The Red team was complaining that the Blue team was stealing their steel, but when Jesse was showing the Blue team around their half of the garage, he told them that the junkyard and the steelrack where for both to use, they didn't know that the Red team bought the steel on the rack.
To ensure no more steel was stolen, the Red team painted their replacement steel red, so there was no denying who owned it. The idea was Shep's, a take on his kindergarden class who marked their stuff so that other kids didn't take it.
After the battle was over and the scrapping of the loser (I'm not giving away who won), Jesse awarded toolboxes to the winners, AND to the losers who sucked it in and stayed for the crowning of the winners. I bet those who left are feeling really stupid right now; they got nothing!
The idea of the turning cars into Rock 'em Sock 'em toy is first shown in episode 'Under the Hood', where the producers originally wanted to feature this project in season finale.
This build went double or nothing, having two teams of Monster Garage veterans making two monsters that would go head to head in combat. It was such a big event, they had to air it as a two-part episode.
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