About the business model of car dismantling

Car dismantling industry has played the major role

Car dismantling industry has played the major role towards the establishment for the environmental protection and the establishment of venous industry.

Those who have heard about the car dismantling industry might think their work is hard, dirty and dangerous. Depending on our activity these are correct. However, our work is essential in the world therefore we do our daily operations with a pride for the bigger cause.

We would like to describe briefly about the role and business model for car dismantling industries which has not recognized much in the world. We hope this page can help to deepen your understanding about the car dismantling industry.

Car dismantling work is essential to the world

When we talk about the car industry, many will have a picture of manufactures who make the completed car. In fact, about 5 million cars are produced and sold per year in Japan and about 80 million cars in other countries.

Number of vehicles owned and sales are increasing in the emerging nation because for the new purchase of the vehicles. On the other hand, the developed countries like Japan, cars necessary to the people's life are prevailing in the society, therefore the car industry is supported by the replacement demand purchase. Demand of the replacement purchase is the core, meaning there are so many cars to be replaced and transferred in Japan. The cars transferred in Japan will be divided to the following three groups, sold as a used car in the domestic, exported to overseas and to be scrapped by dismantling companies.

About 2.5 million used cars are sold per year. It is about 40% are sold by the car dealers connected to the manufactures and the rest of 60% are sold by used car dealers. About 1 million used car per year are exported by all the car dealers. And about 3 million used cars per year are scrapped by the dismantling companies.

Thus, by various industries hands, the distribution of car market is built in Japan.

Flow chart of new, used and scrapped cars

Flow of new car, used car and scrapped car

* Because it is a summary view of the main route, there is the flow of the other exists.

Let's review our role, as dismantling companies who take care of the used cars. Many might think that it should be done by the manufacture to scrap the cars with all means.

However as we explained earlier it is not easy to control only by the manufactures because there are many industries involved to handle the used cars in a different roles. Also used cars will arise not only in Japan but all over the world and in this case all the used cars will be the object responsibility for the manufactures hand. Basically manufactures are the professionals to produce a brand new car efficiently with the assembly line for certain chosen models production. However it is a hard task for the manufactures since there are various car models are existing and choose the certain kind from them, even the car dealers among the group has collected the end of life cars, there is a limitation for the efficient process.

Therefore car business industry can't escape from this responsibility of providing an inexpensive used car parts for the car owners and to perform the appropriate end-of-use car process for the global environment in this complications of car business industry as well as there is a certain limitations for efficient car dismantling process. There are about 3,000 companies who is doing the same car dismantling business like us.

Work of car dismantling companies

As you know car dismantling company the one who dismantle the cars. However, that the dismantling is an one of our work and it doesn't represent what we do entirely. The essence of the work can be thought as to properly handle and sort the parts after it has been dismantled. Also it is a business centered on the customers since customers are the suppliers as well as distributors for the car dismantling business.

End of life cars occurs when the owner replaces the cars or to scrap the cars. It happens not only to the owners but also at the dealer, repair shop, used car sales specialist shop, car leasing companies and non-life insurance companies and so on.

"Domestic parts" are sold not only the local area but also across the country by the internet service. Those who are looking for the used car parts to repair the cars are the customers such as the car owners, car repair shop and the same car dismantling company. Customer for the "over sea parts" are the used car parts shop in over sea and the exporters who purchase the parts in Japan. Japanese car has a high reputations in oversea because of manufactures steady effort. Japanese manufactures prosperous business in the world gives a good influence to us for the needs of used car parts in overseas. The "material for parts" stands for the parts which has its difficulties to find a value as used parts and body. A car contains major metals such as iron, copper and major but also a rear metal as well. To sort the material for the parts properly from scrapped car body takes a very important role since it is directly connected to the effective use of urban mines and helps the construction of recycling society in the country of Japan who has known for a poor resource.

We hope this content helps you to understand a little bit more about our company and dismantling business or car dismantling companies in general, also known in the car industry as a "recycling distributor".

Sales and purchase

Sale and purchase

* It may vary depends on the dismantling company.

Profit structure of the car dismantling business

The cost occurs in the dismantling business are "purchasing expenses", "work expenses" (including facilities fee) and "processing expenses" for the parts can't be sold as a parts.
Our main sales categorized to the following three, "domestic parts", "overseas parts" and "material for parts".

Parts will be categorized into the one with the price and the other without according to its supply and demand. Even in the car of the same model, a vehicle that is equipped with an engine of 2.4 liter, there is also a vehicle that is equipped with an engine of 3 liters. If the demands of the engine are different, the selling price will vary for the car with the same model.

For the "material for the parts", the price also will be vary depends on the market conditions of the scrapped iron of the prime metal that builds the car. As you can see looking at the transition of iron scrap market prices in the past, its price is vary depending on the time. Therefore for the exact same type of the cars, the purchase price will be different depending on the time.

Changes in iron scrap prices

Source: General Japan Ferrous Raw Materials association.

Changes in iron scrap prices

* Human Japan Iron Source Association monitor price.
(H2 manufacturer in average value of three districts: Kanto, Chubu and Kansai).

We will offer the best possible purchase price with its change of the demands
We appreciate your understanding for the change of the purchase of price

Profit structure

Profit structure