Automobiles are recycled more than any other product in the United States. At least 75 percent of an automobile can be recycled. in fact, auto recylers recover material and parts from more than 4 million vehicles in the United States and Canada each year.

No matter what terminology you are familiar with - used OEM parts, salvage parts or LKQ - the recycling industry has an impending presence in the collision repair industry. As with most any facet of the industry, there are issues, though. Arising concerns have surrounded the use of these recycled parts. But auto recyclers are responding, addressing the concerns of shop owners and their customers.

Automobiles are recycled more than any other product in the United States. At least 75 percent of an automobile can be recycled. In fact, auto recyclers recover material and parts from more than 4 million vehicles in the United States and Canada each year. According to Jeff Schroder, president of Car-Part.com, the auto recycling industry generates approximately $8 billion in sales per year. These statistics show that recycled parts are a key entity in the collision repair industry.

Key Concerns

Quality and safety of replacement crash parts have always been a concern among consumers. But mention recycled parts among shop owners, and the same concerns arise.

“Insurers often believe that when a repairer gets a recycled part, it is clean and undamaged. This doesn't happen in the real world,” said Chris Dameron, AAM, owner of True2Form Collision Repair Centers in Raleigh, N.C., and director of the Automotive Service Association's (ASA) Collision Division Operations Committee. “Someone has to repair dings and scratches on even the best recycled part. The insurer says it's not their responsibility to pay for the repairs, and the salvage people can't afford to reduce the price, so the burden often ends up with the repairer.”

This burden amounts to unanticipated time, effort and cost for the repairer. Most insurers insist that they want repair facilities to accept “clean and undamaged” salvage parts. However, each insurance company has its own definition for “clean and undamaged,” a concern that is being addressed by ASA's Salvage Subcommittee, a group comprised from the larger ASA collision committee.

The Salvage Subcommittee's objective is to identify obstacles that currently prevent the industry from maximizing the use of quality recyclable parts. When discussing the definition of “clean and undamaged” among insurers at a recent meeting, members realized this was a key component of possible misunderstanding. Some insurers said they encourage their staff to use common sense and apply appropriate business logic on a case-by-case basis. Another insurer said a part is considered clean and undamaged when there is a minimal amount of preparation time required to remove surface imperfections and restore the part to original condition. Parts with moderate damage, repainted or required modification did not fit their definition.

So, the collision shop is caught in a Catch-22. The insurers recommend and often push the use of recycled parts for cost purposes, but the repairer often spends additional labor-intensive hours restoring the part to a usable condition. This cuts into the profit margin for the shop. Collision shops should be leery of certain parts of an automobile that really don't accommodate themselves to the recycling industry. The additional labor required to make the part usable on an automobile might exceed the costs of using a new part.

“ASA's Salvage Subcommittee has been working to educate our members as to what is included and not included in the electronic databases when assessing damage using salvage parts,” Dameron said. ASA's Collision Division has recently published a booklet titled “Reference Chart of Not-Included Operations when Installing a Recyclable Part.”

“This is a tool to be used by someone writing or reconciling a damage appraisal using salvage parts so they can quickly reference what is and what is not included in each of the databases,” Dameron said.

Advantages of Recycled Parts

A 1999 report published by the Insurance Information Institute stated that a 1997 Ford Taurus worth $19,000 would cost $72,000 to build from new original equipment manufacturer parts. However, according to the Automotive Recyclers Association (ARA), recycled auto parts cost up to 50 percent less than new parts. So, the key advantage of using recycled parts is overall cost. This reduction in repair cost could save a vehicle from being totaled.

The overall price of recycled parts isn't the only thing that affects lower cost. “If a door is heavily damaged - including glass and intricate inside hardware - a salvage part would have all these parts included, saving search, locate and shop time,” Dameron said.

Basically, the assemblies of recycled parts could result in substantial labor savings for collision facilities.

