Eddie Jonsson, Managing Director of two auto recycling facilities at Atracco Group, owned by LKQ, and based in Sweden, talks to Auto Recycling World about their operation, where they are in EV recycling, and about what is unique in Swedish auto recycling compared to other countries around the world.
Atracco Norrköping and Atracco Valla
Eddie is currently the Managing Director of two of Atracco Group’s facilities in Sweden – Atracco Norrköping and Atracco Valla.
Atracco Norrköping employs 33 people and dismantles approximately 2000 cars annually – these are mainly newer cars that have been redeemed by insurance companies. The main brands include Audi, Volkswagen, Seat, Skoda, Mercedes-Benz, Jaguar, Land Rover, MG and Toyota.
Atracco Valla is a facility that handles a slightly older fleet with no specific brand orientation. The facility in Valla also has a shredder facility which is intended to be sold. The operations in Valla employ 10 people and dismantle approximately 800 cars annually. In addition to these assignments, I am also a member of the Nomination Committee in the Laga Group, which is a collaborative organization for Swedish car dismantling companies.
The changes that have led auto recyclers to collaborate
Sweden’s dismantling companies have always been at the forefront when it comes to development. Looking back 30 or 40 years, it was early computerization of inventory management.
In the mid-nineties, there was an environmental wave in Sweden, which resulted in many dismantling companies investing in environmental halls, drainage equipment, time studies on recycling (which included, for example, plastics sorting) and environmental certification.
The industry in Sweden had an early maturity regarding management systems for quality and the environment, and for more than 15 years, these systems have been requirements for membership in the industry association SBR (Swedish Car Recyclers Association).
The great challenges of the 21st century have been for the industry to meet the automotive body repair workshops’ demand for quality and delivery precision. Therefore, over the last 10 years, there has been a major focus on collaboration between other dismantling companies; And this collaboration has been achieved by dismantlers becoming part of an inventory network – Märkesdemo.
The inventory network allows members, of which there are 25, to buy and sell used spare parts from each other, to systematically see within the collaboration of all member companies’ inventories as a single inventory. It requires consensus and a high level of quality assessment, coupled with clear guarantees.
Uniqueness in Swedish vehicle recycling
The Car Damage Guarantee (Vagnskadegaranti) for the first three years on new cars is unique to Sweden, meaning that the car manufacturer/importer has control over the repairs during the first three years. Most car manufacturers (with a few exceptions) have a good view of recycling parts for repairs, and most insurance companies in Sweden apply to either have the damaged car repaired for the car owner when it is financially defensible, or sometimes repair costs are allowed right up to the car’s market value. When it is not financially defensible with repair, the insurance companies redeem the car and sell the car to the agreed car dismantling companies.
Do high-value cars create advantages or disadvantages for the recycler?
The fact that market values are higher for cars in Sweden probably creates more possible deals as there is more financial scope for repair. This can mean that redeemed cars that are bought for disassembly/dismantling become more expensive, but as long as the circular economy provides an incentive to use reused parts in the first place, it creates good revenue per item.
The impact of export
The export of cars does not have as big an impact as far as I can judge. 15-25 years ago, quite a number of cars were imported to Sweden which entailed challenges as cars that were to be dismantled or repaired were not fully in line with cars intended for the Swedish market.
The export of spare parts is important for the car dismantling industry in Sweden. As there is a very large amount of used spare parts from newer cars (especially mechanical parts), it becomes more important to have sales channels abroad.
The future of auto recycling in Sweden
In the current situation with high raw material prices, raw material shortages and a high level of environmental awareness, the market looks really good.
The work that has been done in recent years to facilitate cooperation in the car dismantling industry now creates the conditions for good business.
The challenge ahead is of course electrification, where we are now investing in being part of the transition. We first make sure we have trained staff so that we can handle cars with high voltage systems in a safe way. We also work with provisions for the sale of components from electrified vehicles which requires new thinking. It is no exaggeration to say that in the long run, it can affect the dismantling industry with electric cars, both in terms of the components that are traditionally sold on combustion engine cars (which are missing on electric cars), and of course, safe handling and storage of electric cars, batteries and other components.
Right now, something that can also affect business is that sales of used cars are historically low. This is due to a lack of new cars, which means there will be fewer replacements. The change regarding the bonus/malus system in Sweden (vehicle tax) also affects the sale of used cars. It is often our industry that becomes relevant as a supplier before changes of ownership when cars need to be fixed and supplemented.
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