"I'm not eco-friendly so much as I am body shop-friendly," he quips, noting that he believes the recent acquisition of a WD by a recycled parts supplier is akin to a monopoly, which spurred ABP to make this competitive move. "Now we are giving our customers a 'one stop shop,' and they will be able to order all of their aftermarket parts and their recycled parts from the same distribution chain while utilizing the same logistics solutions."
Each of the recycling shop partners is a member of the United Recyclers Group and Premium Recycled Parts, so their reputations are solid. Morris notes that ABP already was doing business with each of the firms, located in Charlotte, N.C.; Chicago; St. Louis; Kansas City, Mo.; Knoxville, Tenn.; Little Rock, Ark.; and Fort Worth, Texas, and that opening a joint-venture warehouse with them was the logical next step.
"It's our warehouse, but they're supplying the logistics for pulling parts and delivery. The purchasing, call center and sales are on us," he explains. "With the cost of fuel rising, shops like one-stop delivery — they know exactly what time all their parts are going to be delivered."
Mike Akens, owner of Bookcliff Auto Parts, a NAPA independent in Grand Junction, Colo., believes Morris is making an interesting move.
"It seems to be an intelligent way to recycle cars," says Akens, who is a past NAPA/ASE Parts Specialist of the Year. "I could definitely see how that would work. It's good for the environment as well as the industry."
While it might be a while before ABP moves into Akens' "thinly populated" neck of the woods, about 200 miles away from Denver, Akens admits that having more recycled parts easily accessible in the pipeline could potentially cannibalize new-parts sales. However, he also sees there being limits to what could be pulled from a discarded vehicle and salvaged.
"Used electronics, for example — there's a failure rate that could be there," he says. "But hard parts, like differentials? That could be an easy sell."
Akens also sees it having merit in the retail market, perhaps even more so than on the wholesale side. "It's a great idea for the do-it-yourself guys, but I'm less certain about the do-it-for-mes," he says.
The concept is one that has worked well already for ABP in its dealer relationships, through its Factory Direct Outlet program. ABP of West Virginia in Parkersburg, for example, is also a dealership. So is an outlet in Grand Rapids, Mich., Classic Chevrolet.
And it's not a unique model. Bill Heard Chevrolet, for example, which bills itself as the "No. 1 Chevy dealer in the world," has a company called Mobile Logistics do all of its fleet deliveries. Mobile Logistics works directly with ABP on the dealership chain's behalf.
"As the cost of distribution rises, the more popular this will become," Morris predicts. "Customers get all their deliveries at once, knowing exactly what will be delivered and when."
Morris says ABP plans to expand the recycling operation partnerships even further, with a goal of about 15 to 20 such warehouses in place by year's end. The market is particularly hot these days, because body shops are seeing more individuals come in for repair estimates and less claim-driven work. That leads to customers inquiring about salvaged parts vs. new.
"If you ask body shops what their No. 1 increase in market segment is, it's likely going to be the individual buyer," Morris says, noting that many consumers would rather pay out of pocket for repairs than claim the accident and watch their premiums soar. "There were 19 million wrecks on U.S. highways in 2002, and 12 million in 2006. Were there fewer wrecks? No, but there were a heck of a lot less people claiming 'Hey insurance guy, I screwed up.'"
Gabriel Morrow, a New York-based associate with industry advisory firm Lazard Middle Market, points out that consumers often call the shots differently than professionals: "Consumers are being more discretionary with their cash, and they're more price-driven."
So when it does occur that an OE part is cheaper than its recycled counterpart, will price beat out the more "environmentally friendly" (in the sense it's not lying in a landfill) alternative? It depends on the situation, Morris admits. Either way, this newly expanded supply chain concept helps guarantee there will be a sale.
