2020 and all that!

As we start a new decade, what can the motor salvage market expect over the next 10 years, and how different will the marketplace be in 2020?

In the short term, I do not expect too many changes, vehicles will remain fairly conventional and the need for ‘green’ parts will increase as more companies see the need to reduce their carbon footprint and increase their use of recycled parts in vehicle repair and maintenance.

2015 will be a critical point in the decade for a number of reasons.
Firstly, EU ELV legislation means that 95% of each car scrapped in the EU will have to be recycled, an increase over the current 85%. By then, many other countries will have followed the lead set by the EU and have similar legislation.
By 2015 there will have been significant increases in the production of hybrid, electric and alternative fuelled vehicles, including Fuel Cell and Bio-Fuel. The conventional fossil fuel vehicle will be less popular and values of these will decrease with more coming to salvage, and with less demand more of each vehicle will have to be scrapped and the waste recovered, rather than parts being sold to meet recycling targets – and this problem will grow for a few years as the global vehicle market changes to fit the new - low carbon - world order!


So what opportunities can we see for the salvage market during the decade?
China and India are the fastest growing car markets in the world, with an incredible demand in both countries for cars – there could be many opportunities for switched on businesses able to gain a foothold in either country for the supply of vehicles, or the supply of parts. With the incredible growth of vehicle ownership in both countries there will be the inevitable incidents and accidents that occur with new drivers, and with an infrastructure that is unable to grow as fast as vehicle ownership – supply of parts for vehicle repair in these countries may be a very profitable option.

The global credit crisis may also have helped the motor salvage industry; many of the motor manufacturers are investigating or developing ‘global’ models, so they sell the same vehicle in all countries of the world – so the parts coming off a car in the USA could be fitted to a vehicle in China, and parts from China could be used in India – and so-on.. This opens up the whole world to the supply of parts from motor salvage.

Another opportunity could be to specialise in the new technology, become a salvage specialist for hybrid, or fuel cell vehicles. It sometimes takes a few years to develop an idea, and build a reputation in a new area, why not start now and be ahead of the rest of the market?

I think that by 2020 the global salvage market will be looking a very different place, much more regulation and recycling targets will be in place, but with some fantastic opportunities for those that have been prepared to take a risk and develop new markets and build their reputation as a global operator.
Salvage wire could assist you in developing your business to take advantage of the opportunities that this decade will bring, see our web site for more details of how we can help you.
www.salvagewire.com

10 new years resolutions for 2010

10 New Year resolutions for the motor salvage industry:

10 suggested improvements that the majority of motor salvage operators need to look at in 2010 – for some all of these will be applicable, for others you could select one or two of them and see what a difference they make.

These are not in any particular order, as all 10 are important.

1. Licences and Registrations: I know ‘red tape’ is time consuming and laborious, but it is here to stay, so if you cannot deal with it, employ someone who can.

2. Computer Skills: we now live and work in an internet society, from purchasing of vehicles, applying for licences, through parts and vehicle sales, to scrapping and certificates of destruction – too many are still ‘employing’ their children to keep this important part of the operation up to date - learn how to use a computer and recognise the benefits this can bring to your business; increased exposure, more enquiries, more sales, efficiencies in purchasing, licence renewals etc.

3. Stock Control and Inventory: Knowing what is in the yard and the condition of the parts will become increasingly important over the coming year – you cannot afford to lose a sale because you have to check what is in the yard; give a swift answer to any enquiry and there is less chance of the customer going elsewhere.

4. Compliance to Standards: There are many standards and contracts in force, from sellers terms and conditions, to codes of practice and salvage association standards – learn them and comply, they are there for the protection of individual businesses and to increase the professionalism of the industry.

5. Customer Service: The difference between getting and not getting a sale is sometimes very small, and not always related to the price charged as many think. If you give great customer service then the customer will come back and may recommend a friend or relative – if you give poor service that customer will probably not come back and may tell many more people about the experience. Learn how to exceed your customers expectations it will benefit you and your company.