Since the State Farm Insurance lawsuit in 1999, the use of recycled parts has increased. Most insurance companies no longer recommend the use of aftermarket parts. And although the cost of OEM parts is higher, consumer advocates forced the use of OEM parts in the repair of vehicles. But recycled parts are basically refurbished OEM parts. Unlike aftermarket parts, repair professionals know that recycled parts will fit on the vehicle they are repairing because the recycled part was removed from a vehicle of the same make and model. So, in the long run, using a recycled part could save time on searching for the right part that fits a certain vehicle.

Another obvious advantage of using a recycled part is the effect on the environment. Consumers are more aware of the impact recycling has on the environment than they were 25 years ago.

“Any time we can recycle or reuse a part, we are helping the environment as well,” said Dameron.

The Internet Advantage

According to Forrester Research, more than 68 percent of sales for automotive materials will be conducted online by 2004. In fact, online parts ordering has become big business in the collision repair industry. The Internet is definitely becoming a strong entity in the industry and it has an overwhelmingly advantageous presence.

Car-Part.com has been in business for more than three years and currently serves over 1 million part searches per month on its Web site (www.Car-Part.com), according to Schroder.

One key advantage of finding a recycled part online is that the Internet is always open. Repair professionals can locate a part 24 hours a day, seven days a week. This is a facet of the Internet that is unique to the medium.

Sonny Cohen, director of marketing at NextPart Inc. (www.nextpart.com), believes the Internet can nationalize, or perhaps globalize, the part searching process. “Bottom line, if the part exists anywhere in the country, it can probably be found at the convenience of the part seeker,” he said.

Overall, the Internet can simplify the process of purchasing recycled parts. Besides having immediate access to parts, the information provided on sites like Car-Part.com and NextPart is always current.

“The inventory of every participating supplier is provided to NextPart on a daily basis,” said Cohen. “This is not a small task. We're talking about updating the inventory status of 60 million parts from over 1,000 suppliers every 24 hours. Since the link is directly to the suppliers' inventory management system in their facility, the accuracy regarding availability is excellent.”

As mentioned before, the condition of recycled parts varies from part to part. The repair facility never really knows what condition the recycled part will be in when it is delivered to the shop. The Internet is bridging the gap between the recycler and the shop by providing condition information.

“Ten doors can be in 10 different conditions ranging from undamaged to usable for accessories such as power mirrors. They must be tracked accordingly, resulting in more information about recycled parts,” said Schroder. “The Internet provides a great framework to bring these pieces together.”

NextPart grades its recycled parts throughout its Web site. “Parts that are distressed or in need of attention prior to use can be identified and ranked to help with selection and meeting customer expectations,” said Cohen. “This first step of qualifying the inventory reduces the problem of delivering parts which are not suitable for the intended application.”

Overall, the Internet is helping to address the concerns faced by the recycling industry. Standardization of parts descriptions appears to be one of the key concerns being addressed. “The convergence of uniform service levels, standardized part descriptions and increased workflow integration will continue to enhance the recyclers' ability to provide better products and services to shops,” said Schroder.

The Future

Who knows where the recycled parts industry is heading. Just like any other facet of the industry, there are always opportunities for improvement. ASA's Salvage Subcommittee continues to work with the Automotive Recyclers Association and a collective group of insurers and information providers to address the concerns of the industry. The subcommittee is recommending the information providers add drop-down boxes that would list many of the not included items for each labor operation. In the meantime, the development of the “Reference Chart of Not-Included Operations When Installing a Recyclable Part” serves as a temporary solution. This chart can be obtained by calling ASA at (800) 272-7467, ext. 295.

The once so-called junkyards are becoming more mainstream in the industry. The facilities that recyclers operate are becoming a larger influence in the collision repair industry. “The overall trend of automobile recyclers is toward the adoption of professional management practices,” said Cohen. So look for better inventory management, quality control, standardized methods of disassembly and sheltered part storage within these recycling facilities, making the process of buying recycled parts easier and more efficient for the collision facility.

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