Where will the salvage market be in 10 years time? Don’t know is the honest answer, but allow me to predict that more cars will be removed from use, dismantled and broken; and make at least one recommendation that will benefit all motor salvage and auto recycling businesses.
Why will more vehicles be broken?
Well the continued efforts of manufacturers to reduce vehicle weight will continue, resulting in increased use of different and high strength metals that are more effective in protecting vehicle occupants, but more difficult to repair following an accident.
Manufacturers will continue to ignore the repairability of their vehicles and focus on how to make the vehicle easier to build.
As an example, laser welding is impossible to replicate in a repair situation, but is increasing in use on production lines. This increases the cost of repair and raises the potential that the vehicle will be written-off because repair is not possible.
The increase in the amount of electrical systems on vehicles seems to be gathering pace, so cars that are 5-7 years old in the future will be almost obsolete as new vehicles come on the market with ever better control systems, user interfaces and connectivity. Residual values will drop rapidly, when combined with increased repair cost and lack of demand for older vehicles will mean that more will end up as end of life vehicles.
This could lead to considerable change in the salvage market, less focus on vehicles being repaired will mean that more vehicles will need to be dismantled and recycled.
Meeting various recycling targets will become more difficult, especially as the amount of electrical components in vehicles increases, and more legislation will have to be considered as Authorised Treatment Facilities dispose of waste electrical equipment, .
This is where membership of a strong trade body or salvage association is so important, these organisations can advise and assist their members to prepare and change to meet the new challenges, they can also lobby at government level to ensure legislation is sensible and reasonable, that it does not disadvantage legitimate businesses operating within the law, and they can also work with local and national agencies to force non-compliant and illegal sites to clean up or close.
Support your salvage association, use events to network with other members, discuss the future and what this could mean to you, your business, your family and employees, and then work together to make your business viable for the future.
Salvage Wire
Helping Automotive recyclers become leaders in their industry
Showing posts with label motor salvage. Show all posts
Showing posts with label motor salvage. Show all posts
Tuesday, 5 July 2011
Monday, 20 June 2011
Premature End of Life Vehicles
By their definition Premature ELV’s are vehicles that have not survived the expected life span of 12-15 years that most vehicle manufacturers build into their vehicles.
The reasons for this can be many, however I suspect that most will be due to accident, fire, flood or other events that result in an insurance claim.
Insurance engineers completing vehicle inspections need to determine if the vehicle could be repaired economically; if repair is not viable, then vehicles need to be dealt with as salvage and the inspecting engineer must determine if the vehicle is safe to repair, or must it be removed from use?
One of the most important decisions that an engineer makes is deciding if the vehicle ‘could’ or ‘should’ be repaired; the Engineer needs to know the extent of damage, potential method of repair and availability of parts.
Knowledge of vehicle construction is very important here, especially as manufacturers try to save weight whilst developing stronger vehicle bodies, the greater use of high strength steel makes repair increasingly difficult and any motor salvage inspection needs to balance repair potential against passenger safety – in other words, can any professional engineer signing a vehicle write-off report confirm that the vehicle could be repaired to a standard that would maintain occupant safety in the event of another accident.
Developed over many years the Association of British Insurers (ABI) Code of Practice for Motor Salvage assists the decision making process when inspecting vehicles in the UK that are written-off.
The ABI code has four categories of salvage that are:
• Category A. Scrap vehicles, good only for the shredder and metal recycling
• Category B. Break only – bolt on parts can be re-used, but the vehicle structure is so badly damaged that this must be removed from use and destroyed.
• Category C. Repairable Salvage – repairs using normal methods of insurance repair (brand new parts, manufacturer labour) exceed the value of the vehicle, however cheaper labour, second hand parts, or ignoring ‘cosmetic’ damage means that the vehicle could be repaired in the salvage industry.
• Category D. Constructive Total Loss – where the repair cost of the vehicle when added to other costs, such as loss of use, or the value of the salvage, exceeds the value of the vehicle, then insurers can decide to treat the vehicle as a write-off and minimise their costs. As an example, a £10,000 vehicle with £8,000 worth of damage may return £3,000 salvage, so a settlement of £10,000 less £3,000 salvage return gives a final outlay of £7,000 against the claim. Less than the assessed repair cost of £8,000.
There are a number of factors that need to be reviewed when inspecting potential write-offs, including type of damage, repair required to maintain occupant protection, and availability of parts; a few examples are detailed below.
Flood Damage.
Factors to consider include type of water – fresh, salt or contaminated (sewage), height of water, and length of time in water.
Current trends towards increasingly complex electronics will mean that any salt water damage will render the vehicle unrepairable, and if a vehicle has been submerged to a significant depth – for example water high enough to contaminate air bags) then the vehicle should be removed from use.
Fire Damage.
Excessive heat removes the strength from High Strength Steel, so fire damage to structural areas of newer vehicles is serious, I would contend that, unless the damage is very localised, all fire damaged vehicles should not be repaired.
Parts Availability.
A vehicle severely structurally damaged where parts are not available should not be repaired, releasing one of these vehicles into the motor salvage market for repair could lead to a substandard repair being completed and the general public being put in danger as an unsafe vehicle is in use. Engineers need to know what parts are available from the vehicle manufacturers and any safeguards they put in place. For example, many manufacturers place controls on the supply of replacement bodyshells that could result in these not being available to the salvage industry, thus compromising a safe repair on motor salvage.
