Statement – 21^st November 2025

Illegals

The costs of being legal are high

The proposal for a vehicle Regulation mentions the so called ATF more than once. In article 3 (15) it’s describes as: ‘authorised treatment facility’ means any establishment or undertaking that is permitted in accordance with Directive 2008/98/EC and this Regulation to carry out collection and treatment of end-of-life vehicles;

‘Authorised’ means legal, operating in accordance with waste management permit, which precisely defines procedures and scope of conducted operations, known and controlled by (local) government. Key is that treatment of ELV’s is done under controlled circumstances as it’s hazardous waste and this is the first step in actually generating parts and materials for reuse. As parts will be sold with a small margin for the ATF and as some materials have enough value to compensate for costs and effort to separate them, store them, have them transported and recycled, many materials don’t. VAT is paid to the taxes over profit. If ATFs are lucky, the country has a margin scheme in which it’s simple to calculate the profit over which VAT is paid, as VAT is already paid once over the parts or the whole vehicle.

In order to gain 85% reuse and recycling and 95% reuse and recovery, ATFs face mandatory removal of non-profitable materials. These materials often need to be processed further in the chain which means it’s a chain responsibility.

In many countries ELVs are dismantled at sites that are not ATFs. For some reason, enforcement sees no reason to protect ATFs against these illegal facilities. Reason to call it protection is because as these illegals are not controlled, they are not subject to perform mandatory material removal with unfair competition as a result. Also ATFs can do nothing themselves against these illegal unfair competitors. That would be illegal. These illegals however, do not have the costs legal ATFs do. They only pic the profitable parts and materials and discard out of sight of the remains of the ELV or sometimes sell these incomplete ELVs even to legal ATFs! Illegals do not pay for all kinds of measures and they do not pay VAT. They can sell their parts for way lower prices than ATFs can ever do.

These Illegals can only flourish if enforcement does nothing (in many countries environmental inspections only focus on licensed ATFs) and if it is possible for them to buy vehicles for dismantling. If a registration system allows a vehicle owner, it’s easy to end registration. If not paying vehicle obligations (registration, annual safety and environment checks, insurance) has no consequences, a vehicle owner needs no COD to get rid of these costs. The vehicle owner can pick the highest offer for his ELV which is the illegal. For this reason in some countries AFTs have to pay for ELVs in order to get them at all. What’s even worse is that Total Loss vehicles are often sold by the insurance companies and lease to the highest bidders. This often leads to vehicle identity fraud with stolen vehicles on top of unfair competition.

Vehicles come from owners, insurance and fleet owners, but also from trade and import. This import is the biggest problem as it’s the easiest escape from registration and control. ELVs are exported as used cars, which means they leave the registration system they were in as exported. But they will never reappear in any other national system as they are dismantled abroad. As these vehicles do not need CODs, they are especially favoured by illegals. These vehicles officially do not exist and nobody cares who treats them and how, apart from legal ATFs. Only customs could enforce and it happens on a minimum scale in some countries, but often nothing happens.

An ATF sends a treated ELV (Hulk) to the shredder. In most countries it’s the only option, apart from incidental storage and bulking by scrap traders that also are obliged to send them to the shredder. Illegals however simply send their remains to the shredder or even straight to the Smelters in India.

Environmental enforcement should have an open eye for activities that need permits and control, but as said, in most countries they only focus on ATFs with permits. It’s the parts sales or used parts without connection to an ATF, it’s dismantling, it’s transport, it’s storage until transport or shredding that should be red flags to enforcement. It’s export of vehicles that should be controlled on the status of the vehicles. Are the exported vehicles good for use as a vehicle or is it in fact ELVs export?

Also registration systems do not function as properly as they should. In many countries the vehicle obligations are not even connected to owning a vehicle, or escapes are too easy. National systems should be connected to each other and export should mean the exporter is the registered owner. Export should never mean the vehicle just disappeared from control.

Illegal dismantling means fraude, theft, unfair competition, environmental risks, low recycling rates, missed taxes. Enforcement should be looking for unpermitted activities, vehicle and waste streams, parts sales by suspected sellers on digital platforms. Enforcement should become active and should perform risk based control.

In addition to supervision, legal ATFs should be incentivised by regulation in relation to illegal activities. For this reason, the condition about income from parts reuse should be excluded from Article 20 a of the draft ELV Regulation when calculating the costs of producer responsibility. In this way, the greatest possible incentive would be created for parts reuse in legal ATFs, as their income would not be able to cover the costs covered by producer responsibility.

ATFs are one the best enforced operators everywhere, but they are not or insufficient protected by governmental enforcement. As being legal has high operational costs, EGARA is of opinion that in order to enable ATFs to do their business, proper enforcement on illegals and illegal activity is evident.