Collaboration amongst industry stakeholders is vital with regard to green parts
Dale Kirkton, Motor Supply Manager at NFU Mutual provides his thoughts on how industry stakeholders need to approach the use of Green Parts in a collaborative fashion to ensure benefits across the board.
Insurers have looked at salvaged parts with renewed interest during the past few years, exploring their use as a credible tactical response to all the serious knock–on effects which parts delays would inflict on the industry.
Recycled parts appear to have become a talking point and not just for cost reasons, but also the wider considerations relating to the speed of the repair journey and availability of parts, the environment, and creating a balanced, circular economy.
The use of second-hand or reconditioned parts has always been accepted by the DIY mechanic or customers looking to reduce bills with local friendly garages. However, green or second-hand parts have largely struggled to find their way into the mainstream insurance supply chain, despite there being a strong argument for an undamaged, previously used part to be recycled to repair a damaged vehicle of the same age.
There are probably several reasons for this dominance, ranging from poor perception and lack of acceptance from customers, the consequences of insurers driving faster cycle times and repairers looking for ease of supply and safety assurances, as well as repairers being able to make a straightforward mark-up in a challenging industry.
Safety is, of course, paramount and this is the understandable immediate concern most customers display alongside perceived cost-cutting. The reality is that green parts can make an incredible difference to the customer journey, speeding up the repair process and avoiding vehicles being written off when parts are unobtainable.
Of course, any changes to the norm would need to be rigorously tested and proven if green parts are to be supported by insurers, with guaranteed provenance and a straightforward supply and return policy needing to be in place. An endorsement or certified supply programme could give much-needed confidence and legitimise the supply with benefits for the manufacturers.
I agree with other commentators on this subject that there would probably need to be a customer incentive. We only have to look at the fleet sector to see that the concept works. Repairers too would expect to have an incentive to support the use of green parts, not in a profiteering way but to cover the tangible costs of preparing a pre-used part to be fitted to a vehicle.
Another major challenge is that vehicle manufacturers currently reject the philosophy of reusing quality Original Equipment Manufacturer parts they have produced. Is this a consequence of ever-advancing technology and sophistication of design? Or financially driven? It’s well known that margins on new car sales are small and parts income is an important revenue stream for manufacturers.
This position doesn’t help to build customer acceptance and trust and is difficult for insurers to be in conflict with. This also appears to be a UK market quirk, as there is a long and safe history of the use of recycled parts in countries where the practice is established.
Surely though, this shouldn’t be a financial discussion. The main driver is to protect the environment and natural resources. The automotive industry is the top consumer of lead in the world and according to some studies, lead reserves will run out in 2030. Besides the shortages and supply challenges of the raw materials, scarce or not, the rise in global demand for automotive manufacturing materials has created extraordinary price increases of several million pounds year on year.
These shortages are also creating huge delays to the availability of parts for some of the most popular makes and models, sometimes with no delivery dates at all being provided. Insurers often take the brunt of the customer’s frustration regarding these delays despite their limited ability to be able to influence a positive response.
It’s perhaps not surprising that there’s also been a recent spike in the theft of parts from vehicles, particularly catalytic converters. Although this is mainly due to their easily tradable precious properties. We are seeing a trend in parts specific thefts too, such as entire doors, bonnets and lamps. I came across one case where a car owner woke up to find the front half of her Vauxhall Corsa had been dismantled and stolen right from the driveway in the night.
Where the decision is made to constructively ‘total loss’ a vehicle when parts show no sign of appearing, it would make sense to have the parts from the vehicle removed and reused within the crash repair industry. This would be preferable to being sold as a repairable proposition, especially where the risk is that another vehicle could be stolen to facilitate the repair.
If these challenges can be tackled with strict compliance regarding the types of parts achieved and provenance assured, then the UK should be able to adopt a green parts solution. This absolutely must be with the customer’s full consent.
At NFU Mutual we would be far more comfortable supporting a repairer-led initiative rather than suggesting our supply chain uses a solution they do not want to participate in. Repairers are the experts, they know what does or does not fit and where best to purchase these parts. As long as they can assure provenance and provide a cost and service benefit that the customer supports, then insurers should wholeheartedly support this.
What is required is a completely collaborative approach between recyclers, vehicle manufacturers, repairers, insurers and the customer. The recyclers have put the infrastructure in place, insurers and repairers are open to the possibilities, which leaves the vehicle manufacturers and consumers to come on board.