"Mummy, what does the owner do to a car when it gets too old and rusty to work?" The little girl asked.
"Well", said her mother, "they sell it to your father!"
If someone is gullible, they'll believe anything anyone says, and this father is obviously so gullible that he'll buy a car that is in really bad shape. 'Rusty' describes metal that has been in the rain for a long time and has lost its colour.