Paul D’Adamo (the ‘Recall Guy’) and Katie Stark based in the US, provide their views on ways auto recyclers can extract value from their inventory.
Many quotes make you think about the value of money. This is especially true when auto recyclers pay exorbitant prices for inventory and associated fees. Naturally, if the cost of goods continues to escalate, you must strive to extract more value from inventory. Money may not grow on trees, but in the auto recycling world, our job is to make money from our inventory tree; scrap/wrecked/junk vehicles. It is what makes us unique and part of an extraordinary system we call the automotive circular economy.
Non-part revenue, cores, commodities, and recalls need to be an integral part of an auto recyclers business model. I often hear “we don’t have time to pull airbags or cores”. My rebuttal question is are you pulling parts for your customers? Your core, commodity and recall vendors are customers. In fact, we are a customer whose return percentage is ZERO. Some yards have taken it a step further and anointed a Commodities Manager to oversee the process of generating non-part revenue. They recognize the value of this material as part of the monetization of the vehicle’s monetization and they will shake the inventory tree until every valuable item is recovered.
Value Proposition on Airbags
From a scrap perspective, recovered airbags’ value far outweighs their scrap value. At $200 per net ton for scrap, the average airbag (average 15 pounds) returns a whopping $1.50.
From a time and labour perspective, airbags are a win-win. Most driver airbags take less than 5 minutes to remove, so even if you are paying a parts technician $20/hour, it will only cost you $5 for a $55 part. Passenger airbags can take 10 – 20 minutes but the majority are removed in under 10 minutes once a parts technician has removed a few of the same type. Using the example above, that 10 minutes will yield $60. Let’s not forget that airbags have a one-way ticket to destruction, so there are no return costs involved, packaging and freight are covered, and you are keeping your company safe from liability.
For auto recyclers with full dismantling shops, the opportunity is ripe for removing airbags. You have a dismantler with a full set of tools ready to recover parts when that vehicle comes into the bay. The more value they remove in the bay, the less extra time is devoted to chasing down airbags in the yard at a future time.
For self-service, we would always recommend pulling the defective Takata airbags before de-pollution and being set in the retail yard. You will save money and time removing them while they are in a quarantine area rather than chasing them once they are out in the yard.
Stay Tuned . . .
We are awaiting the release of 5M+ airbag VIN’s from GM. These are new Models to the Recalls. The announcement should be made mid-February. We have also been told that another 2M VIN’s are coming from Ford in Q2. These airbags are not from new models of vehicles, but simply include the driver’s side of the existing models on our list.
Questions on airbag recalls? Call or email Pauly D. the Recall Guy at 401-458-9080 or pdadamo@coresupply.com
