Toronto, Ontario — According to a report by Mitchell Power detailing COVID-19’s impact on the auto industry, new total loss trends have emerged in the auto recycling industry.
The report says there has been declines in average sale prices at wholesale auctions across the U.S. and Canada, which may also mean insurers are seeing less of a return on salvage when a vehicle is deemed as a total loss.
In addition to the reduction in demand from the industry’s retail and rebuilding segments, auction prices are also being driven by the drop in commodity prices. The pandemic has caused the global manufacturing industry to pause, reducing the short-term demand for raw materials, including scrap steel and aluminum.
The report also found that the average price of scrap steel has dropped by almost 20 percent since the beginning of the year, and Mitchell Power says they do not know yet whether additional declines are in store.
“What we do know, however, is that changing driving habits and workforce strategies could further impact the salvage market,” said the company.
In other total loss news, some global recycling groups have stopped accepting end of life vehicles entirely.EMR Metal Recycling in the UK was deemed an essential service at the outset of the pandemic, but stopped collecting certain items to protect their employees.
In April, the group announced that it will not be accepting scrap vehicles that require any form of depollution, inspection or the issue of a Certificate of Destruction from any source amid the pandemic. It plans to begin accepting the vehicles when government restrictions are eased.
Click here for the full Mitchell Power report.