Scrappage scheme: Is the vehicle recycling industry ready?
Simon Bastin-Mitchell, Director of Bastin-Mitchell Consulting reminds us of the 2009 scrappage scheme and what the vehicle recycling industry could see from a new one.
In April 2009, the UK government brought in the “UK Vehicle Scrappage Scheme”, to entice motorists in the UK to trade in their older vehicles for a newer, more eco-friendly car or van. The scheme was extended in September 2009, to March 2010.
There were many questions asked about the scrappage scheme from all sides, but one of the biggest U-turn that has stuck out was the push on swapping to diesel vehicles. Look at where we are now, 11 years later, the sale of new petrol and diesel vehicles will be banned by 2040.
The perspective from an “Authorised Treatment Facility” / Automotive Vehicle Recycler
For the main dealers to claim back their allowance from the government, any vehicle that was taken in under the scrappage scheme had to have a “Certificate of Destruction” (COD) completed against it to prove the vehicle had been permanently taken off of the road. These CODs could only be produced by an “Authorised Treatment Facility” (ATF).
Prior to the scrappage scheme starting, there was a real buzz at ATFs about what vehicles it would bring in, and after the first 3-4 weeks what came in the door was a true eye-opener. It was probably the key turning point on how we processed ELVs, changing the way we thought about them and the potential of the market.
Looking back now at the vehicles that had to be thrown in the baler and scrapped is heart-wrenching but at the time, it had to be done because working within an ATF, we just did not predict the sheer volume of what the scrappage scheme would generate. Within 8 weeks of the scheme starting, we were at near gridlock in a yard that covered over 10 acres, stored 1000+ vehicles and processed more than 15,000 vehicles a year outside of the scheme.
The large increase in vehicles coming in from the scrappage scheme had its pitfalls as well as its upside. Though scrap revenues were up because of the large numbers of vehicles coming in, trying to operate efficiently was a challenge, sometimes having to move vehicles 2-3 times a day to get to others that were sold or were due to be dismantled. It was only because of the great teams within the business and direction from the Managing Director that we were able to navigate the challenges and keep the yard recycling.
There was also a major frustration that a high percentage of the vehicles going through the scheme and being scrapped should not even have ended up as an ELV. We were seeing everything from mint condition Volkswagen Campers and Beatles, to Ford Fiesta XR2i’s and Ford Carpi’s. The main dealers were only interested in getting their money back from the government and if they had more time and space, ATF’s would have offered more than the scrappage scheme value.
"A large part of automotive history went in the been throughout the scheme and it was an absolute shame."
There is a lot to be learned from the 2009 scheme as an automotive vehicle recycler, from how much was paid for ELVs, to how long any vehicle should be onsite (either for auction or to be dismantled), to what equipment was needed to optimise the time for depollution. All of this helped design how to become more efficient and profitable.
If the government scrappage scheme is brought back?
There has been a lot of talk in the media about another government scrappage scheme and I am sure the race is already on for ATFs to secure who is going to process these vehicles if it comes along.
Though there will be an influx of ELVs over the next few months, with the government’s extended MOTs coming to an end, the country and automotive industry need a continued injection of life because of COVID-19 and the lost revenues for businesses. There is a real chance the scheme will be back, hopefully with a little more thought behind it.
Here at Bastin-Mitchell Consulting, we are driven by our passion for enhancing the automotive recycling industry and strive to achieve our core principles:
To help Automotive Vehicle Recyclers optimise their revenues and maximise profits, through greener recycling
To assist in enhancing the reputation of an inspiring industry
To help consumers of the industry receive the highest possible levels of service
To empower greener recycling for the future of our children and planet
If you are interested in finding out how we can help your business grow its revenues and maximise profits, visit www.bastinmitchellconsulting.com