Expert Tips: Selling by the Ounce – Not by Unit

Jul 1, 2022 | Sponsored

By Cliff Hope, Senior Account Manager

Now that we are firmly in the second quarter of 2022 the surprises just keep coming for the automotive recycling industry. With end-of-life and parts cars becoming harder and more expensive to source, selling converters by the ounce offers a competitive edge that piece selling can keep up with.

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Historically selling converters by the ounce or “toll refining,” was something only large volume producers were able to do, while smaller producers had to stockpile 1000 plus converters, often taking months or longer. With advances in processing technology, a few companies in the market today are offering this service to auto recyclers wanting to capitalize on this superior selling method – meaning that required lot sizes have shrunk from 1000 units to just 100 OEM converters.

What are some of the advantages of selling by the ounce that the big guys have enjoyed over the years? First, you can access the full financial value for your converters without leaving anything on the table. Even if your current buyer is using serial numbers to buy per unit, there will always be a minimum of 5 percent, and as much as 25 percent, of the value going into his pocket and not your business. 

Next, when you are selling your converters by toll refining them, you can take better advantage of market pricing. There are three precious metals in converters, platinum, palladium and rhodium and each metal rises and falls based on a variety of factors in the marketplace. When selling by ounce, companies can sell converters just like any other non-ferrous metal when the market is right for them on each metal or all three. Unlike selling by the piece when the price is the price when the buyer is there.

One of the biggest advantages of selling by the ounce is knowing what your converters are worth in the current market. More importantly, companies that have good historical data can better price converters into the cost of acquiring inventory. 

One concern about making the switch to selling by the ounce we have heard over the years is that it takes too long to get paid. Depending on who you are dealing with this too is a thing of the past utilizing the right technologies. Based on a good standing relationship with your toll refiner it is possible to get 80 percent to 90 percent of the value of your converters as soon as they confirmed pick up, with the balance wired into your account 10 business days from time of receipt. In many cases, the advance made is 100 percent of what a piece buyer would leave.

Lastly, by working with a reputable toll refiner your auto recycling business will gain insights into converters that most piece buyers have had for years – meaning you will have the ability to understand what you have in advance of it being sold to anyone else. No more blind trust, just good data and better financial returns, giving you a competitive edge in what has become a very challenging marketplace. 

Cliff Hope is a Senior Account Manager at PMR, Inc. He believes, “True success is the combined result of integrity, hard work and the desire to be the best in your field.”

Cliff is a “hands on kind of guy,” who believes that good business is built on trust and mutual benefit. This explains why he has had great success in the recycled catalytic converter industry. Cliff brought with him a strong background/education in sales, marketing, public relations and the ability to remain teachable. PMR is a strong team that Cliff is proud to be part of.  “Together we are making positive changes to how the Recycled Catalytic Converter Business operates.” Contact him at 1-855-901-5050 x208 or cliff@pmrcc.com.

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