The missing link in automotive circularity: recyclers and