In summary, all motor engineers inspecting vehicles for insurance repair need to be fully aware of current vehicle design and construction, they need to know repair techniques for all types of vehicles, and also decide if a salvage vehicle can be safely repaired and placed back into use.
And we haven’t started on electric vehicles yet!
A copy of the ABI Code of Practice for Motor Salvage can be downloaded from http://www.abi.org.uk/Information/Codes_and_Guidance_Notes/General_Insurance_Codes_and_Guidance_Notes.aspx
The reasons for this can be many, however I suspect that most will be due to accident, fire, flood or other events that result in an insurance claim.
Insurance engineers completing vehicle inspections need to determine if the vehicle could be repaired economically; if repair is not viable, then vehicles need to be dealt with as salvage and the inspecting engineer must determine if the vehicle is safe to repair, or must it be removed from use?
One of the most important decisions that an engineer makes is deciding if the vehicle ‘could’ or ‘should’ be repaired; the Engineer needs to know the extent of damage, potential method of repair and availability of parts.
Knowledge of vehicle construction is very important here, especially as manufacturers try to save weight whilst developing stronger vehicle bodies, the greater use of high strength steel makes repair increasingly difficult and any motor salvage inspection needs to balance repair potential against passenger safety – in other words, can any professional engineer signing a vehicle write-off report confirm that the vehicle could be repaired to a standard that would maintain occupant safety in the event of another accident.
Developed over many years the Association of British Insurers (ABI) Code of Practice for Motor Salvage assists the decision making process when inspecting vehicles in the UK that are written-off.
The ABI code has four categories of salvage that are:
• Category A. Scrap vehicles, good only for the shredder and metal recycling
• Category B. Break only – bolt on parts can be re-used, but the vehicle structure is so badly damaged that this must be removed from use and destroyed.
• Category C. Repairable Salvage – repairs using normal methods of insurance repair (brand new parts, manufacturer labour) exceed the value of the vehicle, however cheaper labour, second hand parts, or ignoring ‘cosmetic’ damage means that the vehicle could be repaired in the salvage industry.
• Category D. Constructive Total Loss – where the repair cost of the vehicle when added to other costs, such as loss of use, or the value of the salvage, exceeds the value of the vehicle, then insurers can decide to treat the vehicle as a write-off and minimise their costs. As an example, a £10,000 vehicle with £8,000 worth of damage may return £3,000 salvage, so a settlement of £10,000 less £3,000 salvage return gives a final outlay of £7,000 against the claim. Less than the assessed repair cost of £8,000.
There are a number of factors that need to be reviewed when inspecting potential write-offs, including type of damage, repair required to maintain occupant protection, and availability of parts; a few examples are detailed below.
Flood Damage.
Factors to consider include type of water – fresh, salt or contaminated (sewage), height of water, and length of time in water.
Current trends towards increasingly complex electronics will mean that any salt water damage will render the vehicle unrepairable, and if a vehicle has been submerged to a significant depth – for example water high enough to contaminate air bags) then the vehicle should be removed from use.
Fire Damage.
Excessive heat removes the strength from High Strength Steel, so fire damage to structural areas of newer vehicles is serious, I would contend that, unless the damage is very localised, all fire damaged vehicles should not be repaired.
Parts Availability.
A vehicle severely structurally damaged where parts are not available should not be repaired, releasing one of these vehicles into the motor salvage market for repair could lead to a substandard repair being completed and the general public being put in danger as an unsafe vehicle is in use. Engineers need to know what parts are available from the vehicle manufacturers and any safeguards they put in place. For example, many manufacturers place controls on the supply of replacement bodyshells that could result in these not being available to the salvage industry, thus compromising a safe repair on motor salvage.
In summary, all motor engineers inspecting vehicles for insurance repair need to be fully aware of current vehicle design and construction, they need to know repair techniques for all types of vehicles, and also decide if a salvage vehicle can be safely repaired and placed back into use.
And we haven’t started on electric vehicles yet!
A copy of the ABI Code of Practice for Motor Salvage can be downloaded from http://www.abi.org.uk/Information/Codes_and_Guidance_Notes/General_Insurance_Codes_and_Guidance_Notes.aspx
Thursday, 12 May 2011
End of Life Vehicles
Utter the words End of Life Vehicle (ELV), and many will immediately picture a scrap yard full of old cars leaking oil and water, been involved in a heavy impact, or are simply a gutted shell. But this is only part of the story.
The End of Life Vehicle Directive – 2000/53/EC (to give it’s full title) is a Europe-wide directive that was to be enforced in all member states by 21 April 2002. However, some countries failed to implement the legislation by the deadline and many took advantage of flexibility within the directive so that the ‘last owner’ of the vehicle would be responsible for disposal of an ELV until the end of 2006. From 1st January 2007 this responsibility passed to the vehicle manufacturers bringing all member states in line.
The directive includes various targets involving: environmental practices in the motor salvage industry, the prohibition of the use of various heavy metals in vehicles and the removal of various hazardous fluids and components in a safe manner. Additionally the directive seeks to promote and encourage the development of markets for recycled parts.
The target causing most discussion is that 95% of a car (by weight) must be reused, recycled or recovered by 2015.
These, and other regulations in the directive, close the loop, from design and build, through sale, service and use, to disposal and recycling. The vehicle manufacturer is now responsible for the whole life of the vehicle, not just design and sales.
