Auto Recycling World JAN2022 / by Adam Małyszko, CEO of the Association of Car Recycling / Read original article
The car recycling industry achieved record results in many countries around the world last year, both in sales volumes and profits generated. This is largely the result of huge price hikes for steel scrap, aluminium, copper, chemical elements retrieved from catalytic converters and the increased demand for used parts. The last factor is closely related to the reduced production of new cars.
The rapid increase in the prices of raw materials meant that all companies that had accumulated stocks could generate high profits from their sale. Moreover, in countries where the parallel growth of a huge grey economy is not an issue and owners of end-of-life vehicles are aware that such waste needs to be properly stored and processed, the fact that higher compensation would be paid for a vehicle submitted for dismantling was much welcome. Where the grey economy continues to be a (very) significant challenge, legitimate car-recycling businesses have had to swiftly adjust the prices offered for the cars they receive to – ironically – those offered by the grey economy. Failure to pay taxes and avoiding many other legal obligations translate to lower costs compared to legally compliant businesses. Nevertheless, everyone profited from the increase in raw material prices in 2021. So much so that today even carmakers themselves are considering investing in car recycling.
Limiting the re-use of parts
Every year, we dismantle newer and newer vehicles packed with electronics. Increasingly, despite excellent parameters, some parts cannot be installed into another car due to electronic protection. This problem is likely to get worse over the years. It will be most quickly acknowledged by countries where the share of electric cars is the highest. Electric cars will pose a significant challenge for the industry in the future. The industry’s lack of experience in this segment means that its future is full of uncertainties. To a large extent, we will likely be dealing with a market similar to the electric-engines-recycling market, which is large, but only in the area of raw materials and negligible for spare parts. If an electric car cannot be repaired after an accident, neither new nor used parts will be needed.
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