The auto recycling business of today is facing a lot of new challenges.
By: Troy Webber
Technology has enabled me to stay connected with my stores and my team of managers and to be on top of what is going on in my business. … I can’t wait until the end-of-month reports to see it.
We are seeing new technologies in the cars we recycle; our customers are connecting with us in new and different ways, and the products that we are generating are changing.
Artificial intelligence and new technologies that provide owners with the data they need will be an essential part of staying ahead of those changes. Learning how to use those technologies to modernize your business will be the difference between the yards that grow and the yards that don’t.
End-of-life-vehicle (ELV) recycling can have a small profit margin. Full-service yards spend thousands of dollars hoping that one day soon, you will be able to sell a few major components and clear a few thousand dollars per car. The self-service model is only working on a few hundred dollars per car from mostly scrap, so profit margins can be tight.
That is why it is so important to have up-to-the-minute insight into your business’s operations in real time. As the owner and operator of three self-service yards, I need to know how steel price drops will impact my bottom line. When one of my stores isn’t buying enough vehicles, I can’t wait until the end-of-month reports to see it; I need to be able to take action immediately. Technology has enabled me to stay connected with my stores and my team of managers and to be on top of what is going on in my business.
I use a cloud-based yard management system that gives me access to all the data on the sales and operations of my stores from anywhere in the world. I can see how much I have in receivables, my production stats, and all the activity on the sales counter at any time, from anywhere, and it is all up-to-the-second.
Importantly, a lot of this information is also available to my customers on our website.
Technology has enabled us to show our customers pictures of the cars in the field. We have also started using a technology that automatically sends the customer a notification when the car they are looking for enters the field. The newest thing we are trying is a unique interchange function that will also notify the customer if a car with the same interchange arrives. It is a game changer!
One of the biggest things technology has enabled is giving us insights into the value of vehicles as a purchasing tool.
The VIN will tell us the vehicle’s actual scrap value based on curb weight, aluminum content, and the value of the factory-installed catalytic converter. Then it will give you a retail value based on the parts’ interchangeability on the car, the actual inventory in my field, and the number of times someone has looked for an interchangeable part on that car.
The self-service auto recycling business operates on a low-margin/high-volume model, so generating enough revenue from scrap is essential to achieving those margins. Technology helps me stay in the know about global scrap markets. I can see what the price trends are doing for the various commodities we pull from the ELVs we recycle. When the price of Rhodium drops, I know the value of the catalytic converters we have in stock just went down. When the price of flattened autos drops, I won’t be surprised when my scrap buyer lowers my price. These insights are important for planning the next 30-90 days of business.
Mastering these technologies is not easy. Understanding how to use the tech and the data it provides is easy! You don’t have the time to become an expert in the technology because you are an automobile recycler. The time it would take to become an expert would be better spent expanding your business.
I am not an accountant, but I can read the income statement my accountant sends me. I am not an advertising expert, but I can understand the monthly advertising report from my ad guy. You don’t need to be the expert; you need to hire the expert. Why waste your talents as an automobile recycler? Be the boss you are and hire the expert. They have the know-how to give you what you are looking for in the most efficient and effective way; that’s why they are the experts!
Take advantage of the time, work, research, and money that someone else has already spent. The technology is out there to help you master your business. They have done the work to make your job as easy as possible. The tough part is taking the leap of faith. No one likes change, least of all junkyard owners! We spend years trying to perfect a process; I don’t want to have to change it and risk failure. That is why it is important to use a tried-and-true technology that you can see has made a difference. Ask business owners who have made the switch. Ask a recycler who has recently undergone a change what they think. Ask about the change and if they would do it again. Most of the time, the only regret they have is waiting as long as they did to switch!
The only constant in this business is change. Nowhere is that more evident than in the cars’ technology. The products we sell are changing constantly. If we, as recyclers, are not willing and ready to change with the industry, we will be left behind.
Founder and CEO of YardSmart, Troy Webber, created a new paradigm for the auto recycling industry, due to an ability to predict what was needed, in order for his business to survive. YardSmart is the only cloud based software of its kind, worldwide. As a result of his background and experience, he successfully designed custom yard management software for the industry, beta tested it with his competitors for two years and now operates a SaaS company offering YardSmart. He is proud to be the third generation to own the auto recycling business and hopes one day to pass it on to the fourth generation to help serve the industry that his grandfather created in Richmond, VA 75 years ago.