So what has changed in vehicle design and build? Plenty. The directive dictates that the use of Lead, Mercury, Cadmium and Hexavalent Chromium is now prohibited except in certain applications (i.e. batteries) according to a list that will be regularly reviewed. This ensures that these materials do not become shredder residues and are not incinerated or disposed of in landfills.
The European Union recently reported that this section alone has reduced the use of hazardous substances in vehicle production by 90%.
Manufacturers have also had to provide the industry with all requisite dismantling information with particular emphasis on hazardous materials and have to use component and material coding standards established by the European Commission to identify each individual part for recycling purposes.
In the next 5-10 years designers will have to adapt to many issues including:
Greater environmental awareness resulting in lower vehicle weights and the use of alternative construction materials
New Legislation and industry standards, such as:
Pedestrian impact
Reduction of emissions in production and use of the vehicle
Further increased environmental awareness
Lower production costs
Shorter lead times from design to manufacture
Looking closer at the first issue, vehicle weight is a major contributor to emissions, but it’s not all environmental, lighter cars have enhanced dynamics – handling, braking etc. The quest is on for designers to find components that meet all their requirements: are lighter and stronger, relatively inexpensive, environmentally attractive to produce and also recyclable in 2015.
It’s a tough challenge. For example, polymeric glazing (plastic glass) will be in use by a volume manufacturer within the next five years. Yes, it will be lighter than glass, however the plastics recycling market is currently not as advanced as the market for glass, so this has the potential to negatively impact the drive towards the 95% target.
Many manufacturers are already designing plastic components to be built using recycled materials and in many areas this is being achieved. Moreover, developments in shredder technology are starting to separate more of the various vehicle parts, resulting in less shredder residue going to landfill or incineration. Ultimately though the success of these developments rests upon the creation of a suitable marketplace willing to purchase the materials produced.
Outsourced parts are also a concern, as the manufacturer is ultimately responsible for the recyclability of all the components in their vehicles. Therefore they must ensure that all parts are recyclable within the terms of the ELV directive, i.e. do not contain any banned materials, are coded correctly and are also fit for the purpose for which they were designed.
The use of recycled material brings additional issues, including the availability and consistency of the material. It also requires the education of designers who may have little or no experience of working with recycled materials.
Concern remains over a number of areas both within and outside the ELV directive. For example, work must be done to develop effective recycled marketplaces. This has already started in the form of ongoing research, supported by the European Commission and many member states to investigate and develop recycled marketplaces and recycling processes in order to reach the 95% target.
The Commission also reported on the ELV process, specifically completing an impact assessment on the targets contained within the directive. It has concluded that there is no need to change these targets, despite fears that the current target of 95% by 2015 is unattainable.
The report highlights that any reduction in the targets will end the development of technology to treat the waste and that confirmation of the 2015 target will assist in removing current blockages to innovation. The assessment goes on to support the ELV Directive because it has triggered technological development in ELV treatment and stresses that continued development of treatment technologies will bring substantial environmental benefits.
You can find more details at http://ec.europa.eu/environment/waste/elv_index.htm
As the worldwide vehicle market expands over the coming years environmental concerns are only going to increase, leading many areas of the world to follow the example set by the European Commission.
The work already completed in Europe has made this region a world leader in motor vehicle environmental and recycling activities, creating business opportunities by setting high, but in my opinion, achievable standards.
Thursday, 28 April 2011
End of Life Vehicles
Ok, I know most of you understand ELV’s, but please allow me to expand on the EU regulations and show you that this is more than just a set of rules for vehicles in auto recycling yards.
The whole ELV process starts from vehicle design – ensuring components used in vehicle build can be recycled, adherence to a very specific list of materials that cannot be used in vehicles, ease of dismantling are all necessary. The EU believes that these regulations have resulted in a 90% reduction of hazardous substances in vehicle build since introduction.
Vehicle manufacturers also have a requirement to make dismantling information available to the auto recycling industry – including details of what components are made from, especially important when removing plastic components.
The European Union are also supporting development of recycling techniques and the recycled marketplace – to make sure that any components removed for recycling can be reused.
Once an ELV arrives at the auto recycling yard the vehicle must be stored on an impermeable surface, with sealed drainage until it has been de-polluted. This makes sure that any fluids leaking out are captured and cannot contaminate the surrounding area.
After de-pollution the vehicle can then go into the main yard.
De-pollution includes the following components and processes:
Air Conditioning – evacuation of the system, storage of the removed gas for safe recycling
Oils – removal of all oils from engine, gearbox, power steering and shock absorbers, includes removal of the engine oil filter. Fuel –removal of all fuels; Coolant –Removal; Screen Washer Fluid – removal; All fluids are then safely stored for future recycling.
All fluids need to be stored in sealed containers that are in a bunded area – an enclosed area that will stop fluid leaking out if storage tanks fail.
Tyres: Removed and stored for re-use or recycling, lead balance weights are removed from wheels and stored separately.
Airbags: Deployed.
Batteries: Removed and stored in sealed containers for recycling
Catalytic Converters: Removed and stored for future recycling.
Once the vehicle is considered to be ‘clean’ it can then go into the main yard for further processing as desired, this could be dismantling or straight to a shredder facility. Some recycling yards strip vehicles down further with cores going into separate bins, alloys separated from steel, etc.
Where does the future lie? – Well the EU has set the standard that the rest of the world must follow. There is still plenty to do, ELV legislation applies to cars and light commercials only, so the EU need to bring motorbikes and heavy commercials under the directive as soon as possible, and enforcement is a priority – according to latest reports 12 member states (out of 27) have not met the requirements of the ELV directive.
