For immediate release-July 2003

Auto Recycling eNewsletter

Written and published By Ron Sturgeon, RDS Investments, email to email Ron Sturgeon

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How’s Business?

I have had more emails in the last 60 days than in the last 6 months from owners complaining about weak sales and profits. I have also heard from quite a few folks doing well. The reality is somewhere in between and simply reflects the fact that many owners have not made the changes necessary to remain profitable. Lack of focus on cutting expenses has left them with not enough money to buy cars, and although not buying cars solves a short-term cash issue, in a few months the effects of reduced inventory start to influence sales and cash flows. Most of the folks don’t have period corrected accounting for cost of goods sold; so they don’t see it in their monthly statements (if they even get monthly statements). In fact, with the accounting methods many recyclers use, buying fewer cars actually makes their profits look better on the P & L, and they don’t understand or use a cash flow statement (other than the one in their back pocket). The 2 items needing focus NOW are labor costs and buying the right salvage at the right price. Remember, you MUST spend more time determining what to buy and pay, and you MUST be selling $15,000 per month per employee or you will struggle.

This Month’s News

CarPart.com announced that they are purchasing the auto recycling system assets of CCI Triad, including Auto Info and Orion. These assets were purchased by CCI from ADP some years back, after the FTC made ADP divest them following an investigation of the purchase by ADP. I was active in the hearings concerning this action. CarPart, with this acquisition, will have access to large inventories. CarPart has innovative products and says they are committed to non-proprietary use and distribution of that data. This should be good for recyclers, I believe. Auto Info and Orion users need improvements to their hardware and software, which will pose huge financial burdens for CarPart. They also announced an agreement to provide data to the Automotive Recyclers Association for ARA’s distribution through their products.

On May 9th, ARA officially launched the new http://www.ECARcenter.org web site. ARA Executive Vice President Bill Steinkuller said, "In essence, the site will take the guesswork out of complying with environmental rules by breaking down the requirements to the state level and adding useful tips and resources -- all in a user-friendly format."