Auto Recycling World spoke to Gabriel Menezes, Project Manager at ABCAR – the Brazilian Automotive Recyclers Association, about the current situation of the auto recycling industry in his country and how it is being affected by the pandemic.
With COVID cases on the rise throughout the world, the pandemic has affected many people personally and professionally, and it seems that Brazil is no exception. With 30,000 – 50,000 COVID cases and 700 deaths a day, even though many are trying to stay at home, there are still those who go out, which can surely only see these figures increase further. The situation is ‘bad’ to say the least, and it seems there is very little hope of coming out of a lockdown anytime soon, not until, Gabriel believes, when a vaccine becomes available. But for the auto recycling industry, where does it leave the recyclers?
In Brazil, all scrap cars need relevant documentation so that they can be scrapped, but when COVID came, the government department that provides this documentation to break vehicles stopped for almost four months. This left auto recyclers with very few vehicles to scrap and created further problems in the industry. One of the consequences of this was an increase in vehicle theft; with no work in scrapping cars and few cars available at auction, the industry ground to a halt, and through no fault of their own, people resorted to stealing cars for parts.
The government is working slowly. Scrap cars are rare at this time as people are not out on the roads, so parts sales are the way forward, during the pandemic, at least.
Only recently business has begun to pick up at auction, but this meant that a large stockpile of around 10,000 cars had to be auctioned in a week. Typically, this figure would be around 2000-3000 a week. On a positive note, because the demand for parts is there, prices are not high.
Most auto recycling companies are fully online; parts are sold through online marketplaces, or sales are generated via a company’s website. Most companies have been able to work with parts they have in stock, but with bodyshops stopping for two months during the lockdown, it meant a downturn in sales, but now, it seems, parts sales through bodyshops are picking up once more.
As for the effect of the pandemic on the industry, businesses continue, and there are no figures to show that any company has closed permanently. According to Gabriel, there has been an opportunity to borrow money from the government, offering low taxes on loans, and this, he says, has been helpful, but it was tough to get. Around 20-25% of auto recyclers are using government help to get their business going again.
When talking about how long it will be before the auto recycling industry will recover from this situation, Gabriel said it varies, companies with good operations and have an excellent online presence will recover in two to three months. However, companies who still work in the same way they always have without utilising online opportunities, it looks unlikely they won’t recover anytime soon, if at all.