If this were my old school teacher it would get a B+, but could do better!
The whole ELV process starts from vehicle design – ensuring components used in vehicle build can be recycled, adherence to a very specific list of materials that cannot be used in vehicles, ease of dismantling are all necessary. The EU believes that these regulations have resulted in a 90% reduction of hazardous substances in vehicle build since introduction.
Vehicle manufacturers also have a requirement to make dismantling information available to the auto recycling industry – including details of what components are made from, especially important when removing plastic components.
The European Union are also supporting development of recycling techniques and the recycled marketplace – to make sure that any components removed for recycling can be reused.
Once an ELV arrives at the auto recycling yard the vehicle must be stored on an impermeable surface, with sealed drainage until it has been de-polluted. This makes sure that any fluids leaking out are captured and cannot contaminate the surrounding area.
After de-pollution the vehicle can then go into the main yard.
De-pollution includes the following components and processes:
Air Conditioning – evacuation of the system, storage of the removed gas for safe recycling
Oils – removal of all oils from engine, gearbox, power steering and shock absorbers, includes removal of the engine oil filter. Fuel –removal of all fuels; Coolant –Removal; Screen Washer Fluid – removal; All fluids are then safely stored for future recycling.
All fluids need to be stored in sealed containers that are in a bunded area – an enclosed area that will stop fluid leaking out if storage tanks fail.
Tyres: Removed and stored for re-use or recycling, lead balance weights are removed from wheels and stored separately.
Airbags: Deployed.
Batteries: Removed and stored in sealed containers for recycling
Catalytic Converters: Removed and stored for future recycling.
Once the vehicle is considered to be ‘clean’ it can then go into the main yard for further processing as desired, this could be dismantling or straight to a shredder facility. Some recycling yards strip vehicles down further with cores going into separate bins, alloys separated from steel, etc.
Where does the future lie? – Well the EU has set the standard that the rest of the world must follow. There is still plenty to do, ELV legislation applies to cars and light commercials only, so the EU need to bring motorbikes and heavy commercials under the directive as soon as possible, and enforcement is a priority – according to latest reports 12 member states (out of 27) have not met the requirements of the ELV directive.
If this were my old school teacher it would get a B+, but could do better!
Thursday, 21 April 2011
Cost of the operation
Very interesting morning yesterday working with an excellent recycling yard in South Wales. We were looking at costs, cost of purchasing stock, cost of processing the vehicles and the value of the vehicle as pure scrap.
This organisation have got all the records to hand and we were able to see how much it cost them to purchase stock, how much it cost to process end of life vehicles, the value of the scrap elements - hulk, alloy wheels, cores, catalytic converters etc. We also looked at parts sales and revenue.
What we did find is that the average purchase price was close to half the cost of processing the vehicle, and they cleared in excess of £200,000 profit annually just from processing end of life vehicles.
it got me wondering, how many other operations have access to similar information from their records? Unfortunately I believe that only a very small number of auto recycling businesses will have this knowledge - those that do not have this data are at increased risk of financial problems - knowing your turnover, costs, revenue streams is so important in the current financial climate.
We are now heading into a couple of long weekends - ideal time for owners and managers to take a few days away from the de-pollution bay, and take some time out. So as you fire up the barbeque and open that bottle of wine - think about the business and how much more profit you could be making if you take time to analyse where costs can be saved, where more revenue could be obtained, and how you measure this.
Salvage Wire can help, see our website for more detail on how to contact us.
Happy Easter
This organisation have got all the records to hand and we were able to see how much it cost them to purchase stock, how much it cost to process end of life vehicles, the value of the scrap elements - hulk, alloy wheels, cores, catalytic converters etc. We also looked at parts sales and revenue.
What we did find is that the average purchase price was close to half the cost of processing the vehicle, and they cleared in excess of £200,000 profit annually just from processing end of life vehicles.
it got me wondering, how many other operations have access to similar information from their records? Unfortunately I believe that only a very small number of auto recycling businesses will have this knowledge - those that do not have this data are at increased risk of financial problems - knowing your turnover, costs, revenue streams is so important in the current financial climate.
We are now heading into a couple of long weekends - ideal time for owners and managers to take a few days away from the de-pollution bay, and take some time out. So as you fire up the barbeque and open that bottle of wine - think about the business and how much more profit you could be making if you take time to analyse where costs can be saved, where more revenue could be obtained, and how you measure this.
Salvage Wire can help, see our website for more detail on how to contact us.
Happy Easter
Tuesday, 22 March 2011
Special Report on Salvage
The Automotive Recyclers Association latest magazine includes a special report on salvage, subjects discussed include:
Global Goods - Technical advances in motor vehicles are making repairs much harder and raising costs. This has the potential to increase instances of fraud and sub-standard repair -- issues that can seriously harm the reputation of the auto recycling industry. How can the global auto recycling industry, whilst keeping costs as low as possible, continue to improve standards, consumer protection, and eradicate fraud?,
Fairness - The 2009 study titled International Trade in Used Vehicles: The Environmental Consequences of NAFTA, by Lucas W. Davis, Haas School of Business, University of California, Berkeley, and Matthew E. Kahn, UCLA Institute of the Environ- ment, studied the effects of the law since its passage in 1993, including trade patterns. The North American Free Trade Agreement was created to expand trade between the United States, Canada, and Mexico to make them more competitive in the global marketplace. As of January 1, 2008, all tariffs among the three countries were eliminated and trade tripled from $297 billion to $1 trillion between 1993-2007, according to the study.
