Do recycled parts have a place in fleet SMR strategies to cut costs?

The use of recycled parts may have a role to play in some fleet operations as businesses continually seek to cut vehicle maintenance costs.

A number of fleets, notably in the public sector and particularly some police operations but also utility sector businesses, have used recycled parts, known as ‘green parts’, for a number of years.

Typically if a police vehicle is written off it is sold to a company specialising in parts recycling at a set percentage of the pre-crash value. The vehicle is then stripped down and non-safety related parts sold back to police fleets when required.

In other cases damaged vehicles are recovered by a specialist company, disassembled and non-safety parts then made available for sale.

One of the major issues around the use of recycled parts, which are official manufacturer (OEM) parts that have been removed from a vehicle during the dismantling and recycling process, is consistency and quality. However, specialist companies says they operate a strenuous quality test and a grading system where components are categorised according to any damage template provided by individual fleet customers.

Furthermore ‘green’ parts have typically been inspected, analysed and tested to industry-leading standards to ensure quality. Suppliers will also usually provide warranties on all parts to further enhance peace of mind.

Fleet Service Great Britain (Fleet Service GB) has an open mind on the use of ‘green parts’, but suggests that they could have a role to play where replacement of so-called ‘bolt-on, bolt-off’ parts such as bumpers or a sliding door on a van are required.

However, some fleets have been reported by the trade press to have acquired remanufactured engines, transmissions and turbo-chargers from recycled parts specialists rather than buying new.

One supplier of recycled parts claims that “guaranteed quality assured ‘green’ recycled vehicle parts are creating quite a stir in the fleet and insurance industry even more so today, as the demand for a more affordable and sustainable source gather pace”.

Claimed to cost up to 90% less than buying OEM replacement parts, the supplier said: “We simply cannot afford to keep paying big sums for new parts direct from the manufacturer.”

The company continued: “We can see great potential for uplift in demand for ‘green parts’ and with our industry standards in place, fleet users will be able to buy with ever-increasing confidence. As manufacturers strategies towards producing ever more eco-minded vehicles it would be fair to assume that the buying will switch from expensive, OEM parts to quality affordable, recycled parts that help every aspects of saving time and money as well as the environment.”

Fleet Service GB operates a ‘matching quality’ on new replacement parts with some tenders asking for repairs “at the lowest possible cost”.

Peter Hitt, head of operations at Fleet Service GB, said: “We have met with a ‘green parts’ supplier to understand how the recycled parts market works. We currently do not use recycled parts, but it is a marketplace development that may have a place for certain fleets and vehicles in respect of some replacement of some parts.”

Anthony Machin, head of content at Glass’s Information Systems, which published used vehicle pricing ‘Bible’ Glass’s Guide, writing a blog last year said: “The automotive industry is developing in different ways whilst simultaneously delivering enhancements to vehicles making them more efficient and easier to recycle at end of life. The adoption of ‘green parts’ will continue to grow in the coming years as parts buyers and insurance companies look to new lower cost trustworthy parts sources.”

The Vehicle Recyclers’ Association (VRA), the UK trade association for vehicle dismantlers, salvage agents, scrap metal processors and associated companies previously known as the Motor Vehicle Dismantlers’ Association (MVDA), endorses the parts standards developed by the Automotive Recyclers Association of America (ARA) which has helped to make the use of ‘recycled parts’ widespread in the insurance repair industry in the USA. See – https://www.vrauk.org/PartsStandards.aspx

The VRA admits that “over the years there has been some bad publicity about ‘green parts’, but claimed it mostly originated from either new part manufacturers or horror stories from consumer organisation focusing on ‘cowboy operators’.

As a result, the VRA advises: “We strongly recommend only buying ‘green parts’ from members, who are all reputable businesses. Otherwise there is no way of knowing whether the parts purchased are stolen, have been checked for correct operation beforehand, or will be covered by a guarantee if something goes wrong.”

A spokeswoman for the Association of British Insurers said: “We don’t issue particular advice or have a policy on fleets using recycled parts – it may be that the insurers of specific fleets have their own views.”

AXA Insurance UK is a leading fleet insurer and Mark Heaton, head of AXA motor engineering, said: “In 2001 we ran a pilot testing the concept of using ‘green parts’. We had a number of successful repairs completed but the low availability of quality parts prevented us from taking this forward. It was the main blocker.

“Today we do use ‘green parts’, but only to avoid writing a car off – and with the insured’s permission. However, just like back in 2001, we find the availability of quality parts is still a challenge.”

Martin Smith, motor technical claims manager at rival insurer Aviva, said, “Recycled parts can have a role to play in vehicle repairs, especially in cases where an older vehicle or one where parts may no longer be available and might otherwise have be to declared ‘total loss’ are concerned.  Working alongside our customer, Aviva will consider the use of non-safety critical recycled parts in specific vehicle repairs. Safety critical parts are always replaced with new.”

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