We’ve looked at the automotive industry many times before, as it is worth many billions, and while we’ve looked at the used car business we have not yet looked at the salvage and accident damaged vehicle business.

When people think salvage and damaged cars they usually think SMD (slogan: Buy It. Fix It. Love It) or other players that mainly buy from insurance companies and resell. I’m not talking about that, I’m talking buying accident damaged, non-runner, salvage vehicles from private individuals and then reselling it.

I also want to distinguish this business from the “breaking up for spares” or scrapyard business. That is too much work at least for me. I am talking about a WeBuyCars or a AutoTrader for salvage and damaged vehicles. Read A Look at Middleman Business Models where I discuss various “marketplace” business models.

What is a salvage/damaged car worth
I want to spitball some suggestions here.
Firstly let’s distinguish between accident damaged, non-runner, salvage vehicles
Accident damaged can mean cosmetic, that can be panel beated
When we call non-runner we usually have a problem that is expensive to fix like an engine issue and people will sell it (for cheap) either 1. they don’t have enough money to fix it or 2. they have enough money to buy a new car and don’t want to bother with fixing an old Bafana Bafana or is it skorokoro?
Then we have a salvage that is considered too expensive to repair that is usually a bad accident that has parts that can be salvaged.

SMD vs WeBuyCars – Two sides of the same coin
SMD sells cars for what I consider expensive if you factor in repair costs (hell even before repair costs). WeBuyCars sell cheap cars with so many mechanical issues (almost all B rated cars have engine and gearbox issues) that when you factor in repair costs. You are almost better off buying a decent car if you can afford to. I spoke about the scalability of WeBuyCars before (Buy & Sell Used Cars) people take their fucked up cars there to sell for a quick buck. In this business people will bring you their even more fucked up cars to sell for cheaper.

You need to be a place that is willing to put an offer on any car in any condition. I have spoke about this mentality in Open a Junk Shop (don’t be picky). People will list accident damaged cars on Gumtree and it will take long to sell and if they want quick money they can come to you (at much less than what they advertised for of course). Cars take up space and a bird in hand is better than two in the bush – especially in SA. Also many people just want to sell a car quick after an accident.

Is there an opportunity for a marketplace for salvage, non-runner and damaged vehicles (outside of Gumtree, Facebook Marketplace). I don’t know if this market is big enough. There will be an opportunity for a Facebook group and people who buy to fix and break up for spares will convene. But will it be a viable business just connecting the two?

Somewhere in between
I have said before that the scrapyard went the way of the dodo due to aftermarket parts, yes for German brands I would say breaking up for spares is still viable. If you can get cheap enough, you can buy the car, strip it of general parts (battery, tyres, seats etc) sell that to get within breakeven and sell the rest to the breaking up guys. I would not touch or attempt to work on any car in any business model discussed here.