Scrappage scheme boom time for salvage breaker

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Sum of the parts equals more than the car.
Auto Express recently ran an article looking into the value of a car as parts. With the Government scrappage scheme making more people scrap perfectly usable cars, breakers like 247 spares are being flooded with good quality parts which can be sold on for a premium.

I’d already covered a similar topic back in October 08 on breaking rather than repairing, which even then was looking to be far more profitable in many circumstances.

Article extract – Source: Auto Express issue 1,073.

Under the scrappage scheme, the buyer has to essentially sign the death warrant on their current car before they can get the keys to the discounted one. And we’ve head many tales of dealers accepting completely functional Porsches, fully serviced Civics and pristine Micras.

To qualify for the governments promised share of £2000 discount the motor has to be taken to one of 1,400 Automotive Treatment Facilities (ATFs) around the country and issues with a Certificate of destruction (COD). Up to the end of June 2009, 29,796 cars had either been destroyed or were on the chopping block thanks to the scheme.

But the COD is a bit of a red herring because although the car can no longer exist, the cars can and often will be harvested for resale. “The vehicle has got to be scrapped for the COD, yet the ATF is at liberty to take off any parts” admitted Duncan Wemyss, secretary of the Motor Vehicles Dismantlers Association.

It spells boom time for Britain’s biggest dismantler, Doncaster Motor Spares in S Yorks. Its boss Richard Martin told us: “On average we handle about 500 cars per week, but last week we collected about 100 more from the scrappage scheme.” He admitted the quality had been good too. “In general these models are cleaner, perhaps they have been in a family and passed down through the generations. They’re better quality than a scrap car.”

His company turns over several million pounds a year – hardly surprising when you take a closer look at how much money a single motor can generate in parts alone.
To find out we decided to ’strip’ a popular scrappage trade in – a 1999 Ford KA. First we identified 30 or so of the most sought after parts. We then put in a request for each one with an online clearing house used by dismantlers hunting customers.

As our inbox filled with prices for everything from tailgate struts to 1.3 litre engines, we selected the cheapest offer knocked off the VAT and postage, and began to establish a tidy sum for our little run around. By the end of the day we had generated a huge £1,451. Not bad for a car Doncaster Motor Spares will pay only £1000 for on average.

To see how owners would fare dismantling and flogging the parts themselves, we also compared our trade prices with those on auction site eBay. We discovered that an enterprising soul with a socket set and storage space could fetch nearly £800 for the same spares, although without Doncaster Spares 90 day guarantee. (See table)

So, what does this mean for us?

1) If you are in it purely for profit, before buying any Salvage vehicle, price up repairing vs breaking. You might be surprised how much you could make. Use eBay and parts sites to verify how much your parts are worth.

2) Remember the Scrappage scheme wont be around forever so this may be a temporary phenomenon.

3) If you are breaking, consider the time and storage implications, it may take a long time to sell parts individually, you will incur advertising costs e.g. eBay listings. And you will have the hassle of arranging postage or couriers for sending the parts.

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