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Recyclers News Press
Continued from previous page.
.
"We are excited about the growing opportunities il-
lustrated by this new data for automotive recyclers to
provide green, recycled parts to consumers looking
for economical solutions to their automotive repair
needs," said ARA President, Chris Wright, in the Au-
gust 6 press release. "From do-it-yourselfers to in-
surance companies and the service repair commu-
nity, automotive recycling businesses offer quality,
recycled OEM parts replacement options." To read
the entire press release, please visit the ARA web-
site at
Increase in Average Age of Vehicles
Points to Strong Scrap Market Future
The Director of U.S. Autos and Auto Parts for Citi
Investment Research and Analysis made news last
week when he predicted that the vehicle scrapping
rate will explode in the coming years as the average
age of cars and light vehicles on the road continues
to increase. The comments were made during the
2013 Center for Automotive Research (CAR) Man-
agement Briefing Seminar held in Traverse City,
Michigan.
Citing new data from automotive market research
firm R.L. Polk that the average age of light vehicles
in the United States has reached an all-time high of
11.4 years, Itay Michaeli argued that the tipping
point is approaching for when vehicle scrapping
rates will dramatically increase. Utilizing Polk data,
the Citigroup economist studied the 11.8 million ve-
hicles sent to the scrapper last year and determined
that the rate of scrappage increases significantly
once the age of a vehicle reaches 13 years. Given
the new average high of 11.4 years, Michaeli antici-
pates that "in 2014 and 2015, the rate of vehicle de-
signs and refreshes with tremendous new technol-
ogy is going to come right at the time when we think
the vehicle age will start to hit that ideal range when
scrap rates tend to balloon." He predicts that "no
later than 2015, we should see an incredibly strong
scrap recovery in this cycle, and it hasn't even be-
gun." Despite these positive trends, Michaeli cau-
tioned that the ratio of vehicles-per-household in the
U.S., specifically among the 35-44 year old demo-
graphic, continues to present a challenge. A two-car-
per-household norm could considerably bolster the
recovering auto manufacturing industry. Michaeli
argues that a large segment of the population has
delayed purchasing a second vehicle because of
lingering concerns about the strength of the econ-
omy, and urged industry leaders in the audience to
resurrect job guarantee programs to incentivize sec-
ond vehicle purchases.
Fewer Automobile Dealerships
Operate Body Shops
The number of automobile dealerships that operate
on-site body shops has declined, according the
Mitchell International Third Quarter 2013 Industry
Trends Report. Citing data from the National Auto-
mobile Dealers Association (NADA), Mitchell finds
that only 34 percent of dealerships had body shops
in 2012 as compared to 36 percent in 2011. Approxi-
mately 6,314 dealerships operated body shops in
2011 and that number fell to 5,996 in 2012. Despite
the declining number of dealer body shops, the total
amount of work they performed was slightly up from
2011 ($6.78 billion) to 2012 ($6.9 billion). The de-
cline in dealer body shops tracks with a historical
pattern of fewer dealerships as well - 17,540 in 2012
versus 17,700 in 2011. Mitchell estimates that the
total number of collision repair facilities in the U.S.
was 40,448 in 2012.
ARA Updates
Industry news from the national association
