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If your car can't pass smog, you can't get it plated, and we have the strictest smog laws in the nation. If a car can't pass smog, the owner has a choice...rebuild the engine to its original standards and remove any non-CARB approved equipment from the engine, sell it out of state, turn it into a trailer queen, or crush it. There is no cost limit on this, and there is no break for poor owners. A lot of nice old cars have met the scrap yard this way. The law currently only applies to 1975 or newer vehicles though, so "classic" hardly applies IMHO.
California also has a vehicle buyback that has been making auto collectors scream in rage for years. Anyone with an old polluting car can turn it in to the BAR and get a check for $1000, no matter the vehicles age or condition. The only requirement is that it must be currently registered. MANY poorer people have gone this route and had older cars crushed for the money, which has taken many collectible vehicles off the road. There was a big flap a number of months ago because someone turned in a beautiful old 1960's Mercedes, and it was crushed per program rules. Collectors freaked and offers poured in from people wanting to buy it, but the state had it crushed anyway.
There are a lot of urban legends and half-truths floating around about these programs, and your friend has probably heard them. Yes, there are state run programs in California that destroy classic cars. No, nobody is ever forced to use them.
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