Presenting at one of ATF Professional’s webinars, e2e Chief Operating Officer, Neil Joslin provided the audience with his interpretation of where he sees the finishing line for Brexit and its impact on the motor vehicle salvage and recycling industry.
Neil began by giving a summary of the salvage recycling industry. He said that it exceeds £1 billion in terms of UK motor vehicle damage and is a key component of the motor industry; it contributes to high-level government recycling and environmental targets. The industry has a huge role to play in the used car sales market, in both stock and parts. He said something that is probably overlooked is that it has helped thousands of customers each year, from those who have had a crash, for those looking to get rid of a vehicle they have that just failed its MOT and those looking to buy salvage or parts. It is a service industry.
Neil has seen professional salvage and recycling agents taking accountability for the waste in their sites. He said within the whole industry, there is a lot to be proud of, and in his opinion, it doesn’t always do itself justice, and in many instances, it is barely considered.
Neil added that the vehicle recycling industry rarely has a voice in the design of new cars, new features or new technology which he said, is not for the sake of trying. He said that there is a challenge for the industry, it needs to ‘step up, call out what needs improving and ensure the right engagement with the right people’ and support the work that the VRA is doing for its benefit.
For Brexit, he said that uncertainty remains. There are concerns about administrative costs and delays due to border controls. There’s a huge change already faced in the UK’s motor industry, with the government’s ambition to ban sales of new petrol and diesel cars in 2030. Although a government target, he questioned whether all stakeholders, including the vehicle manufacturers, were aligned.
But more widely than just salvage vehicles, retaining vehicle manufacturing in the UK is under pressure. A lot is going on in the background concerning Brexit and the impact it will have. The TCA (The EU–UK Trade and Cooperation Agreement) is now UK law as of 31st December 2020, and in their document, there is a specific annexe for our sector – ‘Annex TBT-1: Motor vehicles and equipment and parts thereof’ on page 487 Draft EU-UK Trade and Cooperation Agreement. The joint objectives include no tariffs or quotas on the movement of goods produced between the UK and the EU. They also include creating competitive market conditions based on principles of openness, non-discrimination and transparency. And they also involve maintaining cooperation on issues of mutual trust.
A working group is set to be established to assist the proper functioning of this particular annexe and ensure good collaboration. There will be no additional duty placed on vehicles, all their parts coming into the UK from the EU or vice versa. Unless, of course, separately imposed by the UK Government. There are a good set of high-level principles which offer guidance and reform. But it is yet unknown how the TCA will apply in practice to use cars, reclaimed parts, or even to salvage cars. It is also unknown whether there will be increased administration, which will affect how quickly goods flow through border control. So initial indications are that delays are happening, but for how long there is uncertainty.
Neil questioned how the ELV Directive (an EU initiative) will fit in now that the UK is no longer part of the EU. As it affects UK laws and policy, he assumes that it’s not going to change. When it comes to the collaboration between countries outside of the UK, what will this look like for the UK? Will the metals market be affected, and consequently, the price of scrap per tonne? And then finally, in terms of the effectiveness of the TCA working group, who will be the stakeholders and the participants in that working group? Will the salvage industry have a voice in it?
Although there are more unknowns with Brexit, it is far from breaking the salvage and recycling industry; it represents some opportunity. There’s a strong demand for UK salvage vehicles due to several factors, including the salvage’s price and quality. Another significant window of opportunity is for reclaimed parts to be in more mainstream use, whilst bureaucracy and border control delay parts supply. Still, at the same time, the public is very receptive to use reclaimed parts as part of their repair. Neil said that stakeholders need to come together and decide what to call these parts to be described consistently and drive more integrity and credibility to retain them.
Concerning the government’s race to the electrification of the UK roads, he said that some research conducted by the Faraday institution last year concludes that unless there is a significant and immediate investment into UK electric vehicle battery production, the opportunity for the UK to be a player in that market will be lost. Not only will that leave the UK dependent upon overseas for EV batteries supply, but there will also be a significant knock-on impact on new vehicle production in the UK.
Referring to EV sales in Europe, the market is quite significant, accounting for approximately 25% of EV sales worldwide. The UK are one of the four largest markets in Europe, along with Norway, Germany and France. So, again, a huge opportunity for EV battery recycling.
With regard to Brexit, Neil said an opportunity exists, and as an industry that has competed, adapted, innovated, and thrived, we must continue to do these things and not wait for someone else to do them. He added, “We’re all affected whether we trade directly in the EU or not. We just need to keep doing what we do. It’s a competitive marketplace, and that in itself drives innovation.”
Neil said that we must collaborate, support our trade body and talk to them. It’s only by taking a collective approach and collaborating as an industry that we can create an influence – a sound baseline. And we must continue to educate on the safety and benefits of reclaimed parts, and operate with confidence and transparency to exacting standards which need to be accepted.
Neil said that there are some great things happening around reclaimed parts, and he is convinced the whole reclaimed parts option will be flying. Customers should take a chance on them.
Neil said that we need to promote and talk about salvage. We need to put our own business interests to one side and focus on the bigger picture. And he proposed the formation of a working group of relevant stakeholders committed to supporting the VRA.
In his assessment, there is no Brexit finishing line. There will be continuing evolvement just as there has been over the last 125 years. It is just another lap of the change circuit which will help the industry to stay alert.