How the automotive industry is uniquely placed to embrace the circular economy

A new report argues that car parts manufacturers are in a strategic position to adopt circular practices and highlights the Dutch automotive industry as a potential sector leader

Changing consumer demands including digital connectivity and new mobility trends such as “car as a service” concepts, are transforming not only cars themselves but the ways in which we use them. In the traditional automotive sector policies are also being put in place that promote safety and reduced emissions. These new demands require a complete restructuring of the automotive supply chain. Car manufacturers can no longer only focus on re-evaluating car design but must also take into account how the car is used and what happens to it when it reaches end-of-use. This requires new strategies and collaboration across the entire value chain, spreading the heavy burden of innovation throughout the supplier network. “Suppliers need to be able to adapt to these changes quickly in order to stay relevant and avoid becoming the ‘Kodak’ of the automotive industry,” says Ralph Ramaekers, marketing director automotive at DSM Engineering Plastics.

A report, On the Road to the Circular Car, published by ABN AMRO and Circle Economy, argues that car parts manufacturers are in a unique position to answer these rapidly changing and increasingly dominant demands, by adopting circular strategies. Highlighting the strength of the Dutch automotive industry, which consists of close to 300 suppliers, the report focuses on innovative, circular technology solutions that are putting Dutch component suppliers in a strong position to compete in international markets. “At the moment nobody is demanding a circular car, however car sharing trends will lead to shorter life cycles for cars and a circular approach will ensure cars will have a second, third and fourth life,” says David Kemps, sector advisory, ABN AMRO.

Car lifecycle.
Car lifecycle. Photograph: Circle Economy

Innovators such as TenCate, DSM and CLAUT are actively researching new polymers and lightweight materials to enable simplicity and recyclability of materials used for car parts – not only to reduce their weight but also their long-term environmental impact. Furthermore, features such as advanced sensors, intelligent navigation systems, and self-driving capabilities, being tested by the likes of TomTom and Google, are improving driver convenience and dramatically improving vehicle resource use and safety.

New service models such as car sharing are increasing rates of car use while reducing the amount of cars needed to provide the same mobility level. This will lead to a decrease in the overall lifetime of a car from nearly 10 years to just over six. This challenge of product life extension is starting to be addressed by companies such as Neways, who use big data and the Internet of Things to perform predictive maintenance. Other initiatives like the TU/ecomotive Nova, an electric, modular car, are taking this challenge into consideration from the start and creating design solutions that focus on improved modularity and reconfigurable parts and components that can be easily exchanged and adjusted.

Hoping to tackle the growing number of cars that end up in local junkyards and city landfills, companies such as Tesla, Volvo and Renault have established buy-back schemes to retain any remaining value in used cars. Innovators such as ACtronics and Perfect Green – No Risk Parts have created a market for the used parts obtained from these cars, by remanufacturing and upgrading them for reuse, while companies such as Black Bear Carbon are breaking down the remaining parts into usable raw materials that can be cycled back into the supply chain.

The report further explores these strategies, highlights success stories from the industry and stresses that in order to drive successful innovation, the automotive industry needs to collaborate across the entire value chain. Bottom-up, circular innovation from parts and component suppliers will play a crucial role in making the automotive industry future-proof.

Read more: https://www.theguardian.com/sustainable-business/2016/sep/06/how-the-automotive-industry-is-uniquely-placed-to-embrace-the-circular-economy

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