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The Impact of COVID-19 on the Auto Recycling Industry

Matt Lyons, Head of Business Development at L&M Cores/L&M Auto Parts in the USA, provides his thoughts on how there may be some negatives to hit the auto recycling industry but the potential for a positive outcome is within our grasp providing we can adapt to the new situation we find ourselves in.

 

COVID-19 impact on auto recycling industry matt lyons one
Matt Lyons

The world has been a crazy place lately and these have been challenging times for most of us. Just like many other industries out there, the auto recycling industry has no doubt felt the impact of this pandemic. We are going to be looking at some of the ways it has made its impact as well as some of the potential ripple effects it may have in the aftermath.

These have been challenging times for everyone in the auto recycling industry, at the moment, the whole industry has basically come to a halt. With fewer cars on the road in general, there are fewer accidents which mean fewer people needing parts and fewer parts entering salvage yards.

Suppliers have shut down, as well as factories in Italy, Japan, and China. There have been mass layoffs and furloughs throughout the industry, no scrap is being moved or for that matter, any materials at all. It appears that people are being very safe with their money and it is likely that they will continue in this way until next year or whenever this all is over and things are back to running in full force.

Despite how it may appear, not everything that has come out of this situation is totally negative. There have been some positive shifts in the industry as well. In times like these, people are often forced to adapt to keep their businesses afloat.

One of the more obvious positives that have come out of this is that hygiene across the industry has improved significantly over the last few months. A lot of retail stores have not been able to let customers inside at all, causing them to change the way their stores operate in general and in turn giving auto recyclers less business as well. 

When the pandemic shut down New York State, one auto parts store adapted by installing a drive-through window with hand sanitizer and a cashier. They no longer allow customers into their building, and nobody is complaining about it. In fact, both the customers and the staff all really enjoy that. In many ways, the process of doing business has become a lot more streamlined. On top of that, the owner says that the changes have been so well received that they will be keeping them even after the pandemic.

As many businesses make changes to the ways their physical stores operate, many companies have been pushed into doing much more business online if they were not already doing so. The whole industry is being pushed forward technologically, which is great in a business that has remained pretty old fashioned. I think that by moving forward, more family-owned junkyards and salvage yards will hold more value in the importance of being digital. 

We’ve looked at some of the negatives that a lot of us are experiencing in the industry as well as some of the benefits, but what happens when this is all over? Surely things will not be the same as they were moving forward and we may experience some immediate bumps on the path to fully recovering the industry.

I believe that something to expect in the coming weeks or months of recovery is parts shortages in North America. Auto recycling companies are being advised by industry analysts from around the globe to prepare for a large surge of demand for secondhand parts.

With the state of the world right now, who knows when things will be fully recovered, but for now, it is probably best to be somewhat conservative with how we go about operating. Hopefully, things are on the road to recovery already, but only time will tell.

If you want to find out more information about our businesses, visit L&M Cores and L&M Auto Parts

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