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Solving the Supply Issue

Recyclers have a unique opportunity to help collision repairers and insurers dealing with serious parts shortages.

OEM parts supply shortages are a fact of life for collision repair centres today. And for the last two years, this has driven more businesses to automotive recyclers. Insurers have in many cases, traditionally wanted recycled parts, while collision shops were far more reluctant to accept them. One of the reasons was that collision repairers saw less opportunity to make money on those kinds of parts and felt they had little control over those costs as they related to the repair. Today, many shops no longer have the luxury of such thinking, due to growing pressures to not only source parts to complete repairs but to keep length-of-rental (LOR) and severity down.

Greater rental costs
The cost of insurance rentals in particular has been a huge driver. On average the timeframe for a collision repair rental has bloomed from six to 16 days! And because OEMs and even the aftermarket are struggling to have parts shipped from overseas in places like China in Taiwan, plus the costs of shipping those parts by container have doubled or even quadrupled in most cases, salvage parts are becoming an increasingly attractive and practical option for insurers to keep LOR costs down and for collision shops to complete repairs as timely and efficiently as possible.

As a result, more and more, recyclers are being inundated with requests from repairers and insurers for salvage parts. For us, as a sector of the circular economy, this presents a real opportunity, not only to increase business and parts sales but also to professionalize our operations. Progressive recycling operations understand this and have been really upping their game. They are taking the opportunity to improve their marketing and communication strategies, so they can more efficiently contact and work with their customers. They’re also improving their internal processes to ensure faster, more efficient inventory management so they are able to provide parts and solutions for repairers and insurers.

Greater online awareness
At the association level, we are playing our part too, including investing in Google and Facebook ad campaigns to drive more online activity to our members. In some cases, we are seeing website hits increase by 300 percent, indicating that a lot of people are looking to us to help provide them with the parts and solutions they need to fix the vehicles in their shops.

Like everything else, this scenario won’t last forever, which is why, if you’re not actively promoting your recycling business and engaging with repairers and insurers, you need to take advantage of this opportunity now. Engage with your association and talk to fellow recyclers that are successfully capitalizing on OEM and aftermarket parts shortages. See how they are doing it and learn from them. There will come a time when supply chains will normalize, but putting yourself in a position today to help repairers and insurers facing serious parts shortages will help you build relationships, establish business credibility and put you on a path to longer-term, sustainable success.

First appeared in Autosphere September 2022

The post Solving the Supply Issue appeared first on Automotive Recyclers of Canada.