Unfortunately, the same can’t be said for a 1970 XW GT-HO Phase II sedan, regarded by many enthusiasts as one of the most desirable ‘Bathurst ‘higher option’ Fords of the late ‘60s and early ‘70s that went for a mere $215,000.
Someone once said that even though you can’t change the direction of the wind, you could always adjust the sails to reach your destination. And according to recycler Chris Daglis of PARTnered Solutions, the parts recycling industry would do well to check out its sails as the wind is definitely set to change.
Why? Well, about 70% of sales-as opposed to sails-are from high value mechanical components such as engines, gearboxes and transmissions. The advent of electric vehicles that do not have these components is a warning to recyclers of a change in the wind.
According to Chris, many recyclers are sticking their heads in the sand, saying that this is going to take a lifetime to change. Really? Volvo has gone public and made a commitment to only producing hybrid, or electric vehicles, as of 2019 and BMW has committed to 25% of its production being hybrid, or electric, by 2025!
So, is this really a threat? Well yes, if we choose to ignore it. Of course, if we have fewer vehicles powered by engines then we will ultimately be selling fewer engines. The logical question is, what will replace these sales that make up a good majority of our top and bottom line?
In other words, where will a trimming of the sails lead us?
It seems simple then. We can just start selling these components and everything will be fine. Whilst it might not be as simple as that, it is nevertheless a great opportunity to head towards a new destination.
We will need to change. We will need to do things differently. We will need to meet more stringent standards and regulations. But, there is a wonderful opportunity that will become clearer to those that choose to take a more professional and proactive approach.
See, the issue with selling these components is the fact that they all fit into the ‘safety component’ or ‘hazardous goods’ categories. So, how does the automotive recycler guarantee that the lane guidance sensor, the collision avoidance sensor, or the computers controlling these sensors, are all in good working order when they remove them and sell them to the consumer?
Or, in the case of high voltage battery components, what systems, equipment and processes do we have in place to make sure that we handle, store and distribute these dangerous goods safely. And how can we help with the disposal of end of life batteries that we are replacing?
Furthermore, many of these components are items where demand will be driven through collision repairers and insurers. As an insurer though, authorizing the use of recycled safety components brings with it an element of risk. That is, if they authorize their use, they in fact advocate the use of the product and as a result take on, in the current model, the risk associated with anything going wrong.
I think we can now see which way the wind is likely to blow. We have recyclers will need to replace engine sales with parts that currently are not widely used by the collision repair industry and insurers. But both will need to access these components as alternative to t new OEM dealer parts otherwise average repair costs will rise, or insurers will be forced to total loss more vehicles they’d like to.
Somehow, we need to find a happy medium, one, which makes our ‘new’ products attractive and gives the insurance industry the confidence to use them in the repair process.
If we are able to work together to find a path forward to using safe, genuine recycled components at a fraction of the price of a genuine parts, the consumer, the repair industry, the recycler and the insurer will all be winners.
We have the ingredients, demand and supply. But to set the ship in the right direction we now need to bring the demand side and the supply side together and find a model that will enable the trade of these new product lines.
If we can do this, these parts will generate great revenue for the automotive recycling industry and significant savings for the customer. The new destination my well turn out to be El Dorado.