Green Recycled Parts - Delivery and Price Conundrum

‘We want our parts delivered in 1-2 days, maximum, if you can’t do that then we are not going to buy parts from you” a car bodyshop owner told me yesterday.

I hope that this is not the normal working patterns for the UK vehicle repair sector, but if it is then there are problems.

He went on to say that the data from their vehicle estimating system isn’t imported into their bodyshop management system until the vehicle has been stripped out, hence the need for parts to be delivered in 1-2 days because any longer and the repairs on the vehicle will pause due to lack of parts.

My questions here are; how does this repairer plan their work? are they working from day-to-day without knowing what they will be working on tomorrow because they haven't planned it yet?

This is a scary scenario because it doesn't allow them to plan ahead, give accurate completion dates, maximise efficiencies, put the right technician on the right job, plan their courtesy car programme, get the best discounts from their suppliers and more.

Is this the norm for the UK body repair industry? I hope not. I would like to think that the industry is smarter than this, that they are able to plan their work schedules, order parts with the best discounts and margins, and process repairs through their shops with the minimum of delays, at the highest quality and get the jobs finished on time.

In the same conversation the bodyshop owner also stated that some parts are too expensive “I can get a brand new part with no damage for near enough the same price as your green recycled parts”. This is a valid opinion because some UK vehicle recyclers haven't done the maths on customer service.

Bear with me, because there is a serious business case here.

If a brand new part has a retail price of £100 the repairer could expect up to 25% discount from the local dealer giving them a margin of £25.

The price of a green recycled part (an original equipment part that has come off a vehicle of the same age or newer than the one being repaired) has been calculated as follows:

Part £35

Delivery         £30

Additional labour £16 (assuming hourly labour rate of £32 per hour)*

Repairers margin £20 (smaller than the brand new part)

Total £101

The figures above are a real life example, and this is not even a near miss - in this case it was cheaper to purchase a brand new part that gives a bigger margin to the repairer and comes with a full guarantee. This case fails to give any margin to cover extra costs that may be incurred such as additional damage to the green recycled part that needs to be rectified by the repairer before fitment, or a mark up from a parts search company that facilitated the sale of the part.

The greater the retail value of the brand new part the greater the opportunity for significant cost savings through the use of a genuine green recycled part, and if the part doesn’t need a full colour change (panel of the same colour, a lamp or a trim etc.) then the additional labour can be removed from the calculation and increase the savings.

UK vehicle recyclers need to do the simple maths on their parts and delivery pricing so they can show real savings to accident damage work providers and vehicle repairers; prove the case for green recycled parts becoming normal practice for the UK vehicle repair industry and then have the ability to delight and amaze their customers.

*as an example fitting a red painted wing to a white vehicle will result in additional labour to change the colour of 0.5 hours.

UK Auto Recyclers US Road Trip

Return on investment can be calculated in many different ways, however there is some investment that can be considered priceless, and this could certainly be the case for the eleven UK and Ireland auto recyclers who visited the ARA Convention in Charlotte during October.

Together the group of yard owners, managers and staff along with developers of yard management software invested over $22,000 to visit recycler yards across Virginia and North Carolina, hear from the best trainers and teachers at the Annual Convention and network with the global recycling family; one of the group said that his yard “was going to be very different in nine months time as a direct result of what I have learnt this week”.

Our trip started in Washington DC where some of the group were able to sightsee the capital city; the following day we travelled to M & M Auto Parts in Stafford and Fredericksburg meeting the owners and staff as we toured both their facilities.

This first visit set the tone for the rest of the week’s travels; a very warm welcome awaited us all along with an openness that few expected.

Since 1960 M&M Auto Parts has been a proud family owned and operated recycler and now has over 50 acres and 205,000 square feet of warehouse space.

With the majority of their business being wholesale, they are a full service recycler that dismantle and store parts at both locations and the group were privileged to be given tours of both of these, very different, facilities - one being a sprawling yard with lots of space, the other a large warehouse with limited outdoor storage.

The quality of both sites reflected the owners standards and highlighted to the group how important customer service is to the US auto recycling industry.

Following an overnight stop in Richmond which served as the capital of the Confederate States of America during the American Civil War we travelled to Chesterfield Auto Parts.

Chesterfield Auto Parts was formed in the 1930’s and purchased in 1947 by the family who, after three generations, continue to own and run the business.

Chesterfield Auto Parts is a self-service operation and felt very different to the previous visit, with much quicker vehicle turnover, much more customer interaction and an operating style that felt similar to how the majority of UK and Irish yards operate. Again a full tour was given, lots of questions asked and answered with plenty of information to digest at a later time.

