|
Pulled
parts thrive in thrifty times
While many aspects of automotive businesses
have stagnated since the economic crisis of late 2008, the good
old fashioned practice of going to the junkyard and picking up
a used part at a bargain price has not only remained steady,
but has grown significantly.
Several reasons for this seem obvious. People
have been hesitant to buy new vehicles, and many are doing repairs
themselves or opting for their shops to install used parts to
save money on both mechanical and body work. In most cases, this
saves a lot of money, considering the rising prices of OEM and
aftermarket parts. Additionally, there are often difficulties
in obtaining parts as vehicles age.
“I’ve been in this business a long time.
Self-service auto recycling is not completely recession proof,
but our industry really does fairly well during difficult economic
times because it creates a situation where people are willing,
or have to consider the most economical way of repairing their
cars,” said Dudley Smith, a central United States district manager
for the LKQ self service division.
LKQ entered the u-pull-it business in 2004.
Since then it has rapidly expanded to 34 locations in 14 states
and 1 in Quebec. Smith explained how LKQ’s self service business
has fared since the 2008 economic crisis, “Our stores are doing
well. We have had growth since expanding our footprint nationwide
but also within the facilities we already had. More parts are
going out the door. The number of new customers buying parts
has increased significantly. Our store managers tell us about
customers who are brand new and walk in not knowing how the system
works and want to know what they have to do.”
Jeff Robbins, manager of Horseheads Pick-a-Part in Elmira, New
York told us about his 1,700 vehicle operation. “Actually, business
is pretty good. With the recession people are keeping their cars
longer. I’ve seen an increase in new customers and from farther
away, driving as much as two and a half hours to get here. In
addition to the used parts, we are selling new parts like gas
tanks, radiators, headlights and tail lights. If they can’t find
it in the yard we offer them new parts. That’s about five percent
of our business.”
Horseheads estimates that approximately 30 percent of its business
comes from in-house dismantling for customers. “I haven’t seen
an increase in dismantling since the recession. It’s remained
steady,” Robbins noted. “People are just trying to save money
by pulling the parts themselves.”
Since the recession, Robbins estimated that he has seen a 10
percent overall increase in business. “Our business is doing
better than many.”
Many independent self service operations like Horseheads run
environmental and safety compliant operations, but there are
all too many yards that ignore regulations, are downright unsafe,
and give the industry a bad name. A long-time industry expert
estimated that today in the United States there are anywhere
from 5,000 to 7,000 junk yards of various types. Fortunately,
there are fewer bad operations every year, as many are forced
out of communities through zoning or fail to comply with state
and federal regulations.
What used to be called junkyards have mostly evolved into modern
auto recycling facilities. Over the past few decades, however,
there has emerged a new breed of corporate, multi-location self-service
lots that are revolutionizing the used parts business. Every
day they attract new customers to clean, safe, well organized,
mega-sized yards that emphasize customer service.
“There’s been a renaissance within a sector of the automotive
recycling community. The numbers have grown in leaps and bounds
over the last five to six years,” said Michael Wilson, CEO of
the Automotive Recyclers Association (ARA).
“Business is good!” said Steve Levetan, senior vice president
of Pull-A-Part. “I explain to people it’s a double-edged sword.
On the one hand people are keeping cars longer so they need the
parts we are able to provide and we are able to provide them
very inexpensively because of the do-it-yourself nature of our
business. On the other hand people are keeping their cars longer
so there are fewer cars in the marketplace for us to buy from
which they can pull parts.”
LKQ and Pull-A-Part are good examples of the remarkable growth
of large, modern self service operations.
Pull-A-Part grew out of a Georgia scrap metal business that dates
back to 1915. It branched out to establish Pull-A-Part as a separate,
privately-held company in 1997 with one location in the Atlanta
area. In 1999, it opened a second location in Georgia and in
2002 began a rapid national expansion. Today, the company has
23 locations spread over 10 Southeast and Midwest states.
Levetan explained the Pull-A-Part growth strategy. “We acquired
some businesses, bought land for others and did several Brownfield
redevelopments. Site selection was a matter of location. We are
typically looking for large sites close to major urban centers.
