In Deloitte‘s comprehensive report titled ‘Circularity in Automotive: A European Playbook 2023’, an insightful exploration unfolds, examining the intricate dynamics of circularity within the automotive industry. This playbook not only delves into the existing facets of circularity but also unveils untapped opportunities for automotive players. It raises pivotal questions about the future landscape of the automotive sector and propounds winning business models. This initiative is a pivotal component of Monitor Deloitte’s overarching commitment to address the ever-evolving realm of circularity, a crucial element in the industry’s sustainable transformation.
Circularity has long been present in the European Automotive sector through practices such as parts remanufacturing, repair & refurbishment, end-of-life (EOL) dismantling, and used car refurbishment. However, the historical oversight by major players has given rise to a flourishing yet disorganised, independent ecosystem. Although some significant players have made forays into this space, whether organically through OEMs’ Approved Used Car programs or inorganically, as exemplified by Stellantis’ acquisition of Aramis, the overall maturity of large auto players in circularity remains relatively limited.
As the automotive industry gears up for a paradigm shift towards an electrified future, a new era in sustainable automotive manufacturing seems imminent—one that envisions a holistic reimagining of the entire vehicle lifecycle. Several forces are propelling this transformative journey, including revamped circularity regulations (especially for end-of-life vehicles and batteries), stringent emission targets, the reshaping of traditional value pools by electric vehicles impacting aftersales, and an escalating need for robust European supply chains.
Achieving such a monumental transformation demands substantial investments, innovative business models (B2B versus B2C), strategic partnerships, and the development of new organizational capabilities. In the midst of this transition, winners and losers will inevitably emerge. Those agile enough to swiftly establish scalable circular ecosystems will thrive, while others may find themselves dependent on external ecosystems, incurring exorbitant costs to comply with regulations and weather supply chain crises. Presently, the advantage lies with large Original Equipment Manufacturer (OEM) incumbents boasting expansive retail networks, access to a vast car parc, and scalable reverse logistics infrastructure. Yet, only time will unveil which player possesses the foresight, innovation, and agility to create and capture maximum value in this transformative journey.
To read the report, go to www2.deloitte.com
Source www2.deloitte.com
