Commodity

or “refund” back. It automatically gives the buyer an incentive for returning the core to the recycler and it helps the recycler to control their commodity. Cunningham says the success they had was quick with undeniable revenue and the numbers speak for themselves. (See chart p. 46.)

How Does a Core Program Benefit My Yard?

“Cores were the number one part I sold last year – we sold 29,000 cores,” said Cunningham. “No one looks at the core as a part yet when you sell a part you are actually selling two – the part and the core. Only around 30% or so never come back (or get returned) but it doesn’t mat- ter, you still get the money for it.

“Don’t underestimate the value of this core charge pro- gram. I worked with one recy- cler who started doing this

and saw his core revenue grow to $92,000 in just 60 days. You can be sure that it changed the way they han- dle their cores. When you take in $92,000, it literally changes the way you do business; it changes your prod- uct line and changes the profile of your yard. You will become self-educated on high value commodities and identifying the residual amount that goes back because of the cores,” says Cunningham.

According to Cunningham, the success of the core charge program also changes the auto recycler’s buy- ing profile and helps recyclers to learn to manage inventory to the highest level. He says it changes the way the recycler handles and packages its core because their team is seeing it as a commodity. Cunningham says it’s important to develop a core

program because it helps recyclers to control their commodities. “You already own the commodity and you’re relin- quishing control – you must control the commodity – you would never relinquish control of running cars – you wouldn’t even think of it,” he said. “Charging for the core extends your control over the commodity and determines where it goes. By not charging cores, you relinquish control – that starter could be worth eight dollars in weight or you could refurbish it and increase its value to $35.” He says there are two main obstacles that keep recyclers from developing a commod- ity program:

1. Perception of cores as a commodity

2. Fear that customers will not pay the core charge “I can tell you that the cus- tomers will pay the core charge,” said Cunningham. “Auto recyclers are the only ones that don’t automatically

do a charge for cores. OEM’s and aftermarket already charge a core surcharge on their parts – OEM’s even charging core for bumper covers. If you don’t own the car, you do not own the core ... we own the cars, so we own the cores ... you don’t think that your customer owns the car you buy that you sell parts off of, so why would they own the core? We have to get over our fear of charging for core because we’re the only industry that doesn’t.”

One Yard’s Story

M & M Auto Parts, Inc. is one of the yards that took heed to what Cunningham was demonstrating and decided to put a core program in place. Jonathan Morrow with M & M Auto Parts, Inc. agrees whole-

May-June 2015 | Automotive Recycling 47