Regular contributor, Andrew Marsh, Engineering Director at ezimethods.com, provides us with his view on the latest Code of Practice (CoP).
The Code of Practice for the Categorisation of Motor Vehicle Salvage (latest issue V11, published in November 2019) took a long time to publish, allowing the first major update of the code in 10 years. It was quite a balancing act, and the only way to deal with profoundly competitive commercial situations is to avoid commerce and concentrate on engineering. Such a code is voluntary, is not enshrined in law and so relies on collaboration for its effectiveness.
Lest we forget the Association of British Insurers (ABI) and indeed ‘Thatcham Research’ (formerly known as the Motor Insurance Repair Research Centre – MIRRC) were originally born out of the demand by HM Government to the collective insurance companies to either allow the law to be written around how motor policies should work, or adopt a voluntary scheme to allow policy (ABI) and technology (Thatcham Research) to be developed for any insurance company that wished to join either organisation.
It is not compulsory for a motor insurer to belong to either the ABI or Thatcham Research. A few motor insurers do not subscribe to either organisation.
Back to the code and four letters to heaven – A (Scrap), B (Break), S (Repairable, Structural damage) and N (Repairable, Non-Structural damage). There are many disputes and indeed, many examples of vehicles which have been sold with one category which probably should have been in another category. However, to have a code which covers all vehicles, all possible layouts and all possible damage scenarios is immense.
Profit for all
A big key in vehicle disposal is ensuring at each stage from FNOL to the ATF there is sufficient margin to ensure all required legal responsibilities in terms of environmental protection, safe deployment and disposal of waste are met. So, stating the obvious, no one is going to treat end of life vehicles for nothing.
Some motor insurance companies are very excited about how much profit they can make from trading vehicles which are beyond repair, and specialists who do the leg work for this have very sophisticated businesses which deliver good returns.
So, here’s the thread that runs through the whole sector, and the code itself: Engineering. Not commerce, not spot trading, not ‘Buy! Sell!’. No. Engineering.
Imagine a pure commerce model. That would make the stock tracking at a national supermarket chain seem simple. The main failing is ignoring engineering input – ‘what can we do with this?’ – there is no basis for commerce.
Time for detail
To restore a damaged vehicle, there are three elements – labour, paint and parts. Most vehicle manufacturers are trying so hard to produce smoother, faster, more economical and less polluting vehicles that design for repair/disassembly is now further down the priority list than ever before. Further, immense improvements for vehicle occupant protection has been achieved in the main with selected use of recycled destroyer / main battle tank steel.
So, depending on the value of the vehicle, the frequency some parts fail on otherwise healthy vehicles in service (6-speed manual transmission for Trafic / Vivaro, anyone?) or the operational difficulties in welding sheet tool steel, there is a business case to do something with the mess which one day could donate valuable parts into the economy or even get fully rebuilt.
Back to the code. It is a framework and not a Bible. If we say, for example, a roof skin can never be replaced, even though such repair instructions do exist and spare parts can be bought, then there will be a ‘false’ stream of ‘N’ category vehicles. That is not exactly in anyone’s interest.
Arise the green economy
Fear not, there will be no Extinction Rebellion ‘agreeably angry’ farce here.
There is a good capitalist theme in the event of mass unemployment and economic peril: Do not give work away. There is no sense to export vehicles for repair when they could be repaired here in the UK, and the same goes for dismantling too. Each time a vehicle is exported, it effectively takes money with it from the UK economy.
This is not a call to run inefficient business with protective commercial measures – rather it is a call to ensure all have an opportunity to bid for work on a commercial footing.
Just as the code is a framework which will have different priorities as the business world changes in the face of recession or economic success, so we have to be equally flexible. The core message is – use your common sense and above all, engineering to decide what is possible. Then let the commerce take hold, in light of the defined ‘what is possible’. It will lead to better outcomes.
How’s that? An article about the Code that does not ask for it to be torn up – just yet.
To contact Andrew, please visit ezimethods.com or email andrew.marsh@autoindustryconsulting.com