Fleecing Customers - In a 2009 CNN report, Guiseppe "Joe" Pirrone was on vacation when a relative called to say that the work truck he had purchased for his business was being seized by the police. Pirrone learned that the truck he legally bought in 2008 was actually a stolen vehicle, and he was a victim of a car cloning vehicle theft ring. While the truck was now police evidence, he is still on the hook for the $27,000 loan.
Stakeholder Perspective - Automotive Recycling magazine, in an effort to fully understand the issues surrounding the current marketplace of salvage and allow for varying opinions on the topic, sent questions to seven varying industry stakeholders, all who are members of the Collision Industry Electronic Commerce Association(CEICA) Salvage Committee. Here are three responses with their perspective on our questions. We appreciate their participation.
The full articles are available on-line at http://www.a-r-a.org/paper.asp?paper=102, they are well worth reading.
Global Goods - Technical advances in motor vehicles are making repairs much harder and raising costs. This has the potential to increase instances of fraud and sub-standard repair -- issues that can seriously harm the reputation of the auto recycling industry. How can the global auto recycling industry, whilst keeping costs as low as possible, continue to improve standards, consumer protection, and eradicate fraud?,
Fairness - The 2009 study titled International Trade in Used Vehicles: The Environmental Consequences of NAFTA, by Lucas W. Davis, Haas School of Business, University of California, Berkeley, and Matthew E. Kahn, UCLA Institute of the Environ- ment, studied the effects of the law since its passage in 1993, including trade patterns. The North American Free Trade Agreement was created to expand trade between the United States, Canada, and Mexico to make them more competitive in the global marketplace. As of January 1, 2008, all tariffs among the three countries were eliminated and trade tripled from $297 billion to $1 trillion between 1993-2007, according to the study.
Fleecing Customers - In a 2009 CNN report, Guiseppe "Joe" Pirrone was on vacation when a relative called to say that the work truck he had purchased for his business was being seized by the police. Pirrone learned that the truck he legally bought in 2008 was actually a stolen vehicle, and he was a victim of a car cloning vehicle theft ring. While the truck was now police evidence, he is still on the hook for the $27,000 loan.
Stakeholder Perspective - Automotive Recycling magazine, in an effort to fully understand the issues surrounding the current marketplace of salvage and allow for varying opinions on the topic, sent questions to seven varying industry stakeholders, all who are members of the Collision Industry Electronic Commerce Association(CEICA) Salvage Committee. Here are three responses with their perspective on our questions. We appreciate their participation.
The full articles are available on-line at http://www.a-r-a.org/paper.asp?paper=102, they are well worth reading.
Thursday, 3 February 2011
Legislating Write-Offs
The last few weeks have seen two new initiatives focused at legislating written-off vehicles.
The Irish Government are consulting on proposed legislation and the government of New South Wales enacted legislation to stop all write-offs being re-registered.
I have already commented elsewhere on the Irish proposals so will concentrate on New South Wales.
The legislation is very specific; any vehicle under 4.5 tonnes gross weight that is written-off in NSW cannot be re-registered anywhere in Australia. This includes cars, Light Commercials, Trailers, Caravans and Motorbikes.
There are a few exemptions, for example vehicles that have suffered hail damage, but in all cases the owner must apply for authority to repair the vehicle prior to repairs commencing, and the repaired vehicle must go through two inspections before being allowed back into use – one focused on vehicle repair standards, the other on vehicle identity.
A vehicle is classed as a write-off when the assessed repair cost added to the salvage value exceeds the market value of the vehicle. On assessment by a qualified vehicle damage assessor reports must be filed within 7 days, the vehicle must have a very prominent sticker applied where it can be seen (there are penalties for tampering with these stickers) advising all that this is a statutory write-off and cannot be used on the road ever again, and all assessment records must be retained for 7 years. The NSW government have also put a rigorous audit process in place to ensure that standards are maintained to the appropriate level.
What does this mean for the Australian insurance and vehicle repair marketplace; I believe a number of things will change.
• Insurers will be focused more on reducing repair costs, ensuring that fewer vehicles reach total loss status – more ‘recycled’ parts, cheaper labour costs, repairing more parts rather than replacing, and driving lower parts costs from manufacturers.
• Hopefully this will not lower repair standards in the body repair centres.
• There is potential for loss of repair capacity as repair shops close due to lower volume of repairs from insurers and repairable salvage.
• There will also be downward pressure on parts and scrap prices as more vehicles are broken for spares and scrapped than previously.
• Will insurance premiums rise to compensate for the loss of repairable salvage returns? I will let you make your own judgement!
As the various marketplaces consolidate over the next few months the picture will get much clearer and I am sure that the global market will be watching with interest to valuate the impact of this legislation.
More details are available at http://www.rta.nsw.gov.au/registration/written_off_vehicles/index.html
The Irish Government are consulting on proposed legislation and the government of New South Wales enacted legislation to stop all write-offs being re-registered.
I have already commented elsewhere on the Irish proposals so will concentrate on New South Wales.
The legislation is very specific; any vehicle under 4.5 tonnes gross weight that is written-off in NSW cannot be re-registered anywhere in Australia. This includes cars, Light Commercials, Trailers, Caravans and Motorbikes.
