At the beginning, Jack is working on the old Polara. You can see the last part of the license plate showing a California plate - placing the show somewhere in California.
Kevin found the car he was playing with when they got the car.
The For Sale sign that Jack places in the back window indicates that the wagon is a 1963 Dodge when in fact, the wagon is a 1968 model, which (in the timing of season 3) would make this car only one model year old. When the series premiered, Arnold's owned a 1963 Chevy Impala, which (although mentioned in a previous season 3 episode) mysteriously disappeared from the series.