Our emphasis has been in the eastern part of the country, but
we have solid plans for continued expansion.”
A typical Pull-A-Part location contains over 2,000 vehicles,
all 10 years or older end-of-lifers. We asked Levetan how his
business model contrasted with an old time junkyard. “Well, the
same way that night contrasts with day. We are literally the
exact opposite of what most people have of the image when they
think about our industry, as are many others in today’s modern
auto recycling industry. We really feel we take it to a new level.
Our locations are clean, neat and organized. You see cars all
up on stands in perfectly neat rows, organized by manufacturer.
It’s easy for our customers to come in, remove the parts they
need and save a huge amount of money in the process.”
Pull-A-Part attributes much of its success to an outstanding
environmental and safety record. The company website lists scores
of environmental, civic and industry awards.
“We see environmental issues as something that really helps us
stand out in the industry,” said Levetan. Pull-A-Part was, for
instance, the only auto recycler in the country that was a member
of the United States Environmental Protection Agency’s Performance
Track Program which required a rigorous process of standards
and inspections to be accepted into the program.
“All of our sites are compliant for storm water and spill prevention
under the Clean Water Act and the National Pollutant Discharge
Elimination System. We have rigorous self-inspection programs,
both environmentally and for safety throughout our various management
levels and we also utilize third-party inspectors from consulting
firms. All of those compliance problems that others struggle
with are routine for us,” said Levetan.
Pull-A-Part does not dismantle parts for customers. It is strictly
a do-it-yourself, self-service business. “Everything we do is
aimed at improving the customer experience,” said Levetan. We
noticed this approach of simplifying shopping at the company
website. A search feature allows a user to locate a vehicle by
location, make, model or manufacturer. The website is updated
every night.
At Pull-A-Part, part pricing is on a fixed base price regardless
of make, model or year. The price for a six-cylinder engine,
for example, is the same no matter what kind of car it comes
out of. This pricing by category goes down to the smallest parts
like a windshield wiper arm. If a part is not on one of the cars
in the store, the customer can request to be notified when that
car arrives at the store.
For a small add-on fee to the base price, the customer can buy
a 30-day replacement warrantee. If a part does not work, the
customer can either get another part or receive a store credit.
There may be a core-charge on some parts that is refunded when
the customer returns the old part and there is a small regulatory-environmental
fee charged with each transaction.
Customers visiting a Pull-A-Part location find touch-screen computers
to help find what car they want and exactly where it is located
in the yard. “We also have a customer service desk at each location
to help find parts and cross-check parts from different models
that are compatible,” said Levetan.
Torches and jacks are not allowed in the yards and customers
must bring their own tools. The company provides wheelbarrows
to move parts. Engine hoists are provided as well forklifts to
move heavy parts out of the yard. Levetan estimated the average
vehicle stays on the lot for 60 to 90 days and claimed that fresh
inventory is delivered daily. After parts are cannibalized, hulks
are crushed on-site and sold as scrap.
Of course, the main attraction to self-service is bargain prices.
“We sell parts for a fraction of the cost of a new part, plus
on older vehicles many times the part is not available or limited,
you have to wait a while to get it. A tail light assembly for
an older Honda may cost well over $100 dollars and we are $10
to $15 dollars. We sell an entire door for what you would have
to pay for a new door handle,” Levetan concluded.
Most self-service yards do not sell OEM, aftermarket or reconditioned
parts. But that is changing as larger multi-location operations
and independent auto recycling yards are looking for ways to
increase revenue. When a customer can’t find the used part at
a picking yard, smart auto recyclers see a sales opportunity
to satisfy a customer need. It may take the form of stocking
commonly used tools, parts or accessories, or forging partnerships
with other used and new part suppliers. It may require more time,
or software upgrades to locate parts and have them delivered.
The name of the game is customer service and convenience to help
ensure repeat business.
As we continue to grow as a nation of do-it-your-selfers and
habitual bargain hunters, the word-of-mouth about the great values
found at a customer focused self-service used parts yard has
spread wider during this recession and is likely to sustain into
better times. Reusing parts is a good deal for the customer,
the automotive recycling industry and the environment.
|
