In hard times, people turn to auto salvage yards

BY JOHN REID BLACKWELL
Times-Dispatch Staff Writer

Published: August 13, 2008

Troy Webber has seen more unfamiliar faces roaming his family’s Chesterfield Auto Parts recycling center in recent months.

He charges $1 for all-day access to the yard, giving customers free rein to go through the 1,000 automobiles on the salvage yard on Old Midlothian Turnpike in South Richmond and pull whatever parts they need before buying them.

In a slowing economy, automobile recyclers such as his tend to see an uptick, as people on a tighter budget look for cheaper ways to keep their cars going, experts said. But not every salvage yard is seeing an increase.

Webber, the third generation of his family to own Chesterfield Auto Parts, said his business has seen an increase in the number of customers.

“We are a pretty recession-proof business,“ Webber said. “In this kind of economy, people look to our type of business to keep their cars running longer.“

Chuck Hosen, owner of S&J Auto Glass in Richmond, agreed.

“Everybody is looking for a bargain these days,“ Hosen said as he combed through used and junked vehicles on the salvage yard at Chesterfield Auto Parts.

With tools in hand, Hosen hunted for spare parts for customers at his auto repair shop. He removed a tail light from one truck as a replacement part.

Like other auto-recycling centers, Chesterfield Auto Parts attracts auto mechanics and do-it-yourselfers looking for bargains on auto parts.

Shoppers pay less for used parts than for new ones.

Hosen, for example, bought a taillight for about $15 compared to up to $135 if he bought one new.

At other salvage yards, consumers could save more than 60 percent on buying a used automatic transmission compared to a new one from the manufacturer.

Automobile recycling is an estimated $10 billion business in North America, according to the Automotive Recyclers Association. The trade group didn’t have any figures available on the growth rate of the industry.

But Joey Woodfin, founder, president and chief executive officer of used auto-parts reseller EverDrive LLC, said his business and the industry saw phenomenal growth in the past year.

“What we see is that a tight economy definitely helps our business and our industry overall,“ Woodfin said.

The Chesterfield County-based company provides a vast supply of used auto parts to thousands of retailers, including AutoZone and

Pep Boys, through a national network of auto recyclers. The company links the auto recyclers with chains through a Web site that allows customers and retailers to search for auto parts.

While some retailers are reporting soft sales of new auto parts, “the used-part sales are gaining traction today at a precipitous rate,“ Woodfin said.

He estimated — based on his contacts among hundreds of auto parts suppliers across the country — that the industry has seen 9 percent to 10 percent sales growth since last year in the used-parts segment.

Some of EverDrive’s own sales channels have had growth far exceeding that, Woodfin said.

Auto recyclers could benefit from a slow economy in several ways, said George Hoffer, a Virginia Commonwealth University economics professor who specializes in the auto industry.

When prices for gas and other necessities rise, “people tend to keep their cars longer, and since they are more price sensitive, they will go to salvage to find parts,“ he said.

Also, “as used car values decline, it will be much quicker for a car to go to go to salvage, so the supply will increase dramatically,“ providing used-part dealers with more access to products, he said.

“One other thing that may really be helping salvage, is that metals have gone up tremendously in value,“ making some auto components more valuable, Hoffer said.

Chesterfield Auto Parts has seen a 123 percent increase in the past year for scrap metal, which now accounts for about 60 percent of its business.

Not every auto recycler agrees that economic conditions are favoring their business.

Steve Lunsford, owner of Oak Hill Auto Parts in Dinwiddie County, said people tend to delay expensive repairs and may be shifting to buying cars as more incentives are offered.

“We seem to be getting a lot more scrap cars,“ he said. “On the scrap end of it, we are doing better, but the parts end is not doing good. People I talk to at body shops seems to be kind of slow right now.“

Brian Howell, manager of Fleetwood Motor Co.‘s auto-recycling center in King William County, said his used-parts business has seen sales increase compared with the same time last year, with demand up for motors and transmissions.

“Mainly you are seeing a lot of older cars, mid-‘90s and late ‘90s being fixed,“ he said. “They get good gas mileage.“