6. Environmental Awareness: We work in a highly regulated industry, and all environmental offices have a difficult job at times, let’s make life as easy as possible for them by ensuring that all of our operations work to the highest of standards at all times – then those officers can shift their focus to the businesses that are not compliant or licensed.

7. Image: We know that our industry is very environmentally friendly, recycling 85% of each vehicle, ensuring that hazardous materials are dealt with correctly and so on. What is the perspective of the general public? Many have images of vehicles stacked 5 high, dripping oil and water – we need to change this by projecting a clean, smart, professional image. This can be through the appearance of the yard, paperwork, web site, and staff work wear – for example, make sure that all delivery notes/invoices attached to parts are clean and do not have dirty fingerprints on them. Look at the clothing worn by staff on site, where they meet customers do they portray a good image to the customer, or are they just plain grubby?

8. Join a Trade Association: Yes, I know it costs money, but making a good choice of trade association could pay dividends in coming years. The stronger your trade association the more benefits they can give you - This could include a voice at Government level, support in your dealings with local authorities, regular liaison with environmental agencies, and much more. The only way these associations can have this influence is if more salvage businesses join them.

9. Training: Too many businesses neglect training their staff, and many will only provide the bare minimum. The danger for some is the risk of investing in the employee to find that they then leave to join a competitor. Well trained staff bring many benefits to any business, and the investment in training could be a reason for them to stay with that business because the staff can see that they are valued.

10. Ideas: Do not dismiss ideas and suggestions from your staff (or family), sometimes they can see problems and solutions better than you can. In fact, encourage ideas and improvements as this is a good way of retaining and developing employees, and this could improve your business as well as increasing staff loyalty as they then ‘own’ that part of the operation.

2010

As we near the end of 2009 what can we look forward to in 2010?

The end of the scrappage scheme will allow many breakers to take a break from collections and focus on dismantling and scrapping the vehicles they have received.
Looking longer term, I do not think we will fully understand all the implications of scrappage for many months - the impact on scrap prices still has to work its way through - especially as the scrap market is global and the glut of scrappage cars will continue for a while. Parts sales could be weak for a while - too much stock will depress prices, and then as the parts supply is used up prices will strengthen, but in the current economical climate how many customers will want to pay the higher prices?
Residual Values of vehicles could maintain current strength for a while, but these will start to reduce once Scrappage ceases as demand reduces and stock levels of new vehicles increase, causing discounting and distress selling by manufacturers and importers.
VAT change will have an impact on parts and VAT qualifying vehicles, smart businesses have been focusing on VAT qualifying units in the recent weeks and promoting them to ensure that as many as possible are sold. Another 2.5% doesn't sound too much, but on a £10,000 vehicle that is another £250 on the invoice.

Overall though I believe that the Motor Salvage Industry in the UK is a very resiliant sector, that is always looking where they can make a profit, and has the flexibility to survive and come through the year as a stonger, leaner and more efficient operation. All that is needed now is for the Environment Agency to focus on getting illegal operators compliant or taking them out of business - now that would be a real bonus!

Salvage Parts Stock Control

I know I have been on about this before, but I still believe that a decent stock control system is going to be essential for any supplier of 'green' parts in the future.
Visited an excellent site yesterday, A1 BM Spares in Stevenage (www.a1bmspares.com) who have had software from Pinnacle for about 1 month and are getting to grips with all the functionality. You can see from their web site that they are using it very well already, uploading images and detail about the parts available. Not bad for a first time.
As always the effectiveness of any software is only as good as the information that goes into it, and this needs discipline, entering all the donor vehicle details, parts available, pricing, images ec, and recording all the sales, recording all "none sales", i.e. enquiries that could not be satisfied either because parts were not available or too expensive. Only when a few months (or years) worth of this data has been collected will the software really come into its' own as a full stock management system, then the users wil be able to see parts turnover, profit, parts in stock etc.
Pinnacle is expensive, and there are alternatives, so my recommendation is to view a few of the options, talk to some of the users and make your own mind up, but get yourselves a decent system and give the bosses head a break!

Top Gear and the Twingo

Just caught up on the last Top gear programme, what was Jeremy doing with that Renault Twingo, what a waste! I hope that the Renault PR department are happy with their investment, because in my eyes it did not do them any favours, the wanton destruction of property is bad enough at best, but to a few pepole, the fact that a 'professional' journalist abused a car in that way only encourages them to do the same.
I hope that Renault followed the Association of British Insurers Code of Practice and have scrapped the car.
As for the loss of Ross Kemp, no worries!

ELV's and the environment

Approximately 2 million vehicles are scrapped annually in the UK, just looking at the numbers is mind boggling, that means 10 million tyres, 7 million litres of oil, and up to 4 million airbags are removed from vehicles and recycled every year.

A recent study by the University of Colorado said that recycling oil from ELV’s in the states saved over 3 million tonnes of CO2 – enough to offset the entire CO2 output of the US for 45 hours this year.

The UK Government has put some very tough targets for reduction of emissions that mean all areas of business have to make their own contribution over the coming years, and the motor salvage industry is already making a contribution to this.

85% of each ELV is already being recycled, and the EU target for 2015 is 95% of the vehicle to be recycled, tough, but achievable target.
One significant advance towards this target would be the use of ‘green’ parts in insurance repairs, and there are a number of projects ongoing that are investigating this in more detail. I believe that there are a number of areas where the motor salvage industry can improve and really push the use of green parts, and these are inventory and parts quality.
Admittedly there are a few salvage operations in the UK who are setting the standards, but the vast majority need to review their operations and put some significant improvements in place.
Inventory: Many salvage companies operate the inventory management system that is in the bosses head, so when the phone calls, or e-mails come in the yard cannot answer the question without going into the yard to check the vehicles and see if the part requested is still available, and then quality may be questionable as it has not been checked.
Operations need to have a full inventory of each vehicle, detailing the vehicle age, mileage, specification etc, and what parts are available. Better still, these parts should have already been removed, cleaned, tagged and stored, and the inventory system marked with a quality standard, 1 for as new/very good, to 3 for poor quality.
The leap in customer service that would produce will be very noticeable, any enquiry can be met with an immediate response giving full details of the parts available, if this enquiry then progresses into a sale the parts are easily removed from stock, packed and shipped.
On my travels around the UK, I estimate that only 10% of the salvage businesses operate a full inventory system that can meet future customer service requirements, which means that 90% can improve in some way, those that are not looking at how their business can improve will fail to lower UK emissions, and will not survive into the new, lower emissions, world that will be our future.

Relieving the Economic Woes

Last year the US threw about $250M at sustainable technology development. Small beans compared to the Billions of dollars in bail out money already used on US banks.
Will the banks be the architects of the type of economic boost that the world economy needs? I don’t think so, but engineering and innovation in all areas, when properly funded, can deliver massive economic boosts, also keeping white collar jobs in an otherwise harsh world.

We need economies with 'real' engineering, not financial engineering. Whilst the bankers and financiers have been messing up our economy engineers have been developing some major advances, have a look at one example.
Since the Euro 1 emissions regulations of 1993 to the current Euro 5 (Oct 2009) engineers have cut diesel particulate emissions by 94%, NOX by 75% and carbon monoxide by 69% whilst making vehicles lighter, safer and more fuel efficient - this is real engineering.
http://www.youngeng.org/home.asp has details of a very successful programme in the UK that is delivering benefit to the engineering community through the extra-curricular support of school activities.
Also recently in the news was the appointment of a new Chief Executive of the Engineering and technology Board (ETB). The ETB is an independent organisation that promotes the contribution that engineers, engineering and technology make to our society. The new Chief Executive, Paul Jackson, acknowledged the need to build foundations for future economic success rests with organisations like ETB and the encouragement of young people to pursue careers in engineering and technology.
We need more of this, and proper joined up thinking between ALL engineering organisations, to promote engineering as a profession to be proud of, that is rewarding, and one where you can make a difference.
Let’s hear from all engineers out there, how can we get engineers into positions where they can influence the politicians, and get the public on their side, because without a reliable and integrated infrastructure (power, transport, water etc.) we are going nowhere!