Lacy Auto Parts provided yet another perspective on the best that the US has to offer, a business that started in 1940, is now run by the grandson’s of the founder, and recently moved to a large site near Charles City in Virginia. We were all amazed by the expanse of the site, the landscaping out front and that from the road it did not look like an auto recycling facility at all.

This state-of-the-art facility continues the legacy started back in 1940, Lacy Auto Parts are developing new strategies, raising quality and utilising new computerised methods to continue their development and provide the highest quality service for all types of used vehicle parts.

A quick switch of states found the group at an overnight stop in Goldsboro, North Carolina and a visit to Wayne Auto Salvage.

Founded in August 1970 Wayne Auto Salvage are now located on a 25 acre site and they combine a full service and self service yard into one operation with a dismantling and crushing facility separating the two sides of the yard.

Again, a full tour was given to the group where we were able to see vehicles entering, going through and exiting their process. Like all they yards we visited, very efficient, clean, tidy and well run.

Each evening of the trip the whole group could be found in a restaurant going over each days’ events, the yards visited and what had been learnt. 

Two of the major ‘take aways’ that our group had were Cores and Warranties.

All of the businesses visited in the US were much more advanced in how they dealt with vehicle cores, especially adding core charges to the sale of used parts, and the up-sell of extended warranties. Neither of these are a strong focus for UK recyclers currently. We were also very impressed by the facilities available in the full service yards for packaging and despatching of the parts. This reflects the very high standards that all yards have for customer experience, making certain that the parts arrive on-time, with no additional damage, and in a manner that gives customers confidence to return to that recycler for future purchases. The US has a lot to teach the UK here.

We were also very aware that our yard management software is more advanced on the integration with E-Bay when selling parts, so I am sure that we can return a favour or two.

Another group member who brought two of his staff members with him said that “over the course of the trip we are re-defining how the business should be run and updating all the processes we currently follow,” and a third member said “my staff will be hiding when I get back to work on Monday because they know what I have learnt this week will mean changes.”

However, this was just the beginning as we reached Charlotte and joined up with the rest of the global auto recycling community gathered for the annual convention.

As a group we would like to thank our hosts at M&M Auto Parts, Chesterfield Auto Parts, Lacy Auto Parts and Wayne Auto Salvage for their hospitality, kindness and openness to share during our visit, and offer an invitation to them all to come and visit our businesses the next time they are in the UK, and I would like to finish with one final quote from another member of the group. “Visiting the yards along the way to Charlotte and the conference itself has given me a wealth of knowledge and ideas on how to take my business and yard forward, both in selling quality recycled parts and offering a better customer experience along with improving my workplace environmentally and for the good of my employees and customers.” I call that Job Done!

Re-Consider Green Re-Cycled Parts

There has been lots written over the years about green parts and their use within the vehicle repair industry, and many attempts have been made over time to bring green parts into mainstream use in the UK Vehicle Repair sector.

The product isn’t “sexy”; it is boring and often misunderstood, so we need a clearer understanding about the recycling of vehicle parts in today’s marketplace.

Green Recycled Parts have many advantages including environmental and cost savings, and don’t forget these parts were designed by the vehicle manufacturer and fitted on their production lines, so they are a quality product.

Many drivers and owners insist on new parts for their vehicle - that is their choice - but no matter how old their vehicle is, they are still driving a used vehicle so where is the benefit of brand new, original equipment parts that could be 3 times the cost of a quality green recycled part from a professional vehicle recycler?

There are many scrapyards out there, and not many professional vehicle recyclers - they are not the same!

Professional vehicle recyclers buy damaged or salvage vehicles from a variety of sources, they inspect each vehicle, inventory the quality green parts that can be re-used, de-pollute the vehicle to very high standards, dismantle the vehicle and store the removed parts ready for re-sale. They are able to tell every customer where the component came from, the age of the vehicle, mileage, the quality of the part and much more. Many scrapyards cannot do this!

Used Parts Recycling Networks are an elite group of auto recyclers who operate best management practices and strive for perfection in everything they do, and this includes supplying the best quality green recycled parts for the vehicle repair industry.

These Recycling Networks acknowledge a number of factors. including: 

Speed of repair. This has now become an important standard for all UK insurers, and the use of green parts can slow down this process so recyclers are challenged to get green parts price and availability to vehicle repairers in minutes rather than hours.

Loss of Revenue. Vehicle repairers cannot lose any revenue by doing this, so parts discounts will be similar to main dealer discounts available. 

Additional Labour. It is acknowledged that there may be additional labour required when fitting a green recycled part - this could be due to the green part being a different colour to the original or some minor paint damage requiring re-work - and allowances need to be made to the vehicle assessment to reflect this.

