NPO-Japan Automotive Recyclers Association provide their 2020 annual review of Japan automotive recycling under the COVID-19 pandemic.
The whole world is in a difficult situation due to the COVID-19 pandemic. In Japan, in May 2020 car sales decreased by 45% year-on-year, which was caused by temporary stoppage of automakers’ car production and car dealers’ sales due to employee’s self home isolation. As a result, there was a shortage of used cars on the market from the car trade-ins at car dealers making prices of used vehicles increase, and for automotive recyclers, obtaining ELVs from car auctions was more difficult.
On the other hand, the demand for mandatory (periodic) vehicle inspections was ongoing despite the COVID-19 pandemic.
The demand for oil replacement and other repairs weakened due to shortened driving hours amid people’s self home isolation and teleworks and in the long spring holidays in May 2020, car accidents decreased as people could not travel due to lockdowns. Thus, the number of car collision repairs decreased. Naturally, recycled parts sales to repair stations (shops) also dropped.
In June 2020, people returned to car dealers. However, to avoid the spread of COVID-19 infections, car dealers couldn’t hold large-campaign programs to attract customers, so used car demand rose sharply due to their immediate availability compared to new cars.
Car recyclers were also worrying about the “material” business. The trade price of scrap steel plummeted sharply due to the pandemic and the trade price of non-ferrous metals also plunged with a prolonged impact expected.
The recycling industry continues to take corporate efforts for business continuity against the pandemic.
The pandemic has caused heavy damage to automotive recyclers and the negative impact is larger than the 2008’s Lehman shock. This negative impact extends to all three pillars of the automotive recycling businesses: Material sales (steel scrap, non-ferrous metals, etc.), recycled part exports and recycled part sales for the domestic market.
Material and export businesses depend on overseas situations and there are no signs of the pandemic recovery despite car recyclers efforts.
However, in October 2020, the performance of the major automotive recycled parts inventory company, JARA Co., Ltd., (www.jara.co.jp) recovered to the same level as 2019. Optimistic factors have been observed in today’s market, and in November 2020, there was a sign of recovery in new car sales, which lead to the recovery in ELV acceptance by car recyclers.
Corporate efforts by car recyclers were progressing to maintain business continuity due to the experience of the Lehman shock crisis.
The pandemic has caused heavy damage to automotive recyclers in Japan, and therefore they need to review their Business Continuity Plan (BCP) to break through the status quo.
Source: 2020 Annual Review