Auto Recycling eNewsletter

For immediate release –January 2007

Written and published by Mike Gibson and Ron Sturgeon, autosalvageconsultant.com, email to email Mike Gibson. To register for future free issues, visit http://www.autosalvageconsultant.com. Don’t forget to watch for our management articles monthly in Recyclers Power Source Magazine, or posted at our web site.

This Month’s News

Insurance Auto Auctions to Combine Operations with ADESA, Inc.,WESTCHESTER, Ill.-(Business Wire)-December 22, 2006 - Insurance Auto Auctions, Inc. ("IAAI"), a leading provider of automotive salvage auction and claims processing services in the United States, announced today that it plans to combine operations with ADESA, Inc. (NYSE: KAR), which has entered into a definitive merger agreement to be acquired by a group of private equity funds consisting of Kelso & Company, GS Capital Partners, an affiliate of Goldman Sachs, ValueAct Capital and Parthenon Capital. ADESA is North America's largest publicly traded provider of wholesale vehicle auctions and used vehicle dealer floorplan financing. IAAI is owned by Kelso & Company, Parthenon Capital and certain members of its senior management team. As part of the transaction, IAAI will be contributed to the surviving corporation simultaneously with the closing of the transaction with ADESA. "We believe that IAA's current customers and employees will benefit greatly from this combination, as we expect our operations to expand and our business to grow from it," said O'Brien. "Looking ahead, our management team will remain focused on improving the products we offer and the level of service we provide to both our insurance company suppliers and our growing network of buyers."

Court ruling benefits MQVP in trademark infringement case, Jan 12, 2007 By: James E. Guyette Automotive Body Repair News

The Manufacturers’ Qualification and Validation Program, Inc. (MQVP) will ask a judge to grant it increased monetary damages from LKQ Corp. following a federal appeals court ruling in favor of the aftermarket parts certification firm. MQVP’s lawsuit had initially sought more than $2 million in a 2003 trademark infringement case originally filed against Mid-State, an Arkansas-based parts provider currently owned by LKQ. “Now it’s higher because a lot of companies started selling ‘MQVP parts’ that weren’t really MQVP parts,” says Ronald F. McNulty, MQVP’s lawyer. “All that infringement out there has significantly damaged MQVP, so the damages are higher now.” When contacted by ABRN, a spokeswoman for LKQ declined comment at press time, saying company executives may prepare a press release on the matter at a later date. Headquartered in Troy, Mich., MQVP maintains that Mid-State misrepresented its non-program parts as being the same as parts covered by the “quality validation, traceability, safety and warranty characteristics” of officially approved MQVP program parts. Mid-State was never admitted to the MQVP program, says McNulty. Mid-State was later acquired by LKQ, whose participating subsidiary was previously expelled from the MQVP program. In ruling for MQVP, the U.S. Court of Appeals for the Eighth Circuit declared that “[The] Lanham Trademark Act affords the trademark holder the right to control the quality of the goods manufactured and sold under its trademark…so MQVP may control the services sold under its service mark.”

A Salvage Solution Story, Business, Thursday, January 11, 2007 By Philip Marcelo CUMBERLAND

Bill’s Auto Parts, like other companies in the auto salvage business, is moving away from its dependence on a massive stock of half-gutted wrecks and mangled rides in order to compete in a global auto parts industry. Increasingly, newer-model vehicles are being stripped bare before ever reaching the junkyard. Their most valuable parts are cleaned, tested, inventoried, and documented on a host of online databases and websites, ready for shipment anywhere. And don’t expect to find that elusive part for that turn-of-the-century junker sitting in your garage — it’s not here anymore. In order for an auto salvage yard to remain competitive, it needs to turn around cars faster than in the past, said D’Adamo, who is also president of the Auto Recycler’s Association of Rhode Island, a nonprofit organization of state-licensed salvage yard operators. Businesses need to justify the cost of a vehicle sitting on a lot versus the parts sales it generates, which typically taper off within the first two to three months of its introduction into the yard stock. Often times, it is more cost efficient to scrap an underselling car since prices for scrap metal continue to be high. Many yards, including Bill’s Auto Parts, are investing heavily on late model cars, 1998 and newer, and whittling down on the diversity of make, models and years it carries, D’Adamo said. And in a parts industry that includes factory-made and after-market parts, which are parts made by manufacturers other than the original carmaker, businesses must now clean, test, and offer warranties on parts, things that D’Adamo said were unheard of a decade ago. The salvage yard parts still undercut after-market and factory parts prices, but customers today expect the same quick service from salvage yards that they get from those retailers. “Businesses need to have more stock on the shelf,” D’Adamo said. “It’s a big parts world out there and customers are less willing to go out and hunt for a part and pull it themselves.”

How’s Business?

“The best executive is the one who has sense enough to pick good men to do what he wants done, and self-restraint to keep from meddling with them while they do it.” Theodore Roosevelt

AutoSalvageconsultant.com was formed in 2001 to help recyclers improve their businesses. With over 50 years of experience in 3 staff members, the group is THE definitive source for recyclers’ management and training needs. Mike Gibson and Tammy Sturgeon joined the team in 2003, and bring a wealth of experience to the team, plus more resources, as there have been more requests for help than Ron could meet. The founder, Ron Sturgeon is past owner of AAA Small Car World. In 1999, he sold his six Texas locations, with 140 employees, to Greenleaf. In 2001, he founded North Texas Insurance Auction, which he sold to Copart in 2002. In 2002, his book “Salvaging Millions” was published to help small business owners achieve significant success, and was recently reprinted and published in Chinese. In June 2003, he joined the new ownership and management team of GreenLeaf. He also manages his real estate holdings and investments. You can learn more about how to help your business at www.autosalvageconsultant.com. Mike can be reached at 628 SW Rand Drive, Burleson, TX 76028, (preferably) email Mike Gibson, or 817-925-8430.