Cautious Optimism

Several factors and initiatives are creating a future environment that could offer multiple benefits for auto recyclers

It’s an interesting time for auto recyclers. We’re seeing more cost-related pressures in the economy and although the official statistics regarding inflation would indicate things are relatively stable, the reality is that for most individuals and businesses there have been significant cost increases over the last several years.

And while there are some headwinds impacting the automotive industry, including tariff related issues, stagnant household incomes and aforementioned increases in business operating costs, I’m optimistic about the future of auto recycling in this country. We’ve seen time and again, that those businesses that tend to be the most successful aren’t necessarily the ones that offer the lowest prices, but those that are the easiest and most seamless to work with.

“The key to really seizing that opportunity comes to down optimizing your inventory, having highly effective marketing and when customers come to your door being very easy to do business with.”

– Wally Dingman, Executive Director, ARC and OARA

Simpler process

For recyclers, it’s not just about having the right parts, but the right process in which the customer has a single point of contact and just a few steps needed in getting the correct parts.

While tariffs continue to dominate the headlines and impact those that are conducting cross-border business, there is a big opportunity at home for recyclers to capitalize on their strengths including local proximity to collision centres and mechanical shops, plus a wide selection of quality, factory specification parts.

The key to really seizing that opportunity comes to down optimizing your inventory, having highly effective marketing and when customers come to your door being very easy to do business with. I remember having a conversation with a recycler on the West Coast almost 15 years ago and he said that while he might not be able to compete with some operators on price, his goal was to be very easy to deal with, something that has stuck with me to this day.

Making progress

At the association level, we’re seeing progress on a number of important initiatives, although there is still work to be done. One ongoing concern in Ontario is the issue of VIN branding and the proper handling and disclosure of salvage vehicles. The issue has not been resolved, but recent conversations with OMVIC have been encouraging. OMVIC is aware of the concerns being raised by the automotive recycling industry and has indicated that it is holding auction operators accountable for their responsibilities under Ontario’s motor vehicle legislation. OARA will continue to engage with OMVIC and other stakeholders to ensure that the rules surrounding salvage vehicles and vehicle branding are applied consistently and effectively.

Separate from the VIN branding issue, OARA has also been working to establish a dialogue with insurers around increasing the utilization of quality recycled original equipment parts in collision repair. This initiative is focused on identifying the practical barriers that can prevent recycled parts from being selected, sourced and used during the estimating and repair process—and, more importantly, finding solutions to those barriers.

The supply-chain challenges experienced during and following COVID demonstrated the value recycled parts can provide. Insurers, collision repairers and mechanical repair facilities have seen firsthand the advantages of having access to locally available recycled OEM parts, including shorter delivery times, competitive costs and significant environmental benefits. We believe there is a real opportunity to build on that experience and increase the role recycled parts play in the repair ecosystem. On the compliance and regulatory side, ARC continues to focus on updating the Canadian Auto Recyclers’ Environmental Code (CAREC). Steve Fletcher and I have been working on the next evolution of the standard, with the goal of having the updated CAREC program in place and ready for the auditing process in 2027.

We’ve also made good progress with audits and compliance training. That is a testament to our members and the investments they have made over the years in environmental stewardship, employee and public safety, and professional operating standards. CAREC remains an important tool in demonstrating the difference between professional automotive recyclers operating to recognized standards and other operators in the marketplace.

Better visibility

Gold Seal 2.0 continues to move forward and we’re in discussions with eBay about working with our members to promote their products and those recyclers that are Gold Seal 2.0 certified, will have their inventory at the top of eBay’s online parts listings. Not only does this provide better opportunity and visibility for auto recyclers but in working with us at ARC and OARA, there is also less risk when it comes to potentially fraudulent practices against yards that are selling parts online. Gold Seal 2.0 also provides us with another opportunity in working with insurers on utilizing recycled parts on collision repair estimates, providing a clear and transparent standard when it comes to quality and service. Our discussions and the formation of a working group with insurers, indicate that Gold Seal 2.0 could provided significant advantages for those recyclers that meet these standards, which is good not only for our sector, but the wider circular economy.

Bio: Wally Dingman is a long-time auto recycler and past chair of the Automotive Recyclers of Canada. He now serves as Executive Director for ARC and the Ontario Auto Recyclers Association (OARA). You can reach him here