There are fundamentally two types of auto recyclers, with some overlap existing. A business that looks at an end of life vehicle (ELV) as a collection of parts that can be reused, with some material, mostly metals, that can be recovered.
The other is one that looks at an ELV as just a collection of metals, and without the capacity, knowledge, or ability to sell vehicle parts.
Parts Connection and its members operate in the first category, as dismantlers and recyclers of automotive parts for resale. They don’t exclusively operate as scrap buyers, processors, and shredders.
Like a lot of industries there is an unlicensed, unregulated, somewhat unknowledgeable sector that operate within the auto recycling field without regard for regulation, health and safety, vehicle theft, or the environment.
For Parts Connection member dismantlers, they work within systems that can generate revenue from parts and materials to purchase the ELV.
Transportation, storage, preparation, like de-pollution, de-registration, so those parts and materials can be dismantled, tested, checked, warehoused, sold, and shipped profitably, while also investing in people, training, equipment, reporting, overheads and other variety of compliance costs.
You can't talk about the state of this industry without looking at the impact of COVID 19. Mostly Parts Connection businesses remained open during shutdowns, as they were deemed essential in their role as part of the automotive repair supply chain. Many pivoted to online and contactless pickup, with the restrictions accelerating trends towards more online sales and marketing, and an understanding that a clean, professional presentation is mandatory.
These issues and trends have had a positive impact on the auto recycling and dismantling industry. Supply chain disruptions and delays for new and aftermarket parts have meant that a lot of vehicle owners want to hold on to their vehicles longer. Sustained scrap prices including big increases in the platinum metals within catalytic converters have also contributed.
Local supply chains became important during COVID as the closer suppliers and buyers are to one another the less likely that borders, distance, and cost play a role in selecting a part. Recycled auto parts from local vehicles are always locally available. More and more workshops, repairers, insurers, consumers, and even dealers turned to local auto dismantlers and recyclers as they were sometimes the only suppliers of parts that could complete the supply chain.
High and sustained scrap prices, both in the ferrous, non-ferrous, and platinum group metals generally reward both the dismantler and the scrap processor. High prices aren't always a good thing for the entire scrap supply chain, but relatively consistent prices are and given the global stops, starts, and uncertainty, metal price fluctuations have not been as dramatic as they could have been.
The dramatic rise in the platinum group metals within catalytic converters is another story. These huge gains have brought unprecedented catalytic converter theft both overseas and locally.
Some vehicles are showing up at Parts Connection dismantlers and recyclers without the catalytic converter in place, and this alters the economics of successfully processing that vehicle.
There is always a crackdown on illegal activity and increasingly stringent requirements on scrap buyers to understand who they are buying from, where that catalytic converter may have come from, and not aid and abet the underground economy.
Auto dismantling and recycling has been around as long as vehicles have been on our roads. The industry is built on hard work and a love of vehicles. Parts Connection members expect to be around for as long as it takes with responsible methods and processes that meet any requirements.
December 2022
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