Sponsored content: Eddie Longworth, chief executive at E2E Total Loss Claims Management, discusses how new capabilities could transform the recycled motor parts market
A recent commission from the Vehicle Recyclers Association (VRA), and fully supported by E2E and our national network of suppliers, is set to revolutionise the use and reporting of green parts in the collision repair industry.
For the first time ever, there is now an independent, freely available, and credible method for measuring the carbon emission savings that arise from the use of recycled parts instead of fitting Original Equipment Manufacturer (OEM) parts.
The savings are huge – the parts reclamation sector may already be contributing up to three million tonnes of carbon emissions savings every year and this is equivalent to the manufacturer of 24,000 new cars per year.
With a completely transparent methodology that is fully documented in the report, the VRA has provided insurers, TPAs, claims outsource managers, fleets, repairers, garages and anyone else involved in the use of these parts with an entirely new method of accounting for the emissions savings being made.
Just as important as the new and more robust method there is the simple fact that everyone will be talking the same language.
Unlike previous efforts, which have been characterised by obscure proprietary systems designed primarily to gain competitive advantage, it is now possible for direct comparisons between, for example, different insurers who are seeking to leverage their use of reclaimed parts.
At the same time, the supplier community can now provide valuable MI to their clients and play a full part in the downstream measurement of emissions.
Not too late
While this research is invaluable, we do already know that the use of recycled parts is still, by and large, in its infancy.
In 2023, UK insurers paid out £6.1bn on vehicle repairs and around £2.4bn of this will have been in purchasing replacement parts.
The best estimate is that less than 2% of these parts are from the recycled pool of stock, with even conservative estimates suggesting that this penetration could be increased five-fold.
The secret lies in automated matching of demand with supply, as happens in the OEM market, and a more sophisticated and consistent approach to pricing.
Currently, too much of the market is determined by the likes of eBay with an auction-based approach that can lead to wild fluctuations in the pricing of the same or similar parts. This makes it very difficult for claims directors and underwriters to forecast inflation when much of the spend is unpredictable.
New Knowledge
However, it is becoming increasingly clear that bodies such as the VRA, the suppliers themselves and the major system houses such as Solera and GT Motive are seeking to professionalise the market, and this can only benefit those seeking both emissions savings and the concurrent cost reductions that recycled parts also represent.
With the repair community able to source parts with discounts of 45%-75% of OEM recommended retail prices, there is significant scope for improvement on many different fronts
Over the next five years, we can expect the dismantling, supply and purchasing of reclaimed parts to reach new levels of sophistication that will place them on a par with OEM distribution methods.
Motor manufacturers will undoubtedly feel threatened by such a trend, but the rest of us will welcome the further development of this burgeoning market.
