Auto Recycling World SEP 2022 / Read original article
Earlier in the year, Adam Małyszko, CEO of the Association of Car Recycling (FORS) in Poland, spoke to Auto Recycling World about his views on where the vehicle recycling industry was headed. We caught up with Adam to see whether or not his predictions about 2022 were accurate.
There is a possibility that we are likely to face the growing threat of a global crisis that will affect the car recycling industry. Among the factors that systematically increase the aforementioned threat, one cannot ignore such factors as inflation, increase in the minimum wage, energy prices, decrease in the price of raw materials recovered from ELVs, and finally, the decrease in the amount of ELVs submitted for dismantling.
Inflation
Since the beginning of 2022, we have seen a drastic increase in inflation in countries around the world. The pandemic and the war in Ukraine (I’m talking about the war, intentionally avoiding the Russian propaganda term “special operation”) contributed greatly to this surge in inflation; War is an entirely different dimension of the problem.
In some European countries such as Lithuania, Latvia and Estonia, inflation levels in July 2022 exceeded 20%. In others, inflation growth was less drastic. In Japan, for example, it is currently at only 2.4%, whereas in January 2022, inflation was 0%. Huge inflation on a global scale has therefore caused a decline in the monetary purchasing power, which in turn has contributed to a reduction in demand for non-essential goods. New cars are an example of such goods. The average decline in sales of new cars in Europe has exceeded 20%. The same is true for other goods. And this situation has resulted in reduced production, shutdowns or production stoppages.
Companies that use loans have faced the need to revise their business plans as the cost of borrowing has increased significantly. In turn, companies with a surplus of money are looking for solutions to make their funds devalue as little as possible.
The slump in investment and credit risk has led banks to offer very low-interest rates on deposit. Such a slowdown is a straight road to crisis.
Minimum wage increase
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