Rafael Couto, Manager at Servcarros, a vehicle recycling operation in Portugal, tells Auto Recycling World about the company set-up, the challenges faced post-COVID and how the Ukraine conflict has affected business, as well as their relationship with emergency services and partnership with the B-Parts network.
The history of Servcarros
Servcarros, Lda started its activity in 1996 with three partners, Paulo Lachado, José Mariz and Eduardo Couto, in a rented warehouse with basic facilities, like many other companies in Portugal back then.
The business grew to the point that they felt the need to have better working conditions, so in 2000, the construction of the new facilities was completed. It was already advanced compared to the other ‘junkyards’ because it had a vehicle depollution area – one of the first in Portugal.
At that time, the sector had no regulations or laws, especially concerning environmental protection. Servcarros was already a pioneer in this area, so much so that some colleges conducted studies during visits to our operation.
With the evolution of the theme “protection of the environment”, new laws and requirements emerged at national and European levels. After 2009, Servcarros became one of the first “Centro de abate VFV” ((an authorized center for the cancellation of documentation and treatment of end-of-life vehicles and the respective use of their parts for resale or correct disposal of the resulting waste).
Sales were conducted primarily, and remain, face-to-face. Up until 2011, they were known as the golden years for the company. The state awarded them with the “PME Excellence” Award (volume of invoicing for small-medium-sized companies). After that time, more yards appeared in Portugal.
Then, with the economic crisis that shook Portugal with the famous entry of the IMF to help the country financially, there was a significant decrease in sales, and they faced difficult times. Still, it was in these times that evolutionary decisions were made to overcome the difficulties. The company began cataloguing vehicles and their parts, for which they now have a more efficient response in customer service. They set up their first online store in 2014.
Rafael said: “Since then, we have evolved internal procedures and supporting programs, and there was the appearance of some platforms that also helped us to sell online.
We recently signed a contract with Renault in which we deal with vehicles with Hiberic defects, resulting in practically new vehicles in which we resell their parts.”
The connection between Sevcarros and the emergency services
Servcarros has always gone hand in hand with emergency services, namely by its founding partner, as he was a volunteer firefighter. We have always helped all the charities in our city, but there has always been a special affection for the firefighters due to our connection.
We help monetarily every year and personally in the acquisition of various vehicles and equipment. We collaborate annually with vehicles for “incarceration” training (firefighters’ maneuvers to remove victims trapped in car accidents).
Unfortunately, the founding partner died in the service of the Esposende firefighters in a truck accident on the way to a forest fire in 2009. Adding to this event, another company partner had a serious health problem and was hospitalized. It was a challenging moment for the company and for everyone who worked there at the time.
Changes after the pandemic
During the pandemic, we were lucky not to have to close completely, but we were considered an essential service, and we never had an epidemiological outbreak in the company to the point of having to close.
We had a lot of difficulties buying collision vehicles for raw materials to sell. We felt a drop in sales in the first phase of the pandemic like everyone else, but gradually, and luckily, things returned to “normal” operation. With this, we obviously felt a reduction in purchases in the traditional way, but we had a boom in online sales, which we had been developing.
On the one hand, initially, it was very good because we had been prepared since 2014, and we felt the growth in this area. On the other hand, the competition quickly modernized and followed in our footsteps. Nowadays, we already feel that we are not the only ones; in all areas, there is always one that stands out, but the market follows the trend, and things tend to standardize.
Ukraine conflict and cost of living crisis
With the conflict in Ukraine and a looming cost of living crisis, I think that it could be similar to the financial crisis in 2008 in Portugal when we saw a decrease in national sales. Our market has been absorbing existing vehicles for several decades, that is, when a vehicle has an accident, it is sold, repaired and returned to be sold for circulation, and our biggest sales come from the volume of parts to repair these cars.
In general, the Portuguese already buy used parts, but with the previous crisis, we evolved to sell online with the perspective of reaching other European markets.
Today we are all in the same boat, and I don’t see a way out. I am just hoping that the rest of Europe starts buying used parts instead of new ones, and our sales will remain or even grow. Nationally, I forecast that it will decrease.
Challenges and public perception
Increasingly, concern for the environment has made many laws for our sector over the years. In Portugal, several inspections are carried out annually by different entities.
From my point of view, it is correct to make laws and have these inspections to ensure that vehicle recyclers are compliant and follow these requirements. There are, of course, non-compliant vehicle recyclers; those that do not follow the rules and pollute the environment, and due to their lack of cooperation, their establishments have not been inspected. Police and ministries do very little because they do not know where they are or do not want to know because of the work that this implies.
In Portugal, for a few decades, and due to low purchasing power, the general public has been used to buying used parts; in the past, mostly through mechanical workshops, but nowadays, the consumer does the research and buys the part they need online or at a yard.
I think that vehicle recyclers in Portugal, as a result of this trend, have evolved a lot by adapting to customer requirements and trying to sell as many parts as possible.
Being part of the B-Parts network
Our partnership with B-Parts started before it became known as such. One of its partners came to Servcarros to show their product. At that time, the company was connected to the internet and provided online sales in a different format, which also coincided with the computerization of Servcarros’ stock. The desire was to have all the parts cataloged into one database. It was then that the partner of this company founded B-Parts and even helped us in the initial process of cataloging our stock, which he used to start the sales method they use today.
So we can dedicate ourselves to the purchasing of vehicles, cleaning, cataloging and selling in the traditional way, and B-Parts reaches customers in need of a car part who may not know about Servacarros, through marketing and advertising.
It’s a partnership where we help each other. The more car parts we have, the greater the probability of a sale, and, therefore, the greater the profit.
The rise of the EV
I can’t say that we think about the future, but we are solving the problems that arise daily. We continue to create new procedures and programs. We “climb one step at a time”, and this is how I think the future is prepared in our sector.
Regarding EVs, we are concerned with training personnel and preparing the facilities to receive them in our yard. Of the EVs we have received to sell for parts, practically everything sells, including the batteries; two of which were for application in homes to store energy produced by solar panels.
We are also prepared to dismantle the batteries up to the units to process the aluminum, plastic, iron and other recyclable components within, but we just don’t have a procedure for the units of the batteries that are damaged. Those that are in good condition will be reused, whether in a car or for another application.
For Servcarros, when opportunities arise, we will be prepared and ready to take them on.