Small workshops control scrap vehicle sources, tracking the chaos of dismantling scrapped cars

Source: Xinhua News Agency

Xinhua News Agency Jinan, March 25 – Topic: Tracking the Chaos of Scrap Car Dismantling

Xinhua “Xinhua Viewpoint” reporter Wang Yang, Wang Huan

On one side are legitimate auto dismantling companies “with no cars to dismantle,” and on the other side are rural workshops controlling many scrap car sources, reselling parts for profit, with booming business… Recently, the chaos in scrap car dismantling in a region of Shandong has attracted attention.

“Xinhua Viewpoint” investigation found that such industry chaos has appeared in multiple locations. Illegal small workshops and intermediary collection agencies not only disrupt market order but also hide safety hazards and environmental risks.

Where have the scrap cars gone?

According to relevant departments, from 2024 to 2025, the national recovery of scrap cars will reach 17.67M units, with an average annual growth rate of 45.8%.

At a legitimate scrap car dismantling and utilization company, the scrapped vehicles are parked in the factory yard. Xinhua photographer Wang Yang

What is the proper process for scrapping a car?

The Ministry of Commerce’s official website shows that vehicle owners should hand over their scrap vehicles to motor vehicle recycling and dismantling companies, which issue a recycling certificate, collect the vehicle registration certificate, license plates, and driving license, and promptly handle deregistration with the public security traffic management department, then transfer the deregistration certificate to the vehicle owner.

However, in practice, there is a underground industry chain involving intermediaries and small workshops during the process from vehicle owner to recycling and dismantling companies.

Liu Yulong (pseudonym), has been engaged in scrap car recovery for over a year, usually purchasing nearby scrap cars through friends’ introductions, social media advertising, etc. “I drive a tow truck to pick up cars from individuals. Sometimes I also collect cars from auto repair shops, car dealerships, and 4S shops, and finally send them to dismantling points.”

The dismantling point Liu Yulong refers to is a small workshop that privately recovers and dismantles scrap vehicles. A small yard with a few workers can constitute a workshop. They typically remove valuable parts such as engines, steering mechanisms, gearboxes, front and rear axles, and chassis, then resell for profit.

Recently, the reporter visited a dismantling and recycling workshop for scrap cars in Shandong that was under investigation. The workshop was established in October 2023 and has six employees. The owner does not have the qualification to recover and dismantle scrap vehicles.

A local street official said that during the investigation, about 20 vehicles were piled on site. The site lacked environmental protection equipment such as exhaust gas and wastewater treatment devices, and safety protection facilities. Due to unregulated operations, oil leaks seeped into the ground.

Some parts flow into illegal channels, posing as “original factory parts” or “new parts,” suspected of manufacturing and selling counterfeit or inferior products. The disorderly sale of scrap vehicle parts also hides safety risks.

According to a typical case released by the Supreme People’s Procuratorate on March 14, multiple individuals, including Zhang, purchased parts from a scrap vehicle recovery and dismantling company in Chongqing and illegally assembled them into complete vehicles. After polishing, stamping vehicle information, tampering with and resetting vehicle systems, and forging registration documents, they sold the vehicles with new license plates in more than ten provinces and cities, posing serious safety hazards.

Additionally, the dismantling process is prone to environmental pollution, and parts containing heavy metals also risk polluting water and soil.

In a case reported by the Dalian Municipal Ecology and Environment Bureau in December 2025, law enforcement officers found that the soil inside a small workshop was contaminated and blackened, with a strong oil smell. The involved parties took no preventive measures, leading to waste engine oil and brake fluid polluting the soil.

Where do the useful parts from scrapped cars ultimately go?

Several recovery and dismantling company leaders said that the state implements a qualification recognition system for scrap vehicle recovery companies. Units or individuals without qualification cannot issue relevant recovery and deregistration certificates to vehicle owners. Therefore, scrap cars dismantled by small workshops are still sold to qualified companies, but profit margins for legitimate companies are very limited.

Why is it difficult to eradicate chaos in small workshops?

A local commerce official explained that legitimate companies bear rigid costs such as environmental impact assessments, hazardous waste disposal, site seepage prevention, equipment, and labor, and can only profit from scrap metal, with a car collection price of about 2,000 yuan per ton. In contrast, small workshops, which have no environmental, safety, or tax expenses, profit from reselling parts, with collection prices exceeding 3,000 yuan per ton.

