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/

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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

The shifting paradigm of automotive recycling

Automotive Recycling Market [2023]

The post Why 2023 is Crucial for Auto Recycling? first appeared on .

Today, technology is instrumental in radically changing the way various businesses operate. On the other hand, economies are also changing dramatically, with more sustainability-centric policies and digitization, resulting in the automation of processes and labor. Similarly, the Automotive domain is also moving towards a more sustainable approach. Primarily, because the Automotive industry is one of the largest sources of pollution in the environment. Also, research predicts that Automotive Industry will be vulnerable in 2023, due to the energy crisis and slow global demand, and disruptions in the global supply chain. These aspects will also have a direct impact on the Auto Recycling industry, we will explore the same in the context of End-of-Life Vehicle Management.

Presently, trends in the automotive industry for new vehicles are witnessing the adoption of autonomous driving, diverse mobility, connectivity, and sustainable solutions. Whereas, the second-hand vehicle market is also seeing a paradigm shift. Where Auto Recyclers from European and North American Countries are now focusing on and seeking advanced technology solutions to contribute to the Circular Economy Model through Recycling. Reusing. Reselling.

Let’s Explore the Key Challenges of End-of-Life Vehicle Management

Knowledge & Awareness Amongst Recyclers

The Auto Recycling industry usually has types of auto recyclers, and there is much that overlaps, considering the process of dismantling is extensive. Some auto recyclers see ELVs as a source of Second Hand Parts that can be reused or recovered. And others who use ELVs as a source of raw materials like metals and circular plastics. The latter, generally lack the know-how for recovering parts or plan to sell car parts. Also, the industry’s reputation is affected by issues with licensing and enforcement of laws and suffering from the brunt of the underground economy for used parts.

Many of these auto recycling facilities or Authorized Treatment Facilities are old businesses, therefore very conventional. Also, most decisions are based on manual operations, leading to inaccuracy in part valuation and car valuation, and resulting in disappointment at a profit level and also customer satisfaction level. At times, this is also due to less awareness of the market. And sometimes, the employees at these facilities lack the awareness to use technology to better their processes. Thereby, affecting the circular income flow.

Demand & Supply of ELVs Affecting Profit

For the Auto Recycling Industry, ELVs are a main source of raw materials and recycled auto parts and have a significant impact on the overall size of the Auto Recycling Market. The supply of ELVs is dependent on many factors, but not all attrition vehicles go for disassembly. Most ELVs are scrapped and directly sent to the Metal Recycling Industry or Other Auto Recyclers. Then, there are exports of ELVs and acquiring at auctions by Auto Recyclers.

It is known what ELVs acquired by Auto Recyclers are indirectly linked to the Auto Recycling Industry’s profit and available yard space. These ATFs or Recycling Centers get rid of older ELVs in order to free up space and acquire newer ELVs and manage space in their yards. This results in selling vehicles at a cheap cost and not extracting the true value of the used car or its used car parts which may have been profitable if managed better. Here, the demand for ELVs, driven by the number of Auto Recyclers is a major determinant for the ELV cost of purchase which in turn affects the industry profit.

More Scrapping than Recovery

Recovering a part from a used cars is rather more expensive and energy-intensive than scrapping the car. Usually, scrapping was preferred by many dismantlers up until now over recovering and reusing parts. So, it is safe to say that scrapping a car looked always easier and more profitable for a dismantler or an auto recycler. This often happens in case the facility has reached its maximum capacity for keeping ELVs.

However, with the recovery of used parts, reusing and recycling can be encouraged i.e., used parts selling, which will eventually take up less space in the yard. Also, over the years, we have seen a considerable rise in used part selling. But the challenge with recovery is not having the knowledge of which parts to extract from a car. Also, there is no structured way to decide which part to extract maybe partially, or consider the depreciating value of the parts in the car at the yard.

Decision Making based on Manual Parameters

Today, Auto Recyclers estimate vehicle parts value based on their understanding and experience with End-of-Life Vehicles and recycled auto parts. But that does not necessarily give them accurate pricing and value that can be fetched from a used car part or an entire used car. Because these decisions are usually on-the-go and also sometimes with the idea of freeing space in the yard, and that results in low-margin selling. This also becomes another reason for the problem with profitability in this industry. Because there is no standardized way to value your parts and end-of-life vehicle management.

Moreover, there is less insight into what parts can be recovered, without having to manually dismantle the car, which is a time and effort-taking process. “Objective Decision making based on analytics and insights can be the game changer for this industry,” says the Co-Founder of Dismanto, dismantling cars smartly.

“Objective Decision Making based on analytics and insights can be a game changer for the Valuation of Used Car Parts and Used Cars. It will enable ATFs to make their businesses profitable which is a challenge because most of their decision-making is based on manual parameters at the moment.”

Co-Founder – Indrajeet Mitra, Dismanto – A Gateway Group Co.

Yard Space Shortage

From our conversations and learnings from various dismantlers, we have developed this learning that many facilities suffer from premises management, and that stocking of ELVs and congestion management can be challenging.

Storage or (ELV) End-of-Life Vehicle Management requires space, and a separate warehouse is required for the storage of recovered vehicle parts. This results in dismantlers and disassemblers from scrapyards carrying large inventories for both ELVs and parts. They have to constantly adapt their facility size to maintain profitability, which means expanding their facilities but also shrinking which is highly dependent on the uncertain demand patterns of the ELV supply. This affects the industry’s turnover and maintaining profit is hindered. The industry’s reputation is affected drastically because of issues with licensing and enforcement.

Find out with our ELV experts, how you can combat these challenges at your Authorized Treatment Facility and improve End-of-Life Vehicle Management.

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Energy Crisis & Climate Change – The Driving Forces of the Auto Recycling Market

In recent times, climate change and the energy crisis, have driven the Automotive Industry to take every step with sustainability in mind and choose a circular economy model. While we understand that the Automotive Industry is choosing to be more sustainable, Auto Recycling facilities are still struggling with the above-mentioned challenges. And some businesses are learning and using new-age methods and technologies to segregate material waste, treat residue and become more environmentally friendly. The concept of ‘Green Parts’ is picking up i.e. recovered used vehicle parts. Strategies to reduce CO2 emissions and landfills are being explored and discussed.

Europe, in particular, is going through some massive changes in policies and setting the bar for auto recycling worldwide, particularly France, the United Kingdom, Spain, and Italy. The End-of-Life Vehicles Directive was adopted by the European Commission in 1997 to tackle waste created by End-of-Life Vehicles (ELVs).

To take this Directive into account, many ATFs i.e., Authorized Treatment Facilities are investing in their processes and adhering to the EU guidelines for ELV i.e., End of Life Vehicle Processing. Here, reduced raw materials consumption, reduced energy consumption, reduction of CO2 emission, reduction of materials sent to landfill, creation of local and skilled jobs, and new manufacturing techniques are the driving factors of Auto Recycling.

Summing Up

The government and independent aftermarket are taking measures to combat climate change. And under the umbrella of the Automotive Industry, the idea of a circular economy is up to speed, and more businesses are now investing and preparing their strategies to be aligned with Auto Recycling.

Recycling auto parts and used cars is a flourishing avenue for Automotive Industry.

Stay tuned to learn more about Auto Recycling with the ELV experts from Team Dismanto.

Source Credit:

sciencedirect.com

openresearch-repository.anu.edu.au

researchgate.net

The post Brewing Challenges of End-of-Life Vehicle Management (ELV) first appeared on .