Final Thoughts
By Michael E. Wilson, ARA Chief Executive Officer
michael@a-r-a.org
Recalls Significantly Diminish Value of Automotive Recyclers Inventory
ince the beginning of 2014, automak- ers have recalled over 100 million vehicles in the United States (U.S.) alone. Now halfway through 2015, the industry in the U.S. is grappling with an additional 25 million more recalled motor vehicles. These are massive numbers, especially considering the fact that automotive manufacturers in America have sold between 16-17 million new vehicles in each of the past two years.
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The increasing number of recalls demands bold and innovative approaches from the automakers to restore the mar- ket confidence in their vehicles and parts. Unfortunately, the manufacturers seem unable to harness their extensive resources to unlock their business model of the past and help lead the expanded automotive industry to define more advanced and responsive practices. A stunning example of this “slow to react” mentality is that of the 803 recall campaigns issued by auto manufacturers last year, there was only one buy-back program initiated within the automotive recycling industry in 2014 and that one failed to provide full parts value. What about the other 802 industry recall cam- paigns? The automakers unimpressive response will do little to address the growing damage that their recalls are inflicting on automotive recycling busi- nesses and consumers.
Recalls significantly diminish the value of your inventory, especially when one considers that professional automotive recyclers buy millions of vehicles every year to meet consumer demand for recy- cled OEM parts. Given this vibrant and consumer-oriented industry, it is impera- tive that recyclers have access to parts data to help identify recalled parts in their inventory and also to receive com- pensation from automakers in exchange for defective parts.
In fact, there exists precedents for this type of remedy. Under the Motor Vehicle
62 Automotive Recycling | May-June 2015
The increasing number of recalls demands bold and innovative approaches from the automakers to restore the market confidence in their vehicles and parts.
Safety Act, manufacturers are required to replace or repair the defective vehicle equipment or to refund the equipment purchase price. Auto makers are not pro- viding proper compensation for these defective components from automotive recyclers nor are dealers fixing the recalled vehicles that come to their deal- erships for free. Rather, we know that the dealerships are receiving significant com- pensation to remove recalled parts from the marketplace. ARA is working on your behalf so that automotive recyclers receive fair value compensation for both the work of removing recalled parts from your inventories and for the now unmar- ketable part itself.
The recall issue is important to the professional automotive recycling indus- try so ARA members can help ensure the safety of drivers but also efficiently address any questions about the role of OEM recycled parts in the parts marketplace. In 2010, Chrysler directly questioned consumers’ utilization of “salvage” com- ponents in one of their position state- ments due to the fact that the components “are not traceable should a component recall be required in the future.” Throughout that document, the automaker appears to be trying to raise suspicion among consumers about all recycled automotive parts. It is because of threats such as these that we must hold automakers accountable for their faulty parts, misleading statements and refusal to provide parts data that would streamline the parts identification process, while at the same time aggres- sively promoting the continued use of quality OEM recycled parts.
Recalls diminish the value of your inventory. To adequately address this issue and make ARA member businesses whole, ARA staff is working hard to gain access for automotive recyclers to parts data to assist in the identification of recalled parts in your inventory and also to receive compensation from automak- ers for those recalled parts. Access to this data will greatly increase the efficiency and ability of automobile recyclers to sat- isfactorily comply with any regulations prohibiting the sale of defective used auto parts. To date, the association has been suc- cessful in working with and educating federal officials about the need for access to parts data as illustrated in a recent statement made by U.S. Department of Transportation Secretary Anthony Foxx in which he stated that automakers should provide “parts numbers related to recalls” in an “efficient and easy to use format directly to recyclers and others who need this information.” Other indus- try stakeholders have stated their agree- ment with this sentiment, most recently during NHTSA’s “Retooling Recall” Workshop in late April and U.S. Representative Adam Kinzinger (R-IL) in a recent Congressional hearing on Takata airbags.
The demands for professional auto- motive recyclers access to OEM parts data are growing stronger and ARA is proud to lead the charge to meet these demands in the U.S and around the world so that the automotive parts supply chain is streamlined, quality driven and protects the safety of each nation's driv- ers.
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