There are a few exemptions, for example vehicles that have suffered hail damage, but in all cases the owner must apply for authority to repair the vehicle prior to repairs commencing, and the repaired vehicle must go through two inspections before being allowed back into use – one focused on vehicle repair standards, the other on vehicle identity.
A vehicle is classed as a write-off when the assessed repair cost added to the salvage value exceeds the market value of the vehicle. On assessment by a qualified vehicle damage assessor reports must be filed within 7 days, the vehicle must have a very prominent sticker applied where it can be seen (there are penalties for tampering with these stickers) advising all that this is a statutory write-off and cannot be used on the road ever again, and all assessment records must be retained for 7 years. The NSW government have also put a rigorous audit process in place to ensure that standards are maintained to the appropriate level.
What does this mean for the Australian insurance and vehicle repair marketplace; I believe a number of things will change.
• Insurers will be focused more on reducing repair costs, ensuring that fewer vehicles reach total loss status – more ‘recycled’ parts, cheaper labour costs, repairing more parts rather than replacing, and driving lower parts costs from manufacturers.
• Hopefully this will not lower repair standards in the body repair centres.
• There is potential for loss of repair capacity as repair shops close due to lower volume of repairs from insurers and repairable salvage.
• There will also be downward pressure on parts and scrap prices as more vehicles are broken for spares and scrapped than previously.
• Will insurance premiums rise to compensate for the loss of repairable salvage returns? I will let you make your own judgement!
As the various marketplaces consolidate over the next few months the picture will get much clearer and I am sure that the global market will be watching with interest to valuate the impact of this legislation.
More details are available at http://www.rta.nsw.gov.au/registration/written_off_vehicles/index.html
Thursday, 13 January 2011
Make a world of difference when you scrap your car
How to ensure your old car doesn’t become an environmental hazard.
You may have never had to scrap a vehicle before, so you haven’t had to think about the consequences of what happens to your vehicle. Where you take it can be the difference between responsible environmental practices or a total environmental disaster.
The truth is, not everybody handles end-of-life vehicles (ELV) and vehicles that have been in accidents the way they should.
The volume of salvage yards trying to extract the most value from an ELV by cutting environmental corners is a growing practice. The European Union set regulations in place 10 years ago to prevent vehicle dismantling and destruction from harming the environment whilst maximising the volume of each vehicle that is recycled. Currently 85% of the vehicle must be recycled; by 2015 salvage yards will have to recycle 95% of each vehicle.
Unfortunately, there are a number of salvage yards that do not abide by the EU regulations, and these yards are having a negative impact on the environment.
Licensed operators have spent a lot of money on premises and equipment to ensure that all the hazardous components of vehicle dismantling are handled correctly and in a way that does not harm the environment. These areas include tyres, batteries, oils, fuel, coolant, batteries, air conditioning gas etc. Any of these can pose a hazard to the environment, hence the need to treat each of them so carefully.
Once the vehicle has been fully de-polluted it is then recycled, either by going through shredding process, or by being dismantled and the parts removed and resold for use on other vehicles before the remainder of the vehicle is crushed and recycled fully.
There are a number of resources available to help you make the correct choice about who scraps your car, the Environment Agency web site has a full list of Authorised Treatment Facilities – those businesses that have put in the investment to achieve the standard required by the EU – see http://www.environment-agency.gov.uk/business/regulation/65470.aspx
Or you could use one of the many national services available including Give A Car http://www.giveacar.co.uk/ who will scrap your car and make a donation to the charity of your choice, and Car Take Back (www.cartakeback.com).
You can make a world of difference by the choices you make when you scrap your vehicle.
You may have never had to scrap a vehicle before, so you haven’t had to think about the consequences of what happens to your vehicle. Where you take it can be the difference between responsible environmental practices or a total environmental disaster.
The truth is, not everybody handles end-of-life vehicles (ELV) and vehicles that have been in accidents the way they should.
The volume of salvage yards trying to extract the most value from an ELV by cutting environmental corners is a growing practice. The European Union set regulations in place 10 years ago to prevent vehicle dismantling and destruction from harming the environment whilst maximising the volume of each vehicle that is recycled. Currently 85% of the vehicle must be recycled; by 2015 salvage yards will have to recycle 95% of each vehicle.
Unfortunately, there are a number of salvage yards that do not abide by the EU regulations, and these yards are having a negative impact on the environment.
Licensed operators have spent a lot of money on premises and equipment to ensure that all the hazardous components of vehicle dismantling are handled correctly and in a way that does not harm the environment. These areas include tyres, batteries, oils, fuel, coolant, batteries, air conditioning gas etc. Any of these can pose a hazard to the environment, hence the need to treat each of them so carefully.
Once the vehicle has been fully de-polluted it is then recycled, either by going through shredding process, or by being dismantled and the parts removed and resold for use on other vehicles before the remainder of the vehicle is crushed and recycled fully.
There are a number of resources available to help you make the correct choice about who scraps your car, the Environment Agency web site has a full list of Authorised Treatment Facilities – those businesses that have put in the investment to achieve the standard required by the EU – see http://www.environment-agency.gov.uk/business/regulation/65470.aspx
Or you could use one of the many national services available including Give A Car http://www.giveacar.co.uk/ who will scrap your car and make a donation to the charity of your choice, and Car Take Back (www.cartakeback.com).
You can make a world of difference by the choices you make when you scrap your vehicle.