Shandong Huaju Automobile Parts Remanufacturing Co., Ltd. is a relatively large scrap car dismantling and recycling enterprise. The company’s leader, Zhang Juntao, estimated that the total investment in construction was about 40 million yuan, with about 5 million yuan spent solely on environmental facilities, including wastewater treatment, dust removal equipment, and ground seepage prevention. Regular operations involve expenses such as employee wages, electricity, protective supplies, equipment and building depreciation, land rent, and annual taxes.

On the other hand, high costs mean low returns. Wang Buyun, an expert from the Ministry of Commerce’s qualification recognition expert pool for scrap vehicle recovery and dismantling companies, said that finely dismantled used parts from traditional fuel vehicles can be worth several times more. However, many valuable parts are intercepted or stripped by “yellow cattle” (middlemen), leaving only scrap metal processing, with residual value only a few thousand yuan.

At a legitimate scrap car dismantling and utilization company, the dismantled parts are piled in the factory yard. Xinhua photographer Wang Yang

Additionally, Liu Leqiao, an expert from the Ministry of Commerce’s qualification recognition expert pool, said that most legitimate companies are located in suburban areas with low land prices. Vehicle owners find it inconvenient to deliver cars far away, and the process of self-driving to deliver and return is cumbersome and time-consuming, resulting in lower purchase prices. Illegal sites are highly mobile, offering door-to-door collection and full-process agency services, precisely targeting vehicle owners’ desire for convenience and higher prices.

According to relevant policies, local industry regulation involves multiple departments. The commerce department supervises industry activities, the public security organs oversee security and ticketing, the ecological environment department is responsible for environmental protection, and the Development and Reform Commission, Industry and Information Technology, Transportation, and Market Regulation departments each have their responsibilities.

Several local officials said that small workshops are highly clandestine and have low illegal costs, making them difficult to detect in routine supervision. Moreover, they are often located in suburban or remote areas, sometimes in rented or private yards, with no evidence or reports, preventing law enforcement from entering.

How to promote transformation and upgrading?

In the future, a large number of old cars in China will face renewal and elimination. Interviewees suggested that the scrap car dismantling and recycling industry should develop in line with the circular economy, promoting high-quality development and turning scrap cars into real resources.

“To address industry chaos, relying on individual efforts alone is insufficient.” Lawyer Chen Guanwen from Shandong Rizhong Law Firm recommended establishing cross-department joint law enforcement mechanisms. Led by local governments, regular special operations should be carried out to create deterrence. Technologies such as drones and satellite remote sensing should be used to conduct comprehensive inspections in key areas like suburban and remote forest zones. Data sharing between departments should be improved to enable alerts, comparisons, and interceptions of abnormal vehicles.

A local commerce official believes that enforcement should be strengthened to squeeze illegal operations, continuously crack down on illegal dismantling and downstream illegal refurbishing and sales networks; firms that violate regulations should be “publicly shamed,” and those with serious violations should have their qualifications revoked; road law enforcement should be intensified to strictly investigate scrap car backflows, license plate switching, and vehicle assembly, with traceability checks.

“Industry value chains need to be reconstructed; we cannot stay at the low level of ‘selling by weight.’ Profits should shift from ‘dismantling quickly’ to ‘using well,’ for long-term development.” Liu Leqiao said that the next step involves cultivating leading enterprises, promoting direct cooperation between car manufacturers and dismantling companies, and developing the auto remanufacturing industry to set an example.

Industry insiders said that many developed countries have established extended producer responsibility systems, where car manufacturers are responsible for recycling and reuse obligations for dozens of vehicles sold per hundred. It is recommended to guide the industry toward refined dismantling, promoting high-value component recycling; building regional trading platforms for used parts, allowing legitimate companies to increase profits through legal channels and narrow profit gaps.

To address resource waste and efficiency issues, some leading companies are seeking breakthroughs at the back end of the industry chain. Zhang Juntao said that an estimated 36 kilograms of rubber, 70 kilograms of plastic, and 100 kilograms of aluminum can be recovered from a finely dismantled small car, significantly increasing resource value compared to rough dismantling.

Experts believe that from a broader perspective, recycling and reuse of waste products and equipment require coordinated efforts across resources, employing a combination of policies, markets, technology, and society; encouraging enterprises to innovate independently, deepen integration of industry, academia, research, and application, strengthen key technology development, and explore new business and management models.