Research Overview

Traditional manufacturing centers on the process of generating new resources for production whereas a circular economy model aims to minimize the use of virgin materials in the manufacturing process, making the value chain sustainable. The focus is on reclaiming, reusing, and remanufacturing components and materials from end-of-life (EOL) products. A linear economy puts additional pressure on the environment when creating new materials, making the value chain unsustainable in the long term, but in a circular economy companies recycle EOL products into new items, reducing the burden on landfills. The benefits derived from a circular economy model fall into three broad areas: environment, business, and economy.

This study analyzes circular economy practices in the automotive industry. It identifies and explores the most essential practice areas and derives meaningful conclusions about the industry. OEMs and Tier I companies are embracing circular practices to meet regulators’ decarbonization goals and make supply chains and manufacturing practices sustainable and cost-effective in the long run. Circular economy practices will lead to burning less scrap from end-of-life vehicles (ELVs), which can reduce greenhouse emissions, pollution, and the burden on landfills and oceans.

Frost & Sullivan has segmented the circular economy in automotive into 4 key practice areas. The first is remanufacturing, where used components are restored to their original state for reuse in vehicles. These remanufactured components are primarily adopted in used cars and targeted at aftermarket sales. The next area is recycling, where components are broken down into their most basic form for use as raw materials in new vehicles and other industries. The third practice area is product life extension, where the goal is to proactively service the parts of a vehicle before they develop any faults, to extend their life. This practice applies to vehicles in operation. The fourth practice area is the use of eco-friendly sustainable materials in cars, such as vegan leather and bioplastics, to make the production process more environment-friendly and sustainable. These materials are usually used in new car production.