Tuesday, 27 July 2010
End of Life Vehicle Questions
With the change of Government we recently approached the Business Secretary, Vince Cable with the following questions relating to ELV's
Over the last few years the EU End of Life (ELV) Regulations has come into full use. The Environment Agency (for England and Wales) and SEPA (for Scotland) enforce ELV standards on all licensed businesses involved in the dismantling of motor vehicles of any type. However, DVLA, who administer the Certificate of Destruction process (another part of ELV regulations) only apply to the limit of the regulations – cars and light vans. please can we ask the following questions:
• How many vehicles were de-registered from Jan 1 2009 to Dec 31 2009?
• How many Certificates of Destruction were issued in that same period?
• If, as suspected, there is a discrepancy between the two, what happened to the vehicles where a Certificate of Destruction was not issued, where they treated at Authorised Treatment Facilities as the law requires?
• When is the DVLA going to extend Certificate of Destruction to cover all vehicles, closing the current loophole that means people can take a vehicle out of use and dismantle it without having to have the vehicle treated by authorised treatment facilities?
• What action is your government going to take to ensure that un-licensed operators are either taken out of business or forced to comply with those businesses that have invested in their facilities, staff and equipment to achieve, or maintain the standards required as ELV licensed operations?
The answers received will be posted in another entry
Over the last few years the EU End of Life (ELV) Regulations has come into full use. The Environment Agency (for England and Wales) and SEPA (for Scotland) enforce ELV standards on all licensed businesses involved in the dismantling of motor vehicles of any type. However, DVLA, who administer the Certificate of Destruction process (another part of ELV regulations) only apply to the limit of the regulations – cars and light vans. please can we ask the following questions:
• How many vehicles were de-registered from Jan 1 2009 to Dec 31 2009?
• How many Certificates of Destruction were issued in that same period?
• If, as suspected, there is a discrepancy between the two, what happened to the vehicles where a Certificate of Destruction was not issued, where they treated at Authorised Treatment Facilities as the law requires?
• When is the DVLA going to extend Certificate of Destruction to cover all vehicles, closing the current loophole that means people can take a vehicle out of use and dismantle it without having to have the vehicle treated by authorised treatment facilities?
• What action is your government going to take to ensure that un-licensed operators are either taken out of business or forced to comply with those businesses that have invested in their facilities, staff and equipment to achieve, or maintain the standards required as ELV licensed operations?
The answers received will be posted in another entry
Thursday, 10 June 2010
Technically Competent Management
England and Wales based metal recycling and ELV sites are affected by changes in statutory requirements that dictate management standards.
All licensed or permitted waste management facilities must have Technically Competent Management (TCM) on site.
Managers are required to hold the following qualifications:
For low risk Metal Recycling Facilities, 4 appropriate NVQ’s or completing an Environmental Permit Operators Certificate (EPOC) at an approved training centre.
For medium risk ELV sites, 6 appropriate NVQ units or completing a Vocationally Related Qualification (VRQ) course at an approved training centre followed by a work related project.
Following successful qualification all TCM’s must keep their knowledge updated and will have to show continuing professional competence. All current TCM’s must pass a new competency test before the end of Feb 2011 – note, this includes anyone deemed to be competent under ‘grandfather rights’ – and all TCM’s will be reassessed bi-annually.
You can find more details through the Chartered Institution of Wastes Management at www.ciwm.co.uk/pm/17, or through local training centres/colleges.
The Environment Agency have told me that the TCM needs to be present on site for 20-25% of the week, so one self-employed TCM could work with 4 or 5 yards.
My opinion:
This could be seen as more attacks on the ELV industry, with additional cost in an increasingly tough economic environment, but the regulations did come into force in April 2008 so there has already been two years to complete this. These qualifications mean another step up in professionalism for this industry and show that we are serious about protecting the environment, the health and safety of our workers, and give environmental agencies more opportunities to root out and control illegal operations that bring the car salvage industry into disrepute.
All licensed or permitted waste management facilities must have Technically Competent Management (TCM) on site.
Managers are required to hold the following qualifications:
For low risk Metal Recycling Facilities, 4 appropriate NVQ’s or completing an Environmental Permit Operators Certificate (EPOC) at an approved training centre.
For medium risk ELV sites, 6 appropriate NVQ units or completing a Vocationally Related Qualification (VRQ) course at an approved training centre followed by a work related project.
Following successful qualification all TCM’s must keep their knowledge updated and will have to show continuing professional competence. All current TCM’s must pass a new competency test before the end of Feb 2011 – note, this includes anyone deemed to be competent under ‘grandfather rights’ – and all TCM’s will be reassessed bi-annually.
You can find more details through the Chartered Institution of Wastes Management at www.ciwm.co.uk/pm/17, or through local training centres/colleges.
The Environment Agency have told me that the TCM needs to be present on site for 20-25% of the week, so one self-employed TCM could work with 4 or 5 yards.
My opinion:
This could be seen as more attacks on the ELV industry, with additional cost in an increasingly tough economic environment, but the regulations did come into force in April 2008 so there has already been two years to complete this. These qualifications mean another step up in professionalism for this industry and show that we are serious about protecting the environment, the health and safety of our workers, and give environmental agencies more opportunities to root out and control illegal operations that bring the car salvage industry into disrepute.
Scrapyard Safety
I can remember going into scrap yards as a teenager looking for parts for my Ford Escort, and having to climb three vehicles high to strip out the cylinder head that I wanted, there was no health and safety or environmental concerns, if you dropped your spanner it could have killed anyone unfortunate enough to be underneath, hi-viz was completely unknown and if oil was leaking out you just kicked some more mud over it!
