When a car crashes and the insurance rules it as a total loss, what happens to that vehicle? In Brazil, the answer is usually discouraging: only 1.5% of automobiles out of circulation are correctly processed, according to data from the Iron and Steel Scrap Companies Union. The rest ends up in informal scrapyards and even landfills, wasting tons of materials that could be reused. In countries such as the United States and Japan, the scenario is entirely different: between 80% and 95% of these vehicles are recycled.

It is in this gap that Renova Ecopeças has been operating for 12 years. Pioneer in the Brazilian market of automotive recycling, the company, which belongs to Grupo Porto, was born with a clear mission: to transform the problem of totally wrecked vehicles into a sustainable and profitable solution. Today, with over 30 thousand vehicles dismantled, 37 thousand tons of reused steel, and over 1 million parts sold, Renova is already the largest of its kind operating in Latin America and has been profitable for 5 years.

Daniel Morroni, executive director of Porto Serviço, a branch focused on vehicles and residences of the insurer that houses Renova, says that by separating car parts focused on reusing materials, it is possible to recycle up to 95% of components sustainably. He talked to EXAME and spoke more about the process from crash to resale.

“We dismount the car and separate the parts which can be resold, which make up to 85% of the vehicle. Another 10% of material that cannot be resold is turned into residue to the recycling chain and converted into new raw material.” The remainder, of 5% is sustainably discarded since it doesn’t have a proper destination or use in the economy.

Vehicle Recycling

The window of opportunity is not only environmental, it is also economic. The recovered and treated parts have discounts of up to 60% in comparison to newer ones, which are usually expensive for clients and repair shops.

Morroni explains that the price definition is a fragile line: if you overshoot, the piece is stuck in stock because the price is too similar to generic parts. The value, according to the director, is the main factor in convincing the consumer to purchase a used product. At the same time, if the price is too low, the business is no longer profitable. The solution to this is technology: The company has a robust system that cross-analyses prices of new parts, generic, and used in the market to reach the ideal value. “Pricing is the difference between success and failure”, he says.

The environmental side is also essential – and very much so – in Renova’s decision-making. Tons of valuable material, such as steel, aluminum, plastic, rubber, and glass, are wasted in cars that are not recycled after a total loss. The company acts precisely to attack all of these fronts simultaneously, as affirms the sustainability, diversity, inclusion, and equity manager from Porto, Viviane Pereira.

The idea is to connect all possibilities of the circular economy and the management of climate change, topics that are interconnected in the insurer’s strategy. “When we made Renova, we knew the importance of giving new life to residue. This impacts not only Porto, but also the carbon footprint of the entire vehicle production chain”, she informs.

Pereira points out that items such as bumpers, seatbelts, and airbags cannot be commercialized, according to the Dismounting Law, a regulation by the State Transit Department (Detran) that establishes dismounting patterns, enacted close to Renova’s birth. Other parts in good condition are treated and resold. “Whoever follows the rules, gets a certification about the materials. Every piece comes with a tracking seal through QR code, which shows where the material came from and from which car,” says the manager.

Renova’s primary goal is to double car recycling by 2030, which impacts all of Porto’s carbon footprint. Viviane mentions that by extending the service life of these parts, the company measures emissions avoided by the new material, which was never produced. Simultaneously, the calculation methodology uses the time the product gained from recycling as a reference. “If an engine has a service life of 30 years, and the wrecked car had 10 years of use, that part can still be used for another 20 years. This improves the carbon footprint of the reusing client, but in Porto’s sustainability, there is still the other 20 years of engine use to account for”, she affirms.

From crash to resale: how does it work?

The process begins when an insured vehicle suffers a total loss – be it because of a serious crash, or because the repair cost surpasses a specific percentage of the asset’s price. From that point on, the vehicle is a responsibility of the insurer. “Even total loss cars have intact parts. If it were a frontal collision, we could dismount the rear end, doors, and parts”, explains Morroni.

The first stage is selection. Porto Serviços analyses crashed vehicles, selects those with the highest market demand, and purchases them for Renova. After that comes testing. “From the moment the car arrives, we start testing the engine and gear shifts. We put it in a treadmill which simulates a journey and mark which pieces are in good shape, which are broken, and which make no sense to commercialize”, he details.

Part decontamination is the next step, during which the company removes gases, fluids, oils, and liquids, effectively “drying” the car. These materials can also be commercialized, such as leftover fuel, used oil, and air conditioning gas. The fourth step is proper dismounting. “We dismount the car component by component. The doors, for instance, are whole, furnished with locks and window mechanisms, which help in efficiency. This way, when a client buys the door, it already has every feature.”

Damaged items or those with no resale potential pass through a recycling process with partner companies. “We use giant machines which shred parts that cannot be reused and separate plastic, glass, and steel to be reintroduced at the start of the production chain”, details Viviane. These materials are eventually sold by weight to recyclers and industries.

After that comes the washing of parts that can be sold, followed by photographing and registering them for sale online. Finally, there is stock, sales, packaging, and shipping. The operation includes vehicles ranging from cruisers to motorcycles, vans, and medium trucks.

Renova’s Expansion

Current operations are at their limit, according to the executive director, which has required new investments focused on operational expansion. “We plan expansion based on the goal to triple the number of recycled vehicles by 2030”, says Viviane. One of the main reasons was growth in sales, with the evolution of their website and sales made through WhatsApp, which started last year, explains Morroni. “We have grown in dismantling and shipping all around Brazil, from the same center in São Paulo. This forced us to find more space.”

The amplification is meaningful, doubling the operation size. With the new area, the company managed to process almost 8,000 cars a year. “We are ready for a sustainable yearly growth and getting ready for the next four years”, projects the director. New installations, currently under reform, should accommodate more clients by almost doubling stock from 25,000 to 45,000 parts, creating more opportunities for clients to find the parts they need from a larger variety of cars.