This all means that auto recyclers need some guidance to help them price their green recycled parts and make them cost effective for vehicle repairers and work providers to consider, which is where professional Recycling Networks can assist and help members sell more quality Green Parts into the vehicle repair industry.

Are we on the brink of a revolution in how vehicles are repaired in the UK? Will we see an increase in the use of Green Recycled Parts in 2016? Do you want to be part of this revolution and sell more quality green recycled parts in 2016?

If you want to be part of this revolution, then contact Reco Auto through their web site (www.recoauto.com) and become part of their recycling network - they can’t promise instant parts requests, but they can promise that you will be part of a revolution that is changing how UK insurers and UK vehicle repairers complete vehicle repairs in the future.

Changing the way Insurers repair accident damaged vehicles

I started working for the number one motor insurer in the UK over twenty four years ago and Green Recycled Parts were being discussed then, although in those days they were described as second-hand or salvage parts.

Since then the terminology has changed, but the desire to introduce Green Recycled Parts into business as usual for insurance repairs is as strong as ever, but has never been realised. Until now.

Reco Auto is now on the cusp of changing attitudes to these practices in the repair of accident damaged vehicles for insurers and fleets.

Having recently signed an agreement with a major accident management company to supply Green Recycled Parts for total loss prevention and repair cost reduction purposes Reco Auto are now working closely with the network of repairers to raise the volume of Green Recycled Parts that are used in accident repairs.

How is this initiative different to previous attempts?

Reco Auto are working at different levels to achieve these goals, including the introduction of a new Recycling Network to supply the parts. This new network focuses first and foremost on Quality; this includes the condition of the part, how it is handled and how it is delivered to the repairer.

Reco Auto are also working very hard to bring more insurers on board, even to the extent of proposing a new insurance policy where the use of Green Recycled Parts is written into the policy.

Also Reco Auto are including vehicle manufacturers in the discussions and already have agreement from one premier vehicle manufacturer that Green Recycled Parts can be utilised to save a vehicle from a total loss decision, this manufacturer knows that a total loss decision could inevitably result in the loss of that customer from their ‘brand’ when they receive their payout and purchase a vehicle from another manufacturer to replace the written off car. 

To sum up this initiative, Reco Auto have the support of vehicle insurers, fleets and vehicle manufacturers for the use of Green Recycled Parts in the repair of accident damaged vehicles, an initiative that will result in total loss prevention and repair cost reduction. The new Recycling Network focuses on quality which means that price is no longer a driving factor in the purchase of parts; the suppliers of these parts will be chosen from the best auto recyclers in the country, and those recyclers have the opportunity to be part of a programme that changes how vehicles are repaired in the UK after an accident.

Join the Reco Recycling Network now by signing up at http://www.recoauto.com/recyclers/

8.9% of 34,000 used car imports has been previously written off in the UK

As reported in ABP Club newsletter 05/08/2015

.  The risk in Ireland of buying a potential death-trap car from the UK can be highlighted today as new research shows that one in 10 vehicles imported in 2015 had previously been written off in the UK.
.  Sources claim that unscrupulous sellers – not legitimate businesses – are increasingly using Ireland as an easy route to 'wash' cars with dubious histories
. Over 25% of cars in Ireland are imported 
.  4% of cars registered in Ireland are category A/B write offs

The research, which was undertaken for the Irish Independent by consumer car-history check experts MyWheels.ie, also shows that the number of imported write-offs is rising month on month.

Sources claim that unscrupulous sellers - not legitimate businesses - are increasingly using Ireland as an easy route to 'wash' cars with dubious histories.

The MyWheels.ie study, covering the first six months of 2015, found:
.  Out of 33,486 vehicles imported, 2,963 (8.85pc) had previously been written off.
.  These cars had been in crashes so serious that, at best, they required major repairs and, at worst, they should never have been allowed back on the road.
.  The risk for buyers lies not just with older vehicles. A number of two-year-old cars with potentially dangerous defects had been brought in for sale too.
.  All classes of vehicles are included - cars, vans and even motorcycles.
.  A total of 22 cars reported stolen in the UK were also imported and registered here in the first six months.

The MyWheels.ie report is based on an analysis of the complete database of UK market write-offs - providing an extensive insight into the movement of cars to the Irish market.
It is believed that it is much easier to sell a used import under the regulatory radar here than it is with Irish-based cars.

MyWheels.ie spokesman Niall Kavanagh said that while there were good controls to manage Irish write-offs, those for imports were not nearly as effective. 
"We are seeing a disproportionate number of vehicles (that were) written off in the UK being imported into Ireland."
He urged the Government to bring in strict, mandatory cross-checks.

