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France – the current state of the auto recycling industry

INDRA Automotive Recycling, one of the largest auto recyclers in France provided Auto recycling World with a report into the French auto recycling industry. As well as giving an overview of the industry, it also highlighted some of the challenges it faces and also gives an insight into how the current COVID pandemic is affecting the sector.

France - the current state of the auto recycling industry f four

Auto Recycling and Reuse Rates

France has achieved a reuse and recycling rate of 86.9% (87.4% in 2017) and a reuse and recovery rate of 94.2% (94.6% in 2017), still below the 95% target set by the European Directive. One of the explanations for the drop in the rate is a significant increase in the volume of ELVs due to the conversion premium, which, due to the increase in volume, there was less “thorough” and more random dismantling occurring, and a decrease in recovery by the shredders.

According to figures collected by ADEME, in 2018, France recorded:

  • 1,647 Approved dismantling sites and 57 approved shredders
  • 2,632,621 vehicles placed on the market
  • 1,571,776 ELVs declared to be taken care of by approved ELV centres (i.e. ~900 vehicles/year/dismantling site)

 

Table: Evolution of the number of ELVs supported by type of vehicle between 2014 and 2018

2014 2015 2016 2017 2018 Evolution 2017/2018
Private vehicles 1,006,372 941,478 989,688 1,045,066 1,446,479 +38.4%
Utility vehicles <3.5 tonnes 77,744 74,286 86,621 92,868 124,791 +34.4%
Motorcycles 650 562 561 808 506 -37.4%
Total 1,084,766 1,016,326 1,076,870 1,138,742 1,571,776 +38.0%

Source ADEME

Illegal operating

It should also be noted that, like all European countries, some vehicles go into the illegal sector (approximately 30 to 40%). In France, the weight of the illegal sector is around 500,000 vehicles, which should be added to the million and a half indicated above. It is necessary to change the regulations to limit these vehicles that escape the legal sector significantly.

Room for development

Some potential areas for development in the industry include:

  1. Continue to pay the insurance premium, as long as the owner has not provided the CoD (Certificate of Destruction)
  2. Provide proof that the car has been sold for destruction to an approved professional;
  3. Prohibit the export of any vehicle without a technical inspection.

The conversion premium and COVID

As the COVID pandemic has prevailed, the French government has introduced several economic stimulus packages including the ‘conversion premium’ – an incentive to encourage its citizens and businesses to buy a new or used EV or HEV in exchange for scrapping an old vehicle – a scheme that should have delighted the auto recycling industry but this is not the case according to Indra.

More than 200,000 vehicles benefited from the incentive bonus in June and July 2020.

However, the purchasing conditions for these vehicles have not been revised downwards, in a challenging context for the profession as there has been a fall in the price of materials.

This activity highlights the issues of the sector, which feels forgotten by the state.

A double-edged sword therefore for the sector, whose actors are far from agreeing on their profits.

Aid provisions which are difficult to balance, between too much and too little volume, the associated purchase prices, the supply and demand and by all the management and organisational impacts result from this.

Reuse is undoubtedly the cornerstone of economic equilibrium. The turnover must increase through reused parts, and the reduction of costs and time is achieved through the industrialisation of the sector (dismantling process, tools, training, etc.).

Conclusion

In France, dismantling centres have two sources of income:

  1. Re-use parts (pushed by the digitalisation of stocks and associated trade and a change in the regulations relating to the circular economy – an obligation for the repair professional is to inform the customer about the possibility of offering re-use parts)
  2. Materials (Fluctuating world market undergone by the profession)

Resale of economically irreparable damaged vehicles “as is” for export and in France, set to disappear, in particular, because it contributes to supplying the illegal sector.

Thus, Insurers are considering modifying their process to orient their offer more on the repair market. To do this, the vehicle must go through the dismantling sector, thereby increasing the supply of the re-used part on the repair market.

These are essential to achieving the objectives of the EU regulation, and by following the standards of practice, the organisation will achieve profit.

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