Since the highest bidder gets the prize, many end-of-life vehicles (ELVs) find their way into other countries.
These far away markets pose local challenges for the American auto recycling industry.
International buyers aren’t always looking for the same thing that local auto recyclers are. They have their own agendas as they seek specific makes and models. This is definitely benefiting certain consumers in the short run. However, as cars leave the continent, this reduces the number of salvage vehicles in the U.S. market. Fewer salvage vehicles translates into a reduction in recycling revenues. It also impacts the used parts market.
International purchasers push up the price of salvage vehicles by overbidding at auctions. Then they sell them to foreign countries where used cars earn a premium price. The vehicles are shipped and fixed for resale, or they are stripped for parts. Either way, these firms are taking ELVs out of U.S. circulation. The most common destination is a Middle Eastern or African country. The American Recyclers Association revealed that one of the biggest auction houses is selling to more than 100 countries via a variety of representatives.
Money is driving the market as this fierce competition makes it hard for local salvage operations to compete. This also has a negative effect on salvaged parts in the U.S. These are needed by consumers who want to need new car parts but need to save money. It is also essential for consumers who must turn to salvaged parts due to the age of their vehicle.
The internet has helped drive this problem. International salvage operations have learned to tap eBay and Craigslist to find vehicles for sale. They can find what they are looking for faster with the many internet tools available. Some reach out to local representatives to do their bidding, keeping the international angle a secret from auction houses.
Industry leaders are trying to do something about it. They are pushing for better regulations to govern the exit of these vehicles from U.S. markets. This will require stricter rules about who can buy cars from salvage auctions.
Unlicensed and Unregulated
Unlicensed and unregulated buyers are the most obvious problem, according to the American Recyclers Association. Keeping junk cars in the U.S. will depend on whether or not lawmakers will act on this problem.
Issues surrounding these sales go beyond the problems of U.S. professional auto recyclers. The problem has implications for the environment. Licensed businesses follow strict rules about disposal of vehicle fluids and hazardous materials. International unlicensed buyers have no such limitations and are escaping local, state and federal oversight rules.
One route for lawmakers will be to push other countries to adopt better standards. This will encourage international buyers to act more scrupulously. Mexico, which is the destination for many salvaged U.S. cars, has adopted its own standards for end-of-life vehicles. Likewise, the European Union has its own rules about safe dismantling and recycling of vehicles. India and Australia have indicated that they will be pursuing automotive recycling regulations. In an interesting twist, Russian import taxes helped curb salvage purchases by Kyrgyzstan. Until it joined the Russian Union, the Asian country had been a big buyer in the U.S. market.
Another aspect for regulators is the presence of fraud or illicit activity. International buyers who want to go around the system may use illegal means to do so. Since used cars are shipped off shore, it would be easy to mix the stolen vehicles with the salvaged ones.
International salvage operations generally put five vehicles per shipping container. These are destined for resale as usable vehicles. Companies also may have the vehicles taken apart piece by piece in the states. Then these are exported to the parts market overseas. As you can imagine, it would be easy to use these operations to disguise illegal activity.
U.S. auto recyclers are getting smarter and learning to compete. This means utilizing internet tools to expand their reach. Recyclers must have an effective online presence. A viable website and an active social media plan are among the most important ways to find sellers. Reaching out to fleet managers may also go a long way toward getting consumers to trade with U.S. recyclers. While it takes more work, a vigorous effort to reach the public will help stem the tide.