The automotive recycling industry is grappling with two significant challenges: a dwindling number of end-of-life vehicles (ELVs) and a critical labor shortage for ELV dismantling. These issues are causing stress and concern among recycling companies in Japan.
Iwamaworks Co., Ltd., based in Fuji City, Shizuoka Prefecture, Japan, under the leadership of President Suguru Iwama, is at the forefront of efforts to address these pressing concerns. They are working tirelessly to purchase ELVs with a focus on maximizing the number of reusable parts, effectively responding to the current challenging business conditions. Furthermore, the export of used parts has been on the rise due to the weakened yen.
In a recent interview with Daily Automotive News, Suguru Iwama discussed his company’s strategies and provided insights into their operations and future outlook.
Challenges in the Automotive Recycling Industry
The automotive recycling industry in Japan is facing a double challenge: the declining number of end-of-life vehicles (ELVs) and a significant labor shortage for ELV dismantling. These challenges are putting pressure on recycling companies across the country.
Iwamaworks Co., Ltd. – Leading the Way
Iwamaworks Co., Ltd., located in Fuji City, Shizuoka Prefecture, is taking proactive steps to tackle these industry challenges. Under the leadership of President Suguru Iwama, the company is dedicated to the procurement of ELVs with a strong focus on maximizing the number of reusable parts. This approach is their response to the complex and demanding business conditions of today. Moreover, the company has witnessed an increase in the export of used parts due to the current weakness of the yen in international markets.
Sustainable Strategies and Business Performance
Suguru Iwama shed light on his company’s strategies and performance during the interview with Daily Automotive News.
Annual Growth: Over the past three years, Iwamaworks Co., Ltd. has experienced consistent annual growth in both sales and profits. The surge in demand for vehicle repairs, stemming from shortages in new car supplies, has significantly increased orders for used parts in older vehicles. This has been the primary driver behind the company’s growth. Unlike in the past, where orders were predominantly limited to popular vehicle models, they now receive orders for used parts across various makes and models.
Impact of Currency Exchange and Steel Scrap Prices: Approximately one-third of the company’s sales come from exports, and the weakening yen has provided a favorable boost. Despite using fewer shipping containers, their sales have increased by 10%. Additionally, the price of steel scrap has nearly doubled its expected value, contributing positively to the company’s business performance.
ELV Acceptance: While the number of ELVs accepted at the company is currently lower than in the challenging year of 2022, they are gradually recovering. The shift from frequent auto auction purchases to direct acquisition from car users has increased their monthly acquisitions to around 50 units.
Selective Vehicle Purchasing: Iwamaworks Co., Ltd. places a strong emphasis on the number of resalable parts within a vehicle rather than the volume of vehicles acquired. They focus on newer accident-damaged cars, typically within three years, and prioritize models such as the Toyota Hiace and Land Cruiser. Purchase prices are rigorously evaluated. This strategic shift has proven successful, reducing the need to acquire a high volume of vehicles that previously demanded substantial effort for acquisition and dismantling without commensurate benefits.
Employee Retention and Future Outlook
Employee retention is a significant strength for Iwamaworks Co., Ltd. The company actively hires motivated individuals from various industries, particularly those outside the automotive sector. They assess candidates based on their attitude towards adversity. Additionally, women are welcomed into the workforce, primarily in roles related to packaging used parts and cleaning. While there are currently no female staff involved in dismantling work, the company is open to hiring motivated women in such roles.
Future Business Forecast
Looking ahead, Iwama highlighted a critical period between 2023 and 2024. The decline in ELVs is expected to continue, making the procurement process more challenging. Competition for newer accident-damaged vehicles, the company’s current focus, may intensify. The outlook for currency exchange rates and steel scrap prices remains uncertain. In response, the company is encouraging its employees to prepare for these challenges and strive to enhance their work quality. They plan to further develop the company by increasing vehicle acceptance from car users through social media.
About Suguru Iwama
Suguru Iwama, aged 38 and a graduate of Fujimi High School, joined Iwamaworks, a company founded by his grandfather. In 2019, he assumed the position of company president, guiding the organization toward its current success.