Global steel shortages have provided an unexpected reprieve for automakers as they prepare to meet new European Union laws that will govern vehicle recycling 18 months from now.
The present high price of the commodity looks likely to make the environmental initiative a success because it will underwrite the extra cost of recycling.
"The issue's been saved by the current price of scrap steel," explains Max Pemberton, an analyst at autelligence.com in London.
Global demand has pushed the price of a ton of scrap steel to E220 from less than E100 a few years ago.
"As long as the price stays high, people will want to do this [recycling] business," Pemberton says.
A return to lower steel prices would change that picture, but Nicholas Lee, head of technical affairs for PSA/Peugeot-Citroen in the UK, says: "We don't believe prices will go down much. Even if they did, we believe [recycling] would still be profitable."
But some automakers have reservations about the overall approach to the issue.
"Different implementations across the EU, and the directive's ambitious targets pose real challenges," said Bernd Gottselig, manager of vehicle recycling at Ford of Europe in Cologne, Germany.
He added that EU recycling quotas set for 2015 "create no environmental benefit" and said there are better ways to deal with end-of-life vehicles.
Nevertheless, the improved economics for dealing with end of life vehicles are a relief to automakers, which face potential annual recycling liabilities of many millions of euros when the new regulations come into effect in January 2007.
A cornerstone of Directive No. 2000/53/EC - known as ELV - is that vehicle disposals incur no cost to their final owners. That means that automakers will be legally responsible for collecting, dismantling and shredding old or written-off cars and light commercial vehicles.
But automakers have agreements with waste disposal contractors to do the job on their behalf.
Recycling is good business for contractors at the moment because of the prices realized by ferrous metals like iron and steel. These constitute roughly three-fourths of any vehicle by weight.
The price is a lifeline to the waste industry at a time it has to invest in new processing equipment in order to comply with more stringent environmental standards.
There are thousands of dismantlers and crushers across Europe but ACEA, the Brussels-based association of European carmakers, estimates there are just slightly more than 220 approved facilities capable of shredding and separating vehicles.
Much of the recovered metal - in the form of coin-sized pellets once a vehicle has been shredded and the materials separated - is already fuelling China's insatiable appetite for raw materials.
It is big business. Nearly 10 million cars were "de-registered" in the 15 western EU member states last year compared with just over 14 million new car registrations, according to ACEA. As each car weighs in the region of a ton, the potential for recovering valuable waste steel is considerable.
The EU estimates that end-of-life vehicles generate between 8 million and 9 million tons of waste in the 25-nation bloc each year.
Each of those vehicles carries a variable disposal cost to its manufacturer, dependent on how far it is from a recycling center and its condition. Whatever it is, Pemberton maintains, "The accrued liability will need to be shown in the annual accounts of the companies concerned."
But Mark Browning, senior manager at PriceWaterhouseCoopers in London, says: "It comes down to how they (automakers) manage those disposals. Potentially, for example, if they have a contract in place they could take out insurance in the event that the price of recycled steel drops below a certain level."