Andrew Marsh FIMI, Engineering Director at Automotive Industry Consulting Ltd who presented at our conference last November provides a brief view on the evolving use of green parts and how, through vehicle manufacturer’s encouragement, this can be achieved on a wider level.
Welcome to the first short article based on a recent presentation to the ATF Pro recycling conference held in 2019.
Let’s start with dispelling some myths. You know full well that modern vehicle recycling is far more sophisticated and integrated than many external partners realise, and that the public’s image of an oil-soaked open-air bomb site with wrecks stacked upon each other is just about as relevant as the TV endorsed image of vehicle repair.
The dismantler / recycler business is, of course, run at profit.
A primary source of the material is what vehicle manufacturers create, and that’s where our story begins. The issues around vehicle manufacturing world-wide centre on too many factories, too little product to make those factories profitable, immense investments to create even mild changes to existing vehicles, huge regulation pressures which add yet more cost and arguably the biggest issue – they don’t reach customers much beyond the first year of a vehicle’s life except for contractual obligation (PCP for example) or an emergency (major repair).
The vehicle manufacturers want to reach more customers for longer, but don’t. The main task they have is to stay alive, because in spite of immense turn over the profit margins refuse to budge from around 3 to 6%.
That means the vehicle manufacturers find it increasingly difficult to fund the manufacture of spare parts much beyond 10 years after the last vehicle build, and indeed for ‘slow moving’ parts which typically is everything not involved in regular maintenance, that support is gracefully receding to around 7 years. However, whilst the ingrained habit of vehicle value brings older vehicles closer to ‘financial loss’ well before the 10th anniversary of its birth, those very vehicles which get damaged need a source of used parts.
Is there a system for recycling parts? Of course. Under current commercial conditions there are plenty of roadblocks to reuse parts, such as data from the donor vehicle. This currently encourages those who are uncertain of component condition to default to purchasing new parts, and there is no penalty for obtaining those parts from anywhere in the world.
What is revolutionising ‘green parts’? … Connectivity.
The ability of the vehicle to communicate with the outside world is building a usage record as never before. No longer do we have to rely on DVLA, sales receipts or other traditional markers. There are challenges ahead – for instance, the process of removing a ‘write off’ marker from the DVLA database via exporting the wreck to another EU member state and re-importing it via yet another EU member state remains an open loop-hole.
However, the data stream from a vehicle will only get more detailed and extensive as time goes on. The revolution in getting recycled parts back to usable vehicles is underway!
In the next article we shall explore why vehicle manufacturing is financially challenged, the effect of changes in taxation regimes that will become evident towards 2030 and the effect on how vehicles are built.
Ezi-Methods is owned and operated by Auto Industry Consulting Ltd; providing Engineering and Technical Advisory Services to the global collision repair industry.