Automotive Recycling:Your consultancy spans Australia, New Zealand, the UK and the USA. How have you seen the pandemic impact the industry in each region? Chris Daglis: The pandemic has impacted auto recycling in differing ways depending on the region. In Australia and New Zealand, there are some auto recyclers facing tough times, while others are recording record growth. The auto recycling industry in the UK has felt a lot of pressure from COVID restrictions, as they were in a very heavy lockdown for a good part of late 2020 and early 2021. Collision repair claims, for example, were down by 60% in the UK because people were simply not driving. Meanwhile, a healthy number of auto recyclers in the USA have been able to adapt and grow their businesses.
AR: What are you seeing in your interactions with auto recyclers where the pandemic brought silver linings? There’s no denying that there is a lot of uncertainty right now in regions where there has been a hard lock-down approach to dealing with COVID-19. Examples of this are my home state of Victoria and, more recently, in the NSW, but we’ve seen a lot of people come together and collabo- rate to make the industry work better.
This attitude and response has been really refreshing to see as COVID took hold.
Automotive Recycling
AR: What are the implications of the pandemic from the harsher lock-down regions versus others like the USA? COVID-19 has been a challenge for auto recyclers in the UK and Australia, with many stakeholders feeling like they are in limbo. In these regions, auto recycling businesses have often felt the need to be more conservative than aggressive, whereas auto recyclers in the USA have had some time to build up their defenses against COVID. The fact that the USA has remained open for business has led to a ‘business as usual’ approach. Yes, salvage inflation has been clearly evident and as a result has posed challenges to cost of goods. At the end of the day, if you pay more for inventory, and you forget to adjust your parts pricing then your bottom line will shrink. We have seen this in the numbers of many of our Exact- stats clients. We drill down into the detail of their numbers and it is clear that they have not adapted, but luckily, we are able to fix this with them. In the UK, Australia and New Zealand, though, the hard lockdown has been really tough for some – less cars on the road, less servicing, less need for replacement parts, less accidents ... and auto recyclers have been in a stop- start/on-off trading environment for a year and a half now. This is the nature of COVID; it requires you to continually adjust in order to survive!
September-October 2021 //49
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