Management of end of life vehicles needs overhaul

The dramatic increase in scrap metal prices in the lead up to the global financial crisis saw the number of players in the end of life vehicle (ELV) collection business grow significantly and also led to a surge in older cars being stolen off the street for their scrap value.

Notwithstanding the sudden fall in prices in late 2008, the gradual return to historical values has seen the number of players in the scrapped vehicle field stay largely unchanged and competition for vehicles remains fierce.

The scrap metal industry is characterised by three tiers. At the top of the tree there are a small number of tier one corporations that operate capital intensive metal shredding and waste sorting facilities. The second tier is made up of a larger number of small to medium enterprises that buy all types of scrap metal, including whole or crushed cars and who on-sell to a tier one processor or export directly to overseas markets. Tier three is made up of a very large number of independents who collect cars and other scrap metal direct from the public and includes auto recyclers who sell the remains of dismantled cars to tier one and two metal recyclers.

With an estimated 600,000 ELVs processed each year, recycling motor cars is a substantial national business that also delivers important environmental benefits when vehicles are processed using best practice recycling methods.

Unfortunately, there are two main problems with the ELV recycling system as it currently operates. The first concerns the negative environmental impacts associated with the very large percentage of vehicles that are scrapped without first being de-commissioned in an environmentally responsible way. The second is that there is presently no practical means for metal recyclers in any tier to verify the provenance or even record the identities of the cars they receive. Once a car is crushed and shredded its identifiers and any potential criminal evidence such as fingerprints and DNA are lost forever.

The NMVTRC estimates the number of cars stolen in ‘theft for scrap’ rackets at around 3,500 per year although it could easily exceed that number. There is a strong likelihood that a significant proportion of the body shells of a further 9,000 stolen and stripped cars also end up in metal shredders.

Under the current ELV system metal recyclers have no practical means to verify the identities of vehicles to be crushed and shredded.

In 2010 the NMVTRC commissioned a report to examine the structure and day-to-day functioning of the Australian metal recycling industry and how the vehicle identity issue might be addressed.
The report took a pragmatic approach when examining possible means of addressing the current problems. It concluded that given the volume of vehicles that are processed each year and the industry structures that currently exist, measures such as simply extending the written-off vehicle notification requirements to all ELVs by themselves would not be sufficient to deter criminal activity.

There are no simple fixes to these problems and the ultimate solution lies in a significant re-alignment of the end of life vehicle process, most probably along the lines of the UK vehicle scrappage scheme. This may ultimately include introducing the concept of the last registered operator having ongoing financial responsibility for a vehicle until they can demonstrate that it has been delivered to an accredited treatment facility (ATF). The ATF would be legally responsible for, and have the facilities, to verify the legal status of the vehicle, properly de-commission it, and notify their state transport agency that the vehicle has been recycled before it could be processed as scrap.

The current policy and industry settings present significant challenges to introducing such a scheme here in Australia however the NMVTRC is committed to working with relevant agencies and industry groups to find practical responses to these challenges.

National Motor Vehicle Theft Reduction Council