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How Increasing Catalytic Converter Thefts
Hit the Bottom Line in Used Cars?

Background

A news report out of Southeast Texas in March has revealed a disturbing trend. Houston police found as stash of stolen car parts worth in excess of $14,000. Comprised mainly of catalytic converters, the cache had been pilfered from unsuspecting motorists over an unknown period of time. 

These emissions system components are an easy target for thieves, especially when taken from larger vehicles like delivery trucks and pickups, but they don’t discriminate against other vehicles either. If the undercarriage is easy to access, the catalytic converter could be at risk. 

Houston is far from the only place in the country where catalytic converter theft is running rampant. LA County saw a 400% increase in converter thefts through 2020. One recent investigation culminated in around 250 recovered catalytic converters valued at around $750,000 and almost 20 people arrested in connection with the theft ring. 

Police recommend parking in areas covered by surveillance cameras and are well lit, and they recommend having the bolts on the catalytic converter flanges welded to prevent easy removal. They also have begun recommending owners etch or engrave their license plate number on the valuable component.

Why the surge in thefts?

Why the exponential increase in catalytic converter thefts has occurred is simple economics. The parts can be quickly removed from under the vehicle with relatively low risk of being detected, they’re able to be sold easily, and they pull in high values from salvage yards. 

Catalyst materials inside the converter’s internal honeycomb structure react with hydrocarbons and other pollutants as they exit through the exhaust, creating a chemical reaction generating extreme temperatures. The catalyst materials are precious metals, however, including platinum, palladium, and rhodium. Since these materials are in extremely high demand, some metal recyclers are willing to turn a blind eye to the seller’s source, even when they arrive with dozens of catalytic converters with which to turn an illegal profit. 

It’s big money, and relatively easy money for thieves. Recyclers pay between $85 and $500 per part, and that’s just a fraction of the cost of replacement.

How it affects the used car industry?

Although converter theft is typically covered if the vehicle owner has comprehensive car insurance, it’s inconvenient and they have to pay a deductible every time it happens. Some car owners refuse comprehensive coverage also, so the full cost of replacement hits their wallets. In addition, vehicles hit once for the crime can be earmarked for a subsequent theft. One business reported having a catalytic converter stolen from the same vehicle six times in a one-year period. 

Rather than replace the part when it’s stolen, some car owners in states with no smog testing laws or lax emissions regulations may choose to replace the missing part with a straight pipe, eliminating the part. A quick Google search reveals several methods to trick the Check Engine light into thinking the emissions system hasn’t been tampered with so that no alarms are raised for state inspections – or even when trading in a car. 

More than a handful of used car managers have been burned by missing catalytic converters that have been replaced with a straight pipe, whether it’s from a car that’s come through the auction or as a trade-in. Unfortunately, the innocent mistake ends up costing the dealership lost time by arbitrating the sale from the auction or swallowing the cost of the exhaust work to restore it to factory. 

Solving the unseen undercarriage

For problems like catalytic converter theft that has been hastily repaired with a straight pipe, it’s nearly impossible to identify during a traditional appraisal process. The instrument panel can be checked for indicators, the interior and exterior inspected for excessive damage, but the undercarriage is difficult to see, even with used car managers kneeling for a closer look. 

How can dealerships avoid the roughly $1,500 hit for a missing catalytic converter? NADA Data from 2019 reports that used vehicle gross profit per unit was $2,354, so absorbing the cost of a new converter eats up a majority of the profit, without even looking at any other repairs or reconditioning. 

One solution is to perform an on-hoist inspection for every trade-in appraisal. Not only does it require a trained technician and a hoist to be available, but many appraisals happen after the service department closes for the day. It can be effective, albeit inefficient and unrealistic.

Automated Vehicle Inspection Use Cases:

UVeye offers another solution. Using the Helios undercarriage inspection system, dealers can identify abnormalities, damage, and missing components underneath the car so they can more accurately appraise its value. UVeye’s deep learning AI software can pinpoint problems within seconds that a used car manager might never catch otherwise, helping them make more intelligent and informed purchasing decisions for the dealership. Cameras capture hi-res images that can aid the used car manager in negotiating on the vehicle’s actual value rather than just perceived value on a visual check alone. 

Helios can be deployed alone in either a permanently-mounted or mobile configuration, and it can be paired with the UVeye Artemis tire inspection system for even more comprehensive appraisals. It’s beneficial for both service departments and used car departments alike, saving the dealership money while establishing trust with customers.

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