The auto recycling industry must not wait to be invited into circularity’s inner circle

Auto recyclers should not wait for OEMs and policymakers to define automotive circularity. As regulation, profit and supply-chain resilience reshape the market, dismantlers and ATFs must invest in data, traceability, quality systems and partnerships to secure a strategic role beyond feedstock supply and capture value from parts, materials and design insight.

EY-Parthenon’s latest report on automotive circularity lands at a revealing moment for the vehicle recycling industry. For years, circularity has been deployed generously by OEMs, policymakers and consultants, but too often treated as a future-facing sustainability ambition rather than a commercial operating model. This report is useful because it makes the issue harder to dismiss: automotive circularity is now being driven by regulation, profit and supply-chain resilience, not just environmental sentiment.

For dismantlers, authorised treatment facilities, parts suppliers and recyclers, that shift matters. It moves the sector from the edge of the automotive value chain towards its strategic centre. The report forecasts Europe’s automotive circular economy to grow from about €26bn in 2024 to €87bn by 2034, with recycled materials and used parts among the major growth drivers. That should not be read as a distant consultancy projection. It is a warning flare. Value that once leaked out of the vehicle lifecycle is now being mapped, priced and targeted.

The uncomfortable question is: who will capture it?

The report’s strongest point is its insistence that circularity cannot be achieved by any one party. Vehicles pass through too many hands, contain too many materials and generate too many fragmented data trails for an OEM-led circular economy to work in isolation. EY-Parthenon identifies four action fields: circular design, circular parts, circular materials and circular sales models. All four depend, in different ways, on what happens at end of life: how vehicles are collected, how components are identified, how quickly parts can be triaged, and whether materials can be recovered to a grade that satisfies automotive buyers.

That is where the vehicle recycling industry has both an opportunity and a problem. The opportunity is obvious. The industry already holds the practical knowledge that many boardrooms are now trying to model: what comes off a car cleanly, what breaks, what is economically worth removing, what sells, what contaminates a stream and what makes dismantling uneconomic. Circular design, if it is to mean anything, must be informed by that reality.

The problem is that the sector cannot rely on experience alone. EY-Parthenon is blunt about the barriers: fragmented value chains, challenging economics and a lack of long-term commitment. It also notes that many authorised treatment facilities are not yet equipped for large-scale automated dismantling, while logistics costs remain a crucial profitability driver. That is not criticism for its own sake. It is a reminder that the next phase of circularity will reward evidence, traceability, scale and consistency.

The proposed ELV regulation and recycled-content requirements will increase demand for post-consumer automotive material. The report highlights expected plastics targets, battery-material quotas and growing attention around steel and aluminium. But demand alone will not solve the supply problem. If high-quality recyclate is scarce, if undocumented vehicle flows persist, and if parts and materials cannot be tracked with confidence, the market will not mature smoothly. It will become a scramble.

This is where recyclers must be careful. The industry should welcome OEM interest, but not passively. If circularity becomes a new corporate land grab, dismantlers risk being treated merely as feedstock providers while higher-margin value is captured elsewhere. The sector needs to argue for a seat at the design table, not just the collection contract. It should push for shared standards on part identification, digital vehicle passports that work in real dismantling yards, fair access to repair and build data, and commercial models that reward quality recovery rather than simple volume.

EY-Parthenon’s most optimistic scenario is a future of “consortia winners”, where OEMs, suppliers, recyclers, logistics providers and technology companies coordinate standards, infrastructure and investment. That is the right ambition. But consortia must not become closed clubs dominated by manufacturers and large technology partners. If circularity is to work, the businesses that actually handle end-of-life vehicles must shape the rules.

The message for vehicle recyclers is therefore clear: do not wait for circularity to arrive fully formed. Invest in data, quality systems, partnerships and proof of performance. Demonstrate where value is lost and how design could prevent it. Build alliances with insurers, repairers, logistics firms, remanufacturers and, yes, OEMs.Companies that can demonstrate reliable access to parts, cores, and traceable materials will have leverage.

Circularity is no longer a slogan hovering above the industry. It is becoming a competitive system. Vehicle recyclers helped make that system possible long before it had a polished name. Now they must ensure they are not written out of its future.

Delegates attending the ATF Professional Conference – Auto Recycling Intelligence 2026, taking place on 11 June at the British Motor Museum, will hear from Mark Main, Director at EY LLP and UK&I Transport & Logistics Leader within EY’s Mobility practice.

Mark Main of EY LLP speaking at an automotive industry event. — Mark Main

Mark will examine how electrification is reshaping vehicle lifecycle economics, from EV total cost of ownership and battery uncertainty to end-of-life risk, recovery, storage and high-voltage skills. For ATFs, the session will offer practical insight into future profitability, asset risk and operational readiness.

To join this event, please book your ticket at: www.atfpro.co.uk