Detailed approach: Russia wants to create a legal market for used car parts. Article in the Russian newspaper Izvestia

August 4, 2020

Detailed approach: Russia wants to create a legal market for used car parts

The Federation Council proposed to resume and expand the car recycling program

Maria Perevoshchikova

In Russia, it was proposed to allow the sale of numbered used automobile spare parts – for example, engines or gearboxes. The Federation Council recommended the Ministry of Industry and Trade to develop a new program for the utilization of cars, according to the documents of the Upper House Committee on Economic Policy, which Izvestia got acquainted with. It is proposed not only to reintroduce discounts for Russians who buy a new car and give back the old one, but also to allow recyclers to sell used parts after an examination of their quality. Now auto parts are usually sold without any guarantees, their use can be life-threatening for drivers, market participants say. Verified used parts will be offered at least half the price of the same new ones, they calculated.

New program

Russia wants to launch a new car recycling program, similar to the one that operated in 2010-2011. Then people who hand over their cars to recyclers received a discount of 50 thousand rubles when buying a new car, the program extended to brands manufactured in the Russian Federation.Car manufacturers received compensation from the state, Viktor Kovshevny, director of the NSRO association, reminded Izvestia.

Director of the National Recycling Association RUSLOM.COM Viktor Kovshevny told Izvestia.

The Federation Council asked the Ministry of Industry and Trade to create a new program and “work out options for amending the legislation for the implementation of pilot projects in the regions, a simplified procedure for obtaining subsidies for participants in pilot projects.” This is stated in the recommendations of the Federation Council Committee on Economic Policy following the meeting on the regulation of issues related to the circulation of scrap and waste of ferrous and non-ferrous metals in the Russian Federation Izvestia has a copy of the document at its disposal.

Within the framework of pilot projects, the department was recommended to create opportunities for the sale of used numbered auto parts by recyclers – after an examination of their quality. Now it is forbidden to sell spare parts of cars taken off the register, said Natalya Belyaeva, deputy chairman of the committee for the processing of waste and secondary resources of Delovaya Rossiya.

The National Recycling Association was also recommended to submit to the Federation Council Committee on Economic Policy and the Ministry of Industry and Trade information on the possibilities for the formation of pilot projects.

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– We are selecting applications from scrap processors, who are ready to launch pilot projects. They should not only express their desire to participate, but completely organize the disposal process in compliance with all environmental requirements, – said Viktor Kovshevny.

From September 1, 2012, a recycling fee is charged in the Russian Federation for the sale of each imported car – for recycling this car in the future. From January 1, 2014, it was introduced for domestic cars. Over the years, according to Viktor Kovshevny, more than 1 trillion rubles have already been collected (in 2019 – more than 200 billion). But these funds are practically not used, he stressed.

Only a small part is now received by car factories for the development of the industry, Igor Korovkin, executive director of the Association of Russian Automakers, told Izvestia.

The money was to be spent on car recycling. But the average service life of a car is 18 years – those vehicles for which the fee was paid are still too “young”, Viktor Kovshevny stressed. Such machines are retired from use only as a result of an accident or other serious damage.

Most often, they end up in the possession of insurance companies, stressed Nikolai Valuev, a deputy of the State Duma.

It would be more logical to use the utilization fee in full today for the recycling of disused vehicles and for the development of the industry as a whole. In particular, to reimburse discounts for buyers of new cars instead of old ones (70-100 thousand rubles per person), as well as to pay subsidies to scrap processors (about 10% of all fees), says Viktor Kovshevny.

“The mechanism for obtaining subsidies should be developed based on the experience of pilot projects, and it is worth reimbursing the costs of equipment and infrastructure for disposal,” believes Pavel Morozov, founder of Acron Holding.

It will be beneficial to citizens, machine utilizers, manufacturers and the metallurgy sector, which will receive raw materials, said Viktor Kovshevny.

The development of a system for the use of vehicles with expired service life as recyclable materials and used spare parts is useful for both business and the country as a whole, Igor Korovkin agrees.

Whitewashing the market

The goal of the new draft program is to develop a high-tech industry for the disposal of out-of-service vehicles (VETS), stimulate the procurement of recyclable materials and demand for the purchase of new cars, as well as create a civilized market for used auto parts, said Viktor Kovshevny. Now, according to him, such spare parts are sold significantly cheaper than new ones, but, as a rule, without quality assurance, which can be dangerous for people’s lives.

Today, used auto parts can be sold by individuals and companies, for example, car services, car markets and so on, noted Natalya Belyaeva.

– The law does not prohibit the sale of used spare parts, but mostly it is a gray and black market. For example, stolen cars are usually sold as spare parts, – said Viktor Kovshevny.

If cheap used spare parts with a quality guarantee appear on the market, then those players who cannot afford expertise or do not want to invest in it will be forced to leave the market, said State Duma deputy Vladimir Pushkarev. The examination should be carried out by independent appraisers or self-reguatory organizations (SRO), says Natalya Belyaeva.

Scrap processors will be able to sell used spare parts 2-10 times cheaper than new ones, Viktor Kovshevny predicted. At the same time, it should be regulated same as abroad, which spare parts are prohibited to reuse. In particular, this appliels to parts of braking systems and steering systems. Today this is not controlled in the Russian Federation, the expert said.

– In developed countries, you can sell used parts only according to the list approved by the authorities. For example, in the USA, while a car is being processed for recycling, dealers in the first 15 minutes already send their requests for the purchase of parts, – said Igor Adabir, commercial director of Oris Prom.

Considering the long distances in Russia, government support plays an even greater role here in the development of a civilized car recycling industry and the reuse of used spare parts, than in other countries, said Rainer Dagn, the head and owner of the Austrian company SEDA.

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