Encouraging the use of recycled parts in collision repairs covered by insurers could help support companies’ environmental goals, AMA Group Supply Division EGM Adam O’Sullivan says. 

Increased use of recycled parts offers benefits for firms in meeting environmental, social, and governance (ESG) goals, amid changing consumer expectations, and would follow trends in Europe, where legislation supports recycling of components and materials from end-of-life vehicles, he says.

“There is an opportunity to look at the recycled space and say, ‘well if we’re pursuing ESG as part of our corporate goals, then how do we incentivise our repair network to use more recycled parts,” Mr O’Sullivan told insuranceNEWS.com.au. 

AMA Group’s part supply business ACM provides vehicle manufacturer genuine parts, third party manufacturer “aftermarket” imported parts and recycled components. Parts are for both mechanical and collision repairs. 

Mr O’Sullivan says while recycled parts are lower cost compared to new components, there’s more labour involved in their use, but the extra labour cost isn’t reflected in insurer pricing allowed for the collision repair work.  

Insurer product disclosure statements may also limit flexibility around the type of parts used. Some insurers require a genuine part and others will have caveats around aftermarket and recycled parts, depending on the vehicle and availability. 

“There is an opportunity for an insurance company to lead in this space, offering a policy that preferences reclaimed components in the repair process while guaranteeing the repair to be as good as new,” he says. 

Key components reclaimed by ACM Parts last financial year were engines, transmissions, doors, panels, and headlamps, with the number of parts reclaimed from end-of-life vehicles increasing by more than 20%. 

“The reclamation of components for sale back into collision and mechanical repair lifecycles, and the refurbishment of select parts, reduces waste directed to landfill and reduces the demand for new parts production, indirectly saving materials and energy used in the manufacturing process,” the AMA Group annual report says.