Recycler Recap of 2017

by   JAY SVENDSEN   on   THURSDAY, FEBRUARY 15, 2018   in   NMVTIS

This year started off strong for most businesses and I’m glad to say the auto recycling businesses are included in this growth. Metal prices are slowly trending upwards, overseas tensions seem to be easing, and consumer confidence is at very high levels. The promise of personal tax cuts for most, seems to be driving consumer spending and most auto recyclers I have talked to are very optimistic for 2018. New car sales are expected to be down this year with some of the higher than expected sales in 2017 being caused by replacement purchases of vehicles that were damaged by last year’s hurricanes.

It has been over 5 months since the hurricanes Harvey and Irma wreaked havoc in Texas and Florida and the salvage auctions have made huge steps in clearing out the flooded vehicles with many recyclers taking advantage of the flood car prices. From information I have gathered, there are still roughly 100,000 flood vehicles still to be auctioned off, with some of those being auctioned again not meeting the reserve prices that were set. The salvage auctions Copart and IAA have done a monumental job of selling off more vehicles than the Cash for Clunkers program that took place back in 2009. Between the two hurricanes, there were more than 1 million vehicles affected by the flooding that ensued. The state of Texas has been very diligent in making sure that any vehicles considered flood vehicles have been branded as such and Texas is one of the states that operate real time with NMVTIS, so the brand is visible nationwide.

Through part of 2016 and 2017 the Department of Justice finalized just over $2.1M in fines and penalties with insurance companies over Hurricane Sandy vehicles that were not reported properly and other instances where vehicles were not reported to NMVTIS as required by federal law. Because of these fines, there is a general increase in awareness and use of NMVTIS. Reporting by all affected businesses is at all-time high levels.

As auto recyclers see a boost in sales for replacement parts with increases in demand from insurance companies, body shops, and consumers alike, it is important for auto recyclers that took advantage of purchasing some of the flooded vehicles to consider that if a vehicle was branded as a flood vehicle, in almost every case it did get reported to NMVTIS and it is extremely unlikely that those reports will get reversed. If the vehicles were purchased for the purpose of selling parts or scrapping, there should be no issues, but if there were thoughts of “rebuilding” or selling a vehicle as a “rebuilder” it will likely be a very difficult paperwork process.

Another thing to consider when purchasing vehicles is that there were at least as many vehicles that were affected by flooding that were not handled by insurance companies and the insurance auctions, where owners only had liability insurance or the vehicle was not insured at all. On the plus side, there should be a big push in auto parts as owners try to fix vehicles that fail from the long term effects of being flooded. Once the owners realize they aren’t able to feasibly fix these vehicles, they will start dumping them in the market. I’m not certain how these vehicles will be identified without visual inspection but there are a lot of them out there.

Hopefully your business will be able to take advantage of the overall increase in the market and 2018

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