud

One problem with the Cash for Clunkers program is it takes cheap cars off the street for poor folks.  The program essentially makes every car, no matter the condition, worth $4500.00.  By doing so those of modest means cannot find an automobile for a better price.  Now  with the directive to chemically destroy the vehicles,  the reasonably priced used car market is destroyed as well.  In addition, this program makes engine car parts scarce because the engines are chemically destroyed.

This program is just another example of a poorly thought out program that does not help the poor.

July 24 (Bloomberg) — Dealers in the U.S. “cash-for- clunkers” program are being forced to disable trade-in vehicles with an engine-destroying chemical under new rules to prevent those who take the government subsidies from reselling the cars.

Dealers must replace the oil in the “clunker” with two quarts of sodium silicate solution and run the engine for up to seven minutes, permanently disabling it, according to rules released today by the National Highway Traffic Safety Administration in Washington.

“Substantial opportunity exists for fraudulent diversion of the trade-in vehicle, largely because its still-functioning engine makes it attractive to return the vehicle to the road rather than relegate it to the scrap yard,” the NHTSA said.

The government is trying to help jump-start slumping auto sales through the program, giving consumers new-vehicle credits of as much as $4,500 for turning in older cars. Sales of cars and light trucks in 2008 totaled 13.2 million, after averaging more than 16 million a year during this decade. Federal inspectors will review dealer records and vehicles for violators of the rules, who would face a $15,000 fine per infraction.

via Cash-for-Clunkers Dealers Must Kill Engines to Prevent Fraud – Bloomberg.com.

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