⭐Where do salvage yards get the vehicles they sell parts from?⭐
There is a misconception that the vehicles that end up at salvage yards are old, worn out, without life left to them. Junkers. A truck rusting out in the back of a barn or a family van with 300,000 miles that finally gives out. This could not be further from the truth, when you are talking about a late model automotive recycler like Pete’s Auto Parts. Sure, there are salvage yards that take in end-of-life vehicles, usually scrap facilities or self-service yards. But yards, self-service where you pull the parts or full service where professionals pull and prep them, only want to sell parts that have life left, that will run down the road on your vehicle. So where do salvage yards get their cars? The vehicles we buy at Pete’s Auto Parts, and the vehicle most salvage yards are buying, are good running vehicles that were in fender benders.
Over 99% of the vehicles that Pete’s Auto Parts buys were insurance company total losses. Many still had “clean” (green) titles, the rest had salvage (orange, can be recertified to be driven on the road) or scrap (red, can never be driven again, must be scrapped) titles. If you’ve ever been in an accident while you had full coverage insurance on your car, you were likely part of the salvage industry whether you knew it or not! Either your vehicle was repaired (hopefully with used parts) or it was totaled and sold and hopefully it went to a recycler.
A Personal Example
I personally have collision coverage on my 2018 Audi SQ5. Meaning I don’t just have the mandatory PIP (personal injury protection, which covers no-fault medical/lost wages,) PPI (Property Protection Insurance, which covers damage to others’ property,) and Bodily Injury/Property Damage (which covers severe injuries and out-of-state damage,) I also pay for Collision coverage in case my car is in an accident, the insurance company will repair my car or pay me for it if it’s non-repairable. If I remember what boxes I checked, I don’t pay for Comprehensive (theft/weather/vandalism) but I do pay for UIM (Uninsured/Underinsured Motorists protection, which covers if someone hits me but doesn’t have insurance.) Anyway the point is, if I turn left out of Pete’s Auto Parts onto Port Sheldon and I get T-boned, my insurance company will be a) fixing my car with used parts or b) buying me out of my car and they will be selling my car to a salvage yard.
The Where We Get ‘Em
At Pete’s Auto Parts and most late model used auto parts dealers, we buy a mix of insurance company totals from auctions like Copart and IAA within about 500 miles of us, and directly from insurance companies through brokers/contracts. If I was in that accident with my Audi tomorrow, it would likely take time for the insurance company to get an estimate together (although that process is getting faster with AI) and the car would sit at the body shop for a while. Then they’d have to get the title from me, and transfer it into their name. If I had a loan on the car, they have to get the lien released. This all takes time. Eventually the insurance company would have the car towed to an auction, such as the IAA auction in Grand Rapids, where it would sit before being sold to the highest bidder. The benefit for the insurance company to sell the vehicles they total this way is they can drive the price up. Often they get people bidding that are out of the country, exporting the vehicles to fix and sell, even if the insurance company didn’t think it was worth it, lots of rebuilders and car dealerships, especially in other countries, will. So why would they choose a contract instead?
Pete’s Auto Parts sends tow companies to pick up totaled vehicles as soon as the contract insurance company gives us the paperwork for them saying the vehicle is totaled, and we bring them to our lot where we store them. Free. We pay the charges at the body shop where they were sitting collecting storage fees, so it stops the money being spent on storage, and then we keep the vehicle safe while the insurance company negotiates with the insured, obtains the title, gets liens released, finalizes paperwork. That can take weeks or months. Once they mail us the title, THEN we can purchase the vehicle for a set price. Sometimes these contracts are for a set percentage of ACV. Others are not. For the ones we have at Pete’s Auto Parts, we do “bid” on the vehicles, we calculate what they are worth to us and we pay that, but we don’t have any competition! The advantage for us is getting the salvage without having to bid against others, the disadvantage is we pay out on storage and then have to wait to take the vehicle apart.
