IAA Signs Deal to Export Auto Hulks to China

According to a recent press release, Insurance Auto Auctions Inc. (IAA), a salvage auto auction company and subsidiary of KAR Auction Services Inc., Carmel, Ind., has signed an agreement with Chen Jia Inc., a wholly owned subsidiary of Jiangsu Chenlong Resource Recycling Development Co. Ltd., located in Jiangsu, China, to ship salvage vehicles to Chen Jia’s Chenlong Recycling facility in China.

IAA says it is one of the first companies to obtain one of only a few recycling permits from the Chinese government that allows the import of salvage vehicles for recycling purposes.

"This agreement helps us achieve our growth strategy by expanding our global buyer base in a region with a fast-growing need for scrap metal," says Tom O'Brien, IAA CEO. "We are pleased that our long relationship with Chen Jia has added tangible value for vehicle sellers at our auctions. Their initial purchases at our locations along the West Coast have already created increased competition for vehicles and may eventually expand throughout the greater United States."

The two companies began discussions on the arrangement in 2008. The facility in China is owned by Jiangsu Chenlong Resource Recycling Development Co. and is able to process hundreds of thousands of tons of scrap iron per year.

IAA says the operation is the first in China to complete the installation of a shredder built specifically for processing scrap steel, including automobiles coming from the United States and other countries. Through the new agreement, IAA says it now has the ability to be a major salvage provider to this operation—specifically, lower-end vehicles for the purpose of recycling.

"There are several reasons why we chose IAA, including their 30 years of expertise in the salvage auction business and their global outlook," says Gu Long Sheng, president of Jiangsu Chenlong Resource Recycling Development Co. Ltd. "The management team at IAA has been dedicated to seeing scrap vehicles legally enter the China market and their support of our efforts has been both encouraging and instrumental in helping us shape our business model in the U.S. Second, IAA is clearly a market leader and our relationship with them will help ensure our ability to source the salvage vehicles we need to meet our production demands."