Chris Daglis, advisor to the collision, alternative parts and insurance industries gives his insight into how change is happening in the industry and at speed but provided you can keep up with these changes, opportunities to succeed can be achieved.
Never before have we been presented with more opportunity than we have today. This is true personally and in business. Likewise, never before have we been presented with more risk/threat than we will over the coming decades.
In our business, this is driven by the changes to the modern-day motor vehicle, our customer base and their changing behaviours, and very importantly, the sheer speed of this change.
It is true that some organisations have and will continue to perish. We’ve seen it in other industries time and time again with the biggest of organisations. Some of the biggest companies in the world just 20 years ago either no longer exist or have dropped off the radar.
Compare this list to the list of businesses that were in the top 16 in 2007 – IBM, GE, Nokia, Citi, HP, Gillette. Can you find these brands?
What about Kodak, Motorola, Blackberry, Ericsson and so many other global leaders back 20 years ago?
On the flip side we have the disruptors like Uber, Airbnb, Facebook, Snapchat, Instagram. Many of these companies didn’t exist a decade ago, now they are some of the fastest growing and largest brands in the world.
But the change phenomenon is not new – the difference today is its speed.
Traditionally a vehicle manufacturer would update a model after 3 or so years. These updates would mostly be superficial – slightly different headlights, or mouldings and so on. Today, a model upgrade usually includes different computers on board, additional collision avoidance technology and changes to electronic displays, which in effect, make the previous model somewhat of a dinosaur.
So, let’s break this down into its component parts. I will focus on the incredible opportunity that exists. Ultimately, there are plenty of case studies around the risks and what ‘doing nothing’ means to an organisation. Put simply, they will either shrink or no longer exist.
I will start and end by stating that those that move quickly, those that are ahead of the game, those that embrace change, adapt to and shape it within their market’s context, will see disproportionate success.
By disproportionate, I mean that the gain – sales, profit, growth – will be much greater and happen much quicker in comparison to what we have ever seen before. On the flip side, so too will the loss to some be disproportionate in both size and speed. The good news from a loss perspective is that the pain will not be long and torturous, it will be swift and clean.
Opportunity – Vehicle Technology Changes and the Auto Recycling Industry
I touched on these changes briefly in my last article – ‘Key Elements to Profitable Growth beyond 2025 for Auto Recyclers’:
ADAS includes cameras and other sensors/systems that constantly monitor the vehicle’s surroundings, alert the driver to hazards and even take corrective actions to avoid a collision.
- Electric Vehicle High Voltage Batteries
Both EV and Hybrid vehicles run batteries that need to be handled, stored, transported and recycled completely differently. These batteries are also very expensive, a challenge to recycle and therefore the perfect candidate for re-use.
- Hi-Tech Lighting
The traditional Halogen head lamp is no longer. High voltage, directional LED headlamps are heading towards being categorised as ‘safety’ components. These too are super expensive components that we should be paying close attention to.
There are some common denominators to each of the above that we must consider when looking to adapt and change to make the most of the opportunity.
- They are all really expensive part types.
- They currently are all categorised (some more than others) as safety components or dangerous goods. As a result, customers, especially insurers and collision repairers to whom these are most attractive and where scale lies, see the auto recycling supply channel as high risk and so do not accept this product from it.
- In one combination or another, these will be on every single vehicle you handle in the near future, replacing the traditional combustion engine and gearbox.
Are we ready for it?
It follows that in order to address the above, auto recyclers must professionalise. The image of the industry is generally poor and our approach to the customer still well under par. THIS MUST CHANGE!
We need to:
- Build trust in our organisations
- Build trust in our products and services
- Build trust in our people by providing the right training that will keep them safe when handling these vehicles
- Build trust in the collision repair and insurance segments that not only are our work practices safe and best in class, but that the product they buy off us is fit for purpose, tested, handled and shipped safely
- Invest in our businesses. It is no longer good enough to have a yard that is messy, a front sales office with parts lying around everywhere, a workshop that is dirty and full of oil. We must become manufacturing facilities with painted floors, cleaned daily, quality-controlled products with all documentation to demonstrate the consistent quality process employed by the business. In fact, the list is too long to write here, as there are literally hundreds of improvements that need to be made.
To be frank, NO we are not ready for it. But that’s ok. The biggest question for the industry – for you – is whether you are up for it, because you will need to make changes and improvements to make the most of this opportunity.
Remember, whatever you choose to do, whether you choose to move, adapt, invest and drive your business forward with these changes, or whether you choose to keep doing the same thing as you always have, the opportunity and risk are disproportionate. On the one hand you will do really well, quickly, or you will fail really well quickly. There is very little room for the middle ground here and the tail out the other end for those that choose to stick their heads in the sand will not be long. Rather a little like falling off a cliff.
In Part 2 of the ‘Disproportionate Opportunity’ Series, I will get into some of the detail around what we should be doing to maximise the benefits of this opportunity. I will look through product and customer lenses, exposing their needs and how we need to adapt in order to meet them. I will also talk to the changes in customer behaviour across a number of customer sectors – collision, garage and retail – and how our approach to selling may also need to change to meet their ever-changing needs.