The Bottom Line
With an auction, the insurance company usually pays a lot more in fees and storage and it takes longer for them to sell the vehicle– but they also get a little higher price for the vehicle. With a contract, the insurance company pays WAY less in fees and storage, and they don’t have to pay out that money up front at all, it’s just deducted from the price we pay them when we pay out for the vehicle, protecting their cash flow.
Finding the Right Balance
Contracts are great, but they also remove some choice from our vehicle buying. We get contract vehicles we never would have been able to buy at auction because they would sell to someone bidding in Georgian, Nigeria, Jordan, Cambodia, the UAE, etc. Every day we are bidding against buyers from other countries that intend to put the vehicles back on the road, but we are bidding on cars we know we need that will have a lot of great selling parts. But with contracts we get whatever vehicles they send us, so sometimes that’s great because it’s multiple Silverados, and Silverado parts in in high demand, but sometimes it’s not as great because it’s multiple Tesla Model Ys, and not very many people are fixing Model Ys and putting used doors on them! Don’t get me wrong, we are grateful for the contract cars we get, and they are some of our best performing cars.
At Pete’s Auto Parts we want to, we NEED to buy the vehicles where the parts are in high demand, so auction vehicles are important, too! We have one staff member whose main job is buying and he also does a smattering of other things, and we have another staff whose main job is inventory and he does a smattering of buying. The Pete’s buyers download each auction they intend to bed into software that scores the vehicles based on the parts needs, and then they filter the list down and evaluate each vehicle for the good parts. They mark which parts of the top 13 or so parts are good and bad, assign dollar values to those parts and tweak the price we can pay for each vehicle based on their projection for that vehicle’s sales. Basically, they gamble!
Roll of the Dice
Each vehicle we evaluate we’re saying, “I bet we can sell $X on that.” Then the ones we win, we process, we sell the good parts, we recycle the fluids/precious metals/scrap parts/copper wire/etc. At the end of the day, when the vehicles are being crushed, our GM evaluates the vehicles and gives buyers feedback on what worked and what didn’t. And we keep trying to buy a little better vehicle. At late model salvage yards like Pete’s Auto Parts, we tend to buy side hits and rear hits and front hits, but we don’t buy many flood vehicles or fire vehicles, because they just don’t have as many good parts. Pete’s Auto Parts tries to buy a good mix of foreign and domestic vehicles, a lot of trucks and SUVs because so many people drive trucks and SUVs, but we buy small cars, too. Basically we want to buy the cars that are driving down the road and if they are in a fender bender, they’ll be fixed. Because we want Pete’s Auto Parts to supply those parts. Used parts are better for the pocketbook AND for the environment. It not only takes less cash to buy a used bumper, it takes so much less energy – less metal, fuel, plastic, electricity, etc to reuse a perfectly good bumper from another vehicle vs creating a new one, whether the new one is an OEM or an aftermarket knockoff. But I digress.
Conclusion
Next time you drive by a Copart location or you see cars in the back lot at a body shop, now you know where those cars came from, and where they are headed! At late model auto recyclers like Pete’s Auto Parts, we are buying good running vehicles and parting them out to keep the cars on the road, on the road! And if you are looking to sell your vehicle because the engine or transmission is bad, you may now know from this article it’s not really our cup of tea, but we recommend Padnos or Lucky’s to buy a vehicle with mechanical issues.
If you were in a fender bender and you didn’t have collision insurance, and you think Pete’s Auto Parts may be interested in your vehicle, you are welcome to send the VIN and some pictures to our buyer craig@petesauto.net and if he’s interested he’ll get back to you with a bid. We try to buy vehicles with relatively low mileage and a lot of great parts left to sell! Thanks for reading 🙂
Or if you need parts, you can reach out to Pete’s Auto Parts by calling or texting 616-669-6592 or you can search our site here on our used auto parts search page. We also have a YouTube channel where we run all of our vehicles. And you can follow us on Facebook for more content.
