Why 2023 is Crucial for Auto Recycling?
| Read Time: 5 minutes
The Auto Recycling Domain is going through a paradigm shift, where EU Directive and other regulations are enforcing dismantlers, car parts sellers, and yard management services to be aligned with the circular economy and sustainability practices. Moreover, civilians are also making efforts to be more nature-friendly and reduce pollution.
And this cultural change in the world population has led to changes in practices followed by various businesses. Auto Recycling is an important one, considering Automotive Industry is the 3rd largest industry contributing to pollution. There is research being done to know how most of the parts and materials from used cars can be recovered, reused, and recycled. Now, not just reusable car parts but many other materials, rare metals, and fluids are being explored as components for recycling, in order to become a part of a circular economy. Due to which, there are several new auto recyclers are on the market, and with the urgency of recycling parts, the competition is also increasing.
In recent times, the market trends signal major acquisitions taking place across Europe, namely France, Sweden, and the UK, where Big Auto Recycling companies are acquiring smaller ATFs i.e. Authorized Treatment Facilities, to form a bigger unit of dismantlers and used part sellers. This will enable them to have joint inventories of used parts, as the demand for reusable and refurbished auto parts is gradually increasing. It allows cost savings for customers in damage and service repairs, and in selling used car parts to a big network of customers.
Points to be Considered by Auto Recycling Businesses:
Incurring Exorbitant Energy Bills & Compliance Costs
Auto recycling companies are incurring high energy bills. The adaption of new methods and technologies is leading to an increase in the costs of energy consumption. Moreover, regulations on automotive dismantling have resulted in the extraction of more parts and components from an end-of-life vehicle. Here, it is the cost of compliance that needs to be considered and understood.
These costs are borne by one or various stakeholders in the auto recycling life cycle. These costs vary for each stakeholder in the lifecycle. And in the cycle, dismantlers and disassemblers, and salvage yard owners suffer from low profitability. Thus, it is critical to understand the relative benefit of the policies enforced.
And it is important to ensure that policies do not compromise the economic viability of Auto Recycling as a business. Knowing the key cost drivers and their effects on the cost of compliance will help in quantifying the impact of different policies.
Today, software systems are enabling dismantlers to follow these policies and make vehicle dismantling economically viable. Know how to increase your profitability while complying with EU Directive and other regulations with our ELV experts onboard.
The Need for Skilled Resources
With the increasing inflation rate globally, employee salary expectations are growing. Rising fuel prices are affecting logistics and supply chains. Moreover, skilled resources are required to run sophisticated systems and IT infrastructure or practice new methods of recycling and automotive dismantling, running, and maintaining the latest equipment. The impact of these factors has resulted in an overall increase in expenditure and overheads.
The Need to Upgrade
Small dismantlers, startups, or companies using less sophisticated methods will encounter more problems this year, as the expected process for a vehicle handover for disassembly will be higher than last year. There is an urgent need for all these companies to upgrade to the latest in technology and methodologies to meet the demands in the market and keep their efficiency at par with the competitors.
Many salvage yards are now looking at adapting new technology and innovation for extracting reusable car parts, and soon they will be able to combat these challenges. However, 2023 will be critical considering the EU regulations tightening its grip.
Learn why to encourage dismantling over scrapping here: https://www.dismanto.com/why-dismantling-of-elv-should-be-encouraged-over-scrapping/
Influence of the Manufacturers on the Industry
The decisions taken by OEMs have a huge impact on the Automotive Aftermarket. And their influence on the Auto Recycling Industry can lead to an increase in frequent electronic blocking of the possibility of recovering parts. This is due to compliances and other regulations. Therefore, making recovering challenging for salvage yards, dismantlers, and auto parts sellers.
Logistics is Becoming Expensive
Many countries have regulations and obligations when it comes to delivering auto parts, and these regulations lead to costs incurred by auto parts sellers and sometimes automotive dismantlers. As mentioned above, rising fuel and energy shortages are causing more problems. These factors have led to high expenses on auto parts returns, sometimes also due to multiple orders placed for one part. Here, intelligence in choosing the right part for replacement is crucial for Auto Recyclers, used auto part sellers, and dismantlers.
Know-How & Technology Adaption
Many dismantlers and salvage yards are still using age-old systems i.e. software and hardware, and many have moved to sophisticated technologies and methods. However, those who have not moved with time will struggle this year to compete with other salvage yards, which can optimize their operations, increase efficiency and save costs by using technology.
Moreover, staying up to date in terms of knowledge and expertise is going to be very crucial, and finding such human resources is a challenge. It will be good to know which parts to disassemble. And this requires experience, and good knowledge of extraction.
Brands with Rare Make & Models
There are many old brands in the automotive industry with lesser demand, and there are not many customers for those make, model type, or simply put there is no demand for those vehicle parts. It is important to know which brands to cover and invest dismantling efforts, and then decide which ones to scrap and get more value. Such decisions can be very crucial to the profitability of a salvage yard and also how its future unfolds.
So, what can be done?
As industry experts enabling Automotive Aftermarket with software solutions and products. We think it is time for small or big dismantlers to move to sophisticated systems that helps them in dealing better with the challenges this year, and also in the coming years. It can help them stay ahead of the curve amongst competitors.
Our ELV experts have studies and analyzed the process of dismantling a used car or ELV, and its nuances to build a platform like no other, a platform that helps a dismantler manage end to end dismantling process and ensure profitability through intelligence on parts extraction and yard management. Visit our website and explore other features and how Dismanto can add value to your salvage yard business.
Schedule a demo of the solution today to learn more or consult with our ELV experts.
Follow us on LinkedIn and Facebook for regular updates on the Auto Recycling Industry.
Information & Research Links:
Legislative Issues Facing The Automotive Recycling Industry