Laguna Beach, Calif. -- Much has changed about the automotive recycling industry in the decade since LKQ Corp. was formed, said Herb Lieberman, corporate industry liaison for LKQ. While LKQ can not take credit for all of the changes, with more than 75 recycling facilities dismantling more than 5,700 vehicles a week, it has become a driving force, he said. Lieberman said he joined LKQ in 1999, when his family's recycling facility in Santa Fe Springs was acquired by LKQ. The family facility was founded by his grandfather in 1952 and was being run by his son, he said.
In 2003, LKQ became the first U.S. automotive recycling company to go public when it was listed on Nasdaq, Lieberman said. In 2004 LKQ became involved in the aftermarket crash-parts industry when it acquired Action Crash Parts and through acquisition and growth has quickly expanded to be the second largest nationwide provider of aftermarket collision repair parts with 48 facilities, he said. In the last fifteen months, LKQ also acquired companies that refurbish products such as alloy wheels and headlight assemblies, he said.
"LKQ is a company that deals primarily in recyclable parts for the repair industry," Lieberman said. "Isn't it simpler, though, for a repairer to acquire all of their parts through a single source, whether they be recyclable parts or aftermarket? If a recyclable part is not available, we can offer an aftermarket part, a remanufactured part, or a refinished part."
All but 22 of the company's recycling facilities are focused on serving the professional repair market, Lieberman
said, with about 90 percent of its sales going to professional mechanical and collision repair facilities. Those facilities tend to focus on late-model vehicles, he said.
said, with about 90 percent of its sales going to professional mechanical and collision repair facilities. Those facilities tend to focus on late-model vehicles, he said.Those other 22 facilities are self-service operations that specialize in end-of-life vehicles that are 10 years and older, Lieberman said, meaning that about 90 percent of their sales are to do-it-yourselfers.
In addition to its recycling and aftermarket operations, LKQ has headquarters in Chicago and Internet business offices in Aurora, Colorado. "The Internet Business office primarily handles retail business from customers who find a part on our Web sites or through sales organizations such as e-Bay," he said.
The consolidation and increase in competition that was driven by LKQ and its other publicly held competitor, Greenleaf (formerly a division of Ford Motor Co. and now owned by Schnitzer Steel Industries), meant that the entire industry, including smaller regional consolidators, groups of independent recyclers that teamed up, and individual operations, were all driven to adopt new technologies and work diligently to improve customer service, Lieberman said.
"LKQ came on the scene at a time that the insurance industry was clamoring to use more recycled parts," he said. "In my opinion, this was not just an effort to reduce severity but also to give consumers a quality repair." The technology in vehicles has changed, he said, with many being assembled and welded using robots, and the assemblies of recyclable parts that recyclers offer are built in the same way.
Consolidation, improvements in inventory methods and technology, and the creation and adoption of new industry standards resulted not just in more inventory being immediately accessible but also ensured that it is the high-quality inventory that professional repair facilities need, Lieberman said.Computer systems not only allow salesmen at LKQ to search the company's vast inventory but also those of other recyclers, he said. "At LKQ we look weekly at the number of parts that we are sourcing from outside recyclers," he said. "If we have a plant that is not sourcing enough parts from outside recyclers, we know that they're not providing that level of customer service that we expect them to be delivering."
Finding the part is only the first step, Lieberman said. "Part of it was supply," he said, "but part of it was also the description of the part. We are dealing with a used product, and it is not always perfect, but what can be perfect is the description of the part." 
The growing competition in the industry helped spur the Automotive Recyclers Association (ARA), of which Lieberman is a past president, to create standard descriptions and option codes, which were then adopted by LKQ and other competitors, he said.
The size, scope, and financial wherewithal of LKQ also benefited the greater industry because the company was able to meet with the insurance industry on a national level and educate them on the viability of many types of recyclable parts that they had not been using, Lieberman said.
"The insurance industry was using the recycling industry for nine different part types," Lieberman said. "These were the same part types my grandfather sold to them 50 years earlier -- hoods, fenders, bumpers, decklids, etc. We have been able to educate the insurer and repairers about the other products that we can supply for the repair."
Lieberman said that in addition to the sheetmetal that collision repairers commonly had bought from recyclers, they also supply many other components, including seat tracks, electronic components, glass, and interior trim parts, to name just a few.
"I know that insurers receive a huge discount, but recyclable glass is still much less expensive," he said. "While I don't advocate reusing windshields, why not reuse the quarter-window glass or back glass. Glass doesn't wear out."While Lieberman acknowledged that the chief complaint on recyclable parts made by collision repairers is that they make less money using a recyclable part than a new one, he said the choice is often not between used and new but rather used or nothing.
"If we can lower the cost of repairs, we can repair more vehicles and total fewer repairable vehicles," Lieberman said. The 2006 CCC Crash Course publication noted that the percentage of estimates written 10 years ago that resulted in totals was 8 percent, while today it is 19 to 20 percent, he said.
"That doesn't benefit the consumer, and it doesn't benefit the repair industry," he said. "How much money do you make if a vehicle totals?"
In addition, Lieberman said LKQ and many other industry participants are working diligently to eliminate the "hassle factor" in finding a recyclable part, as well as eliminating any surprises, such as receiving a part with unexpected damage or without the proper options.
Lieberman urged every estimator in the industry to form a relationship with a local recycler and to talk with them about what is available and when recyclable parts make the most sense in the repair process.
"When your estimating program begins to flash total loss, call a recycler that you trust and have confidence in, and ask what he can do to help you save this job," he said. "If it's me, I'm going to say, 'Send me electronically the list of all of the parts that need to be replaced.' If I've already quoted you a front end, maybe I can identify some other parts that I can supply very cost effectively or can even include at no extra cost.
"We are looking at an industry today that has transformed itself at least as much as the collision repair industry, and we really need to get reacquainted again," he said.
In the mechanical repair industry, the field is wide open for recyclable parts, Lieberman said. "On the mechanical side, a repairer can actually make more money on a recycled part than new and at the same time save the customer money," he said.
There are other benefits for the mechanical repair shop as well, Lieberman said. For instance, electrical components from a dealership can not be returned, he said, but in many instances recyclers will allow a return if it was discovered that the part was not the problem with the vehicle.
"We as an industry have not educated mechanical repair shops about what is available in recycled parts," he said. In addition, many repairers do not realize that many recyclers offer warranties and that in some cases, those even cover the shop's labor in the event of a failure. ARA has helped establish standard for warranties, he said, allowing shops to understand what the warranty is when they buy a part from a participating recycler.
"We now have standards to protect the repairer and allow them to be confident in suggesting to the consumer the use of a recycled part," Lieberman said.
On the legislative front, the recycling industry, by way of ARA, supports the passage of U.S. Senate Bill 545, introduced by Sen. Trent Lott, R-Miss., which would create a publicly accessible electronic total-loss VIN database, Lieberman said. ARA is requesting that in addition to vehicles declared total losses, the database also include vehicles that are being exported.
"The recycling industry is only purchasing 30 percent of total losses," he said. "What's happening to the other 70 percent?" Many are being used in insurance fraud, consumer fraud, and auto theft, he said.
"What's the No. 1 stolen component today? Airbags," Lieberman said. "I don't know of any insurer in the United States that authorizes the installation of a used airbag, so what is happening to those airbags. Why are so many stolen cars being recovered without doors or front sheetmetal. I believe that those parts are being used to fix those cars."
Creating a public database of the VINs of those vehicles is the first step in fighting those types of crimes, Lieberman said.
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