Ford plans to recycle junked cars, sell parts

New global unit to use Internet, mail order

April 27, 1999|By BLOOMBERG NEWS

DETROIT -- Ford Motor Co., the world's second-largest automaker, said yesterday that it will start recycling junked cars and create a used-parts clearinghouse that it expects to add $1 billion a year in revenue and help control landfill growth.

Ford said it bought Copher Brothers Auto Parts, a Tampa, Fla., company, as it forms a new global business unit that will take apart old cars and trucks to resell the parts to body shops, insurers and consumers. Ford didn't disclose a purchase price.

The automaker said it will use the Internet and mail order to bring efficiencies to the $11 billion used-parts industry, which comprises some 10,000 junkyards, repair shops and other small businesses.

After years of focusing on cost-cutting, Ford is trying to capture more of the money that customers spend to finance, insure and repair vehicles.

"There is a lot of value in the chain that the big automakers don't have a hand in," said auto analyst Alan Baum with IRN Inc. in Farmington Hills, Mich. Some of those other businesses have widening profit margins, he said.

The move also comes as Chairman William Clay Ford Jr. pushes the company to take a leadership role on environmental concerns. The new venture will distribute recycled parts from Ford factories.

Some 11 million vehicles are scrapped in the United States each year. Of each new vehicle produced today, about 75 percent of the content can be recycled, Ford said. Parts such as dashboards, which often contain more than 30 different types of plastic, usually end up in landfills.

The new business unit hasn't yet been named, but will capitalize on Ford's worldwide brand recognition, said Martin Saffer, the venture's acting chief executive. He declined to say how much Ford will invest, but said the company hopes that the business will generate $1 billion in annual revenue within five years.

Most used-parts companies are too small to be efficient or modernize their distribution methods, Saffer said. "Many of these small businesses have Web sites, but they don't know what to do with them," he said.

Bill Li, chief operating officer of Ford's new venture, said most sales initially will be to other businesses, but the company wants to open its own retail network eventually to sell recycled parts directly to consumers.

Earlier this month, Ford purchased Kwik-Fit, Europe's largest independent repair chain, for $1.63 billion.

Ford shares rose 43.75 cents to $64.1875 yesterday.

Pub Date: 4/27/99

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