Corona Daily 162: Your Car is not Safe

Last month, Michael Kevane, an economics professor living in San Jose, California, parked his 2005 Prius out on the driveway. Next morning, when his son went to start it up, it sounded like a drilling machine. All the neighbours in the block could hear it. Two days later, the professor’s sister Jean, who lives in Los Angeles, had an identical experience with her 2003 Honda Accord LX. This can’t be a coincidence, thought Michael Kevane.

In another American state, Minneapolis, Andrew Reichenbach’s repair shop has had three Mitsubishis come in with their exhaust pipes sawed off. In recent months, dozens of cars were landing at the repair shop with the same limb missing. Mitsubishis seem to be the new target, said Reichenbach. He called it a pandemic within a pandemic.

This international crime wave is reported in the USA, Europe, UK, India and other places. The cars’ catalytic converters are being stolen.

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Catalytic converter is the exhaust emission control device.  It reduces toxic gasses and pollutants. America, Europe, Asia and China keep on raising emission standards.

This device is located under your car. A professional thief can unscrew the device in minutes, and take it away. But most thieves in pandemic times are not professionals. They come with a pipe-cutter or a saw and while cutting the converter also cause much damage to other car components, such as the alternator, wiring or fuel lines.

What is so attractive about Catalytic converters right now?

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They have a mix of precious metals such as platinum, palladium and rhodium. Except those with PhDs in chemistry, few would have heard of Rhodium (Rh).

Rhodium (meaning rose in Greek) is a silvery-white material, mainly used in the automobile industry. It is the best-known metal to remove the most toxic pollutants from the vehicle exhaust. As regulations on emissions become stricter, the demand for rhodium grows.

Rhodium’s price in August 2016 was $625 an ounce. Today, it has skyrocketed to $29,000 per ounce. (Making it 17 times more expensive than Gold, which is $1700 an ounce). Since the start of the pandemic, it is steadily climbing, making our cars (or rather one of their components) more expensive. And accordingly, prone to be stolen.

Why is the Rhodium price rising, and will it come down?

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South Africa is the key producer of Rhodium. If their mines were to produce more Rhodium, the prices can come down. But they won’t. Because Rhodium is not produced by itself, it is a byproduct. Each unit of ore mined typically contains 60% platinum, 30% palladium and 8% rhodium. Unless platinum is mined, rhodium can’t be produced. And currently platinum and palladium suffer from excessive supply. Rhodium shortages are estimated to be over 150,000 ounces, and expected to grow until a substitute is found or vehicles switch over to electric. The price is expected to keep rising till 2025. The risk to our cars as well.

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Since 2020, many thieves have become unemployed, and some unemployed have become thieves. Pockets are more difficult to pick in lockdown times. Cars are stationary, and some thefts are not noticed for weeks. Law enforcement is slack. A few minutes’ work under the car can fetch you over $500. The thief sells the anonymous converter in the black market, the scrapyard sells it to recyclers who extract the metals. Older cars tend to contain more of the precious metals than newer ones. Hybrid cars (using a combination of petrol/diesel and electric) contain more precious metals. Honda Jazz, Toyota Prius, Toyota Auris, Lexus RX and Mitsubishi are some of the reported popular models.

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Because no other party is involved, like in an accident, insurance generally doesn’t cover this theft. The car owner loses about $2000. It is important to park your car in secured places, and get effective alarms. If you see someone suspiciously under any vehicle, call the police.

Though they are not PhDs in chemistry or MBAs in finance, thieves worldwide have learnt to keep an eye on the price of Rhodium.

Ravi