Argentina’s auto recycling industry is facing a perfect storm. On one side, the government has imposed strict regulations on the sale of used auto parts, effectively banning the majority of the industry. On the other side, there is a shortage of dollars to import new parts, and inflation is making it difficult for businesses to operate. As a result, the illegal auto recycling market is booming. Thieves are stealing vehicles and stripping them for parts, which is leading to safety concerns and environmental problems.
In this article, Maximiliano Marques, the owner of NH AUTOPIEZAS, discusses the challenges facing Argentina’s auto recycling industry, the potential solutions, and how his company is working to navigate the perfect storm and create a more sustainable future for the industry.
What would you do if you weren’t able to recover and sell 50% of every car that entered your facility? And what do you think about how selling even a wheel rim, a door handle, or a seat could see you sent to jail?
This is a true story and is happening in Argentina right now. According to current legislation, all but 30 used parts of a vehicle are forbidden to sell. The rest must be destroyed. The government claims that this is for safety reasons. However, the reality is that the OEM manufacturers were the main supporter of the legislation; they are even still seeking to forbid the entire activity.
In 2019, I wrote an article for ATF Professional claiming that the auto recycling industry was under attack and questioned if our regulation could expand to other regions. Four years on, and there is both good news and bad news. The good news is that, fortunately, Argentinian law didn’t spread around the globe and that there are just a few countries with problems like ours. The bad news is that the consequences have been devastating, confirming our initial warning.
To make matters worse, we are in the middle of “the perfect storm”; do you remember the movie? On the one side, there are legal restrictions to sell used auto parts and process more ELVs. On the other side, there is a shortage of dollars to import new parts, and there is a high inflation level that erodes salaries every month. You can probably guess how this movie ends! We must make the right decision at the right time. Unfortunately, in this instance, this is not the case.
The illegal market is growing. Vehicle and auto parts theft is increasing; owners can’t afford to fix and replace auto parts; safety is declining, and the environmental impact is tremendous.
While we agree that our environment is in a dangerous situation and that we have to do the right things to ensure a better world for future generations, we are falling short of the volume of our actions. In that sense, and according to the waste hierarchy, we must reduce, reuse, recycle and recover.
To achieve this, we need to be able to recover all end-of-life vehicles (ELVs), sell all auto parts in their original condition, and process them in authorized treatment facilities that meet the highest international standards. This would increase the supply of used, original, and affordable auto parts. In turn, this would have several positive impacts: reducing crime, improving safety, increasing innovation, creating jobs, and, most importantly, protecting the environment so that we and future generations can live.
There are a few positive factors that give us hope. The circular economy is a key topic nowadays, and many politicians want to use that flag. Key stakeholders are starting to ask questions and listen. Some auto recyclers are showing more interest in the green side of the business and professionalizing their processes. Although insufficient understanding exists to fully apply the circular economy mindset to vehicle recycling, some steps have been taken.
In the coming years, we will face several challenges and obstacles to overcome, including regulators, bureaucracy, illegal competition, rising costs, a struggling economy, high inflation and much more. But this industry is beautiful, and we are still responsible for positively affecting our bottom line.
At Nh Autopiezas, we are implementing lean philosophy, building a great team, incorporating artificial intelligence, and acquiring new machinery to tackle these challenges. We train our staff by adding the right technology. We are developing the ecommerce business and strengthening our relationship with the professional sector.
As a positive side effect, we have also opened another company dedicated to all kinds of waste, such as cardboard, plastic, glass, metals, WEEE, and other streams. The synergy between the two companies is very important: more knowledge, volume, and profit.
I firmly believe the best way to prepare for the future is to work together and stay connected to other auto recyclers. Recently, I had the pleasure of receiving colleagues and members of A.R.A when they visited our facility. It was the best thing in my career. I am still learning from their questions, support and experiences and gaining friendships with them along the way.
Being involved in an association, attending conferences, expositions and being aware of the latest trends from specialized magazines and portals is the key activity of a CEO. You shouldn’t avoid or delegate this role. It is a strategic weapon for achieving the best results.
Finally, lawmakers will have a crucial choice to make. Either develop a professional industry or allow the proliferation of illegal operators, corruption, crime, safety issues and environmental problems. We are committed to working diligently, with patience and perseverance, to contribute and be a source of inspiration.
Legal and professional auto recycling companies are the best solution for our people and planet.