Your converter counts and averages and taking complete ownership
Published by Auto Recycler’s Toolbox – April/May 2020
Knowing converter counts and averages greatly assists in understanding catalyst material as well as understanding that converter pricing is a direct reflection of the live PGM market.
In today’s rapidly changing world and economy, it is important to understand that with the right information, there is always a profit to be made with converters. Unfortunately, more often than not, we see profit ending up in the wrong hands. Automotive recyclers are missing out on higher converter returns because they are heavily relying on core buyers to inform and educate them on their own material.
The reality is, automotive recyclers repeatedly lose out on higher converter returns by allowing core buyers to dictate their counts and averages. As a result, a question arises; “How do I educate myself and take ownership of my own material to validate what I’m being told”?
The answer is two-fold; knowing your converter counts and averages will greatly assist you in understanding your material and will allow you to navigate toward best-selling practices. In addition, understanding that converter pricing is a direct reflection of the live PGM market will help recyclers validate price fluctuations and assessments.
Proper tracking; knowing your counts and averages.
The majority of automotive recyclers rarely keep track of their converters but having an ongoing and running count of units pulled (and possibly bought) is absolute key for not only qualifying buyers but for calculating can averages. Detailed unit counts allow you to calculate your can average per material type from your given returns.
When you know your counts, you will be able to validate inconsistencies. For example, if your buyer is counting all aftermarket units in his can-average calculation as 1 unit, the result would be skewed statistics that depict an incorrect average price per unit. Buyers typically do this to present a higher than normal price per unit to win a bid but in reality, the true can average they are paying is much lower than your material standard. If you do not have access to your grading data, which would include having a detailed report that indicates the exact amount of grading categories (aftermarket, DPF, Foil, beads and ceramic), as well as a fullness count, you would never be aware of such an inaccuracy.
Evidently, having access to the proper instruments that help you evaluate what material is in your possession or what material you are planning to purchase is critical. Likewise, working with a buyer/processor that is able to provide accurate unit counts and accountability of your material makes it easier validate returns and profits. More advanced processors also enable you to track your partial percentages (full versus partially full converter units in your lot).
If you are confident that your current buyer/processor is accurately reporting on your material and providing you with transparent data, the next thing to consider is the precious metal market.
Market awareness; being cognizant of your precious metals.
The PGM market determines what your converters are valuated at in addition to clueing you in on how to compare prices. As an automotive recycler, knowing the precious metal composition in your converters is essential.
Converters procured from a truck salvage yard are largely Platinum based with 30-40% Palladium and no Rhodium. Converters obtained from a late model yard have higher compositions of Palladium and Rhodium and little Platinum. Lastly, yards purchasing older model vehicles will generate converters holding higher levels of Palladium. Having this knowledge will help you follow the correct precious metal prices and will also allow you to better understand how changes in market value affect your converter values.
To illustrate, if your buyer is usually giving you a can average of, let’s say $135 per unit for a mixed box (as a truck salvage yard), and both Platinum and Palladium increased significantly since the last time you sold, that is an indicator that your can average should automatically increase selling in that higher market (all other factors remaining constant). But if you don’t know your averages or if you are given inaccurate information – it’s hard for you to know if you are being treated fairly.
Take the wheel!
Many recyclers ask, “why should I embrace change or make changes when I can hang on to what’s right in front of me?.” The response is simple; change is an agent for good especially when it stimulates a growth mindset. Constant education allows businesses to remain extremely adaptable, helping them survive in highly volatile markets. Finding new ways to stay ahead of the curve is extremely important. Every dollar counts and every profit stream is important. Stop allowing buyers to come into your yard and subjectively tell you what you have. Your converters are yours and should be managed by you alone.
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