Guard dogs roamed freely and if they didn’t like you they bit first. In fact I can remember one yard where the dog was chained to the back half of a car (an Austin Allegro was one of the sections used) that had no rear suspension, and he dragged this around the yard after him. Slowed him down a bit, but he could still bite you.
Nowadays you cannot get into many yards, and if you do you are dressed in safety boots, hi-viz and hard hats, and accompanied by a member of staff. Is this a sign of progress, or political correctness gone too far?
Those of us who are a certain age can all remember being driven in our parent’s cars, no seat belts, air bags or anti lock brakes, metal dashboards, hard plastic steering wheels, drum brakes and cross ply tyres. As car design and safety has increased dramatically since the 1970’s so has our recognition of unsafe practices at work. Some of the practices of generations past need to be consigned to the crusher, but have we gone too far?
I agree, the safety of employees and members of the public are of utmost importance, and we need to take all possible precautions to make working environments as safe as possible, but there seems to be too much reliance upon personal safety clothing than focusing on safe practices.
Formula 1 is recognised to be an unsafe sport where death and injury used to be regular occurrence, the steps taken over many years have made the operating environment - the cars and the tracks much safer, and then the driver’s safety equipment has been proved to be fit for purpose in preventing further injury in the event of an accident.
Motor salvage yards need reflect on Formula 1 experience, and make the operating environment as safe as possible – look at the condition of the yards, the vehicle handling and storage, the safe keeping of hazardous fluids and the de-pollution and vehicle repair environment, and then ensure that their employee’s safety equipment is fit for purpose.
This year, yes 2010, I have visited over 100 salvage yards, I deliberately leave my hi-viz equipment in the car when I arrive, and only 3 of the yards I have visited have asked me to wear any safety equipment as I complete site inspections. Of these yards, a number are open to customers, some stack vehicles two high, and I have seen vehicles being de-polluted whilst hanging from fork lifts. Standards are improving, but there is a long way to go.
Friday, 23 April 2010
Australian ban on repairing motor salvage
The New South Wales Government intend to introduce legislation that bans all insurance write offs from being re-registered, effectively condemning all motor salvage in NSW to the crusher.
Mr David Campbell, Minister for Transport and Roads has said that the legislation will prevent vehicles being ‘re-birthed’ with stolen parts.
This has major implications for much of the industry, and shows that Government initiatives are being implemented without full investigation of the consequences.
Currently many insurers will use the salvage value of a vehicle to ‘construct’ a total loss scenario for high value vehicles with heavy damage. As an example, a $40,000 Mercedes with $30,000 worth of damage would probably achieve $12,000 return as repairable salvage, but would struggle to get $4,000 under the proposed NSW laws, so the customer and insurer are faced with 3 options.
Repair the car – would you want your $40k vehicle repaired?
The insurers pay the market value and sell the vehicle as damaged repairable, with no mention of total loss or write off – thus hiding the history of the vehicle or:
Pay the owner the repair cost on a cash in lieu basis and then let the owner decide on the next course of action, many of whom will sell the vehicle as damaged, but with all the vehicle documentation. Fuelling the possibility of fraudulent activity, including vehicle cloning that the legislation is trying to stop.
Message to NSW, look at the current Code of Practice in force in the United Kingdom, it has been in force since the early 1990’s, and it successfully controls the decision on vehicle repair or scrap, and also specifies information that must be made available through data check services, and the release of vehicle documentation to the purchasers of motor salvage. These controls give the insurers the opportunity to sell salvage; to construct total loss cases for the benefit of their customers; gives legitimate salvage companies the chance to continue buying and repairing vehicles; makes life much more difficult for those that are operating outside of the law; and improves the professionalism of the whole motor salvage industry.
Mr David Campbell, Minister for Transport and Roads has said that the legislation will prevent vehicles being ‘re-birthed’ with stolen parts.
This has major implications for much of the industry, and shows that Government initiatives are being implemented without full investigation of the consequences.
Currently many insurers will use the salvage value of a vehicle to ‘construct’ a total loss scenario for high value vehicles with heavy damage. As an example, a $40,000 Mercedes with $30,000 worth of damage would probably achieve $12,000 return as repairable salvage, but would struggle to get $4,000 under the proposed NSW laws, so the customer and insurer are faced with 3 options.
Repair the car – would you want your $40k vehicle repaired?
The insurers pay the market value and sell the vehicle as damaged repairable, with no mention of total loss or write off – thus hiding the history of the vehicle or:
Pay the owner the repair cost on a cash in lieu basis and then let the owner decide on the next course of action, many of whom will sell the vehicle as damaged, but with all the vehicle documentation. Fuelling the possibility of fraudulent activity, including vehicle cloning that the legislation is trying to stop.
Message to NSW, look at the current Code of Practice in force in the United Kingdom, it has been in force since the early 1990’s, and it successfully controls the decision on vehicle repair or scrap, and also specifies information that must be made available through data check services, and the release of vehicle documentation to the purchasers of motor salvage. These controls give the insurers the opportunity to sell salvage; to construct total loss cases for the benefit of their customers; gives legitimate salvage companies the chance to continue buying and repairing vehicles; makes life much more difficult for those that are operating outside of the law; and improves the professionalism of the whole motor salvage industry.
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