Why so many cars ending up like this

People would be crazy not to snap something like that up other than fixing up their rusty piece of crap. Maybe use their rusty piece of crap to fix that one.
Now to answer the question, it can be overwhelming to really add up the costs that a body shop would charge to paint the car, alone with what a shop would charge to do all of the mechanicals, interior, etc.
If you can't do most of the rebuild yourself, and you don't have a place and time to do it all, you're dead in the water.
It's easy to rip a car apart, but not easy to follow through with a total rebuild especially if you don't have the money in place.
I bet he ran out of money, or the new car changed things.
As said before, it's hard to drive an older car when the new ones are so much easier to live with, all you have to do is make the payments , maintain it, insure it, and put gas in it.
That's a hard act to follow!