by MAURA KELLER
A few years ago, the automotive recycling industry was experiencing one of the worst slowdowns in industry history. Exports of scrap metal were down, primary commodity prices had dropped, and the tariffs imposed against China were affecting the auto recycling industry immensely.
Fast forward to 2020 and the industry experienced one of its busiest years in recent memory. While some industry experts are scratching their heads and wondering how, during a global pandemic and people driving less and less, an industry such as automotive recycling could see significant growth in certain areas of the business.
According to Amanda Richards, head buyer at Junk Cars New England and marketing manager at Seymour Auto Wrecking, the auto recycling industry has experienced growth in the area of used car parts, while other areas of the business have slowed.
“The pandemic has caused used part sales to soar because people want to find cost-effective ways to repair their vehicles rather than junking their car,” Richards said. Of course, since the onset of the COVID-19 pandemic people have been traveling much less, thus fewer cars are on the road, resulting in fewer accidents.
“Wrecked cars that we usually get from the auction are less available, causing an increase in the amount we have to pay to get those types of vehicles,” Richards said. Also, because of economic instability, many people are choosing to hold onto their cars longer, where in the past, they may have been more willing to junk their car and buy a newer vehicle.
“This has definitely affected the supply and caused the price that we have to pay to purchase junk cars from people to go up within the last year,” Richards said.
According to Melanie Musson, automotive expert at CarInsuranceComparison.com, there are several factors that have come together to contribute to the strong growth of auto recycling. The three biggest factors are demand, ability to supply, and environmentally conscious decisions.
“There is a demand for recycled metals to manufacture new, lightweight, efficient vehicles,” Musson said. “Recycling technology has progressed enough that recycling plants finally have the ability to separate vehicle components and isolate materials that can be recycled.”
And while recycling takes a lot of work, time and money, people and organizations are driven to invest in recycling in order to use natural resources as responsibly as possible.
While Seymour Auto Wrecking has experienced growth, the company has faced recent challenges due to the pandemic.
“It’s been hard trying to maintain a steady workforce,” Richards said. “Employees have had to quarantine on various occasions due to possible exposure or contraction of the COVID virus. Also, it’s been hard to get people to work because of the unemployment benefits being offered due to the pandemic. This is making it difficult to get consistent, reliable workers to show up to work every day and that’s been slowing things down a bit.”
That said, Musson indicated that the automotive recycling market is expected to grow by at least 25 percent over the next five years. “As the recycling process becomes more accessible and streamlined, you can expect to see that kind of growth continue for several more years,” Musson said.
In fact, the IMARC Group released its research report, “Vehicle Recycling Market: Global Industry Trends, Share, Size, Growth, Opportunity and Forecast 2020-2025.” During that study, the IMARC Group found that global vehicle recycling market size reached $19.6 billion in 2019.
The report indicates the defining factor in the growth of the automotive recycling market is technology. As car manufacturers continue to focus on creating lightweight, fuel efficient vehicles, they are also focusing on the widespread use of steel in their manufacturing processes. As consumers continue to turn their attention to “going green” in all facets of their lives – including the vehicles they drive, they are eager to incorporate recycled materials when their automobiles need parts replaced. As such, automotive recyclers are turning to sophisticated tools, including optical sensors, to recycle all facets of a vehicle, including fluids, natural materials, polymers, and of course, metal.
As the IMARC report indicates, “other factors, including the increasing utilization of recycled batteries in the manufacturing of consumers electronics and the implementation of government regulations to minimize environmental hazards associated with the disposal of batteries, rubber, oils and other materials, are expected to drive the market in the upcoming years.”
One growing area of focus within the automotive recycling segment of the industry is the handling of electric vehicle batteries.
According to Jeff Spangenberger, director of ReCell Center, Argonne National Laboratory, electric vehicles are still very new to auto recyclers. In fact, vehicles using lithium-ion battery technology didn’t really hit the market until around 2012, and even then sales were small relative to gasoline engine-only vehicles. The Argonne National Laboratory is home to ReCell, the Department of Energy’s lithium ion battery recycling center. A large focus of their work is on the challenges of recycling electric vehicles (EVs).
“The average lifespan of a vehicle is around 11 to 13 years so that makes the average early-EVs to hit the road reach their end of life around 2023 to 2025,” Spangenberger said. EV battery warranties typically last 8 to 10 years so that means the battery will not be the cause of early retirement since the manufacturer will fix it.
“EVs reaching the auto recyclers will start to ramp up over the next decade and will continue to grow rapidly, quickly becoming commonplace,” Spangenberger said.
As the EV market grows, so too do the challenges to automotive recyclers who have to properly and effectively handle the recycling of the EV batteries. As Spangenberger explained, learning how to safely remove and handle the EV batteries is a challenge that auto recyclers face.
“Making the economics work is another challenge,” Spangenberger said. “There will likely be less net value in these vehicles because of the cost of handling, transporting and recycling the batteries in them. Auto recyclers are going to have to be creative to get the most value out of an EV they are processing.”
The grand goal, in an effort that includes the battery recyclers, is to make the batteries in these end-of-life EVs a valuable asset, actually increasing the value of these vehicles at end-of-life above the gasoline engine-only vehicles.
Aside from the growth and opportunities of the EV market, Richards wants to be optimistic about the status of all areas of the auto recycling marketplace.
“With the distribution of the COVID vaccine now underway, people’s daily lives can start to go back to normal, therefore allowing for the flow of cars on the road to increase again,” Richards said. And unemployment benefits may begin to dwindle, causing people to seek steady work. Unfortunately, there could be more regulations on the recyclers due to the change in the political administration. And metal prices can fluctuate due to the tariffs that were put in place during the previous administration.”
In addition, focus on new areas of vehicle recycling is expected to add to the industry’s growth. In the research report, “Car Recycling Market – Global Industry Analysis, Size, Share, Growth, Trends, and Forecast, 2020 – 2030” released by Transparency Market Research, one area of auto recycling that is expected to expand significantly is plastics recycling.
According to the report, currently there are approximately 39 types of plastics and polymers used in automobiles and the “rising environmental standards worldwide and growing emphasis on recycling plastics is estimated to boost the recycling rate of plastics used in interiors, bumpers and fuel tanks.”
In addition to the expected increase in the amount and type of plastics being recycled from automobiles in the future, another expected impact on the auto recycling is China’s recent lifting of the scrap steel ban that was put in place in 2018 to prevent global dumping of low-grade scrap waste.
As of January 1, 2021, China released new standards for what is officially known as “recycled iron-steel raw materials” and they broaden the range of steel scrap that can be imported, which may open up opportunities within the automotive recycling industry.
Published in the March 2021 Edition