Universal Salvage's shares plummeted on Monday following the company losing its contract with Direct Line. The share price almost halved, dropping to 215p.
The insurer's contract accounted for 40% of Universal Salvage's business - 50,000 of 125,000 vehicles.
Direct Line is thought to have taken its business to a joint venture run by the National Salvage Group and the National Auto Salvage Amalgamation.
Universal Salvage scraps written off vehicles and auctions damaged cars purchased from insurers. It is thought the joint venture offered to pay more than Universal Salvage for salvage vehicles.
