Despite seeing an overall market rebound, auto recyclers say that in 2012, they are challenged by new parts manufacturers sometimes matching prices for used parts.

Another challenge cited is competition from foreign buyers and unregulated domestic salvage operations, market dynamics that are continuing to drive up prices for salvage vehicles.

According to experts, the market for salvage vehicles is tight because people are hanging onto their cars longer. This is a positive for sales because people need parts to keep their cars on the road, but it makes it challenging to get used parts. Competition for recyclers in obtaining salvage cars comes from rebuilders and car dealers, who are driving up used vehicle prices to record levels. Also, the Internet has created a global marketplace for salvage vehicles, so foreign competition has increased.

Still, industry experts are calling 2011 a near record-breaking year, and have a very positive outlook for 2012.