The term 'write-off' covers a multitude, but essentially there are four categories.
A and B are also known as 'mechanical' write-offs. These have been so badly damaged that they should not be put back on the road under any circumstances, although some parts from category B cars can be re-used.

Categories C and D are known as 'economic write-offs', where an insurance company decides that the cost of repairs is higher than the worth of the car. But they can still be viable for repairers to make roadworthy and sell profitably - provided the work is carried out to specific standards, is fully inspected and the cars' histories are recorded.

Mr Kavanagh said he was worried at the rate and level of imported write-offs.
"We are concerned about the safety of some of these cars for those who buy them. Many category C and D write-offs are back on the road, but anyone planning to buy needs to take precautions to avoid ending up with an unsafe or uninsured vehicle.”

Weeding out the scammers
.  When an Irish car is written off, insurers notify the National Vehicle and Driver File office in Shannon.
.  A 'lock' is put on those vehicles.
.  The registered owner is told the vehicle needs a major mechanical check-over before being passed.
.  With used imports, cars go through an NCT test if they are four years or older.
.  The NCT test is reckoned to do a good job, but by its nature it is not designed for detecting all write-offs.
.  According to the Department of Transport's own memo, detecting write-offs requires specialist engineers taking a lot of time to assess a vehicle's repair history and structure.

Non-Deployed airbag sales to be made illegal in UK

The Motor Vehicle Dismantlers Association has advised that this is what may happen if you don’t act NOW!

As part of the ongoing review of the Salvage COP, Insurers have asked Government to make the sale of non-deployed airbags illegal in the UK. This includes all pyrotechnic devices (airbags & seat belt pre-tensioners), from all salvage categories.

In reality, it will be impossible to distinguish ‘salvage’ from ‘non-salvage’ airbags, and of course the same concerns would apply to all airbags irrespective of source. So the only practical approach is to ban all airbag sales.  This is despite the fact two EU Directives on pyrotechnic devices currently being implemented by the UK do NOT make the sale of used airbags illegal.  Far from it.

Instead of reducing the availability of non-deployed airbags, this may simply drive the trade ‘underground’, into the hands of illegal operators, or overseas. Customers will simply buy non-deployed airbags from abroad – there’s already plenty available on-line. Or is Government also going to make it illegal to purchase non-deployed airbags?

It would also seem that insurers are not concerned about the effects on repairable salvage of a ban on non-deployed airbags. Or are they simply happy to see more salvage move abroad?

This has very serious implications for UK vehicle recyclers, and may only be the ‘thin end of the wedge’! Will we see the sale of other ‘safety critical items’ being banned – tyres? Suspensions? Brakes? Steering? Wheels?  The list goes on & on….

The significance of this cannot be over-stated.  What view will insurers & Government take on new-technology such as Autonomous Emergency Breaking, Lane deviation etc.? Will we see a ban on the sale of these parts?

It is by no means certain that the Salvage COP will become law. Currently it is voluntary, so vehicle recyclers are under no greater obligation than insurers. Even though the ABI has asked Government to legislate – this Conservative Government is strongly ‘de-regulating’ & is not keen on more regulation.

We understand that Thatcham will shortly be undertaking some work on non-deployed airbags, but we have no way of knowing or influencing the outcome. Despite UK vehicle recyclers having handled more than 225 million pyrotechnic devices since they were introduced into mass market vehicles in 1994, we are not aware of any evidence which shows non-deployed airbags are a safety problem. And as you know, MVDA has already undertaken research which shows that non-deployed airbags are safe to re-use.  But this all seems to be ignored.

So, we need your help – NOW.

Government does respond to business. So we need all MVDA members to write to Department for Transport saying that the proposal to ban non-deployed airbag sales is not based on fact and will cost UK jobs.

To help you do this MVDA has drafted a letter for members to send. All you need to do is add your name & address, sign it & post it!

We will be e-mailing this letter to all members TODAY

DO NOT DELAY!

Electric and Hybrid Accreditation

Salvage Wire’s Safe Handling of Electric and Hybrid training course has recently been accredited by the Waste Management Industry Training and Advisory Board or WAMITAB. 

This accreditation confirms that the training offered by Salvage Wire will support professionals in the Auto Recycling and Motor Salvage industry as they raise their standards of knowledge and competence and their continued professional development.

This accreditation also provides national recognition of the added value that training  programmes bring to workers in terms of quality, job specific knowledge, skills and experience.

Arrangements for future training courses are already in progress, dates and locations will be released shortly, and for more information please contact Salvage Wire via their website www.salvagewire.com or find us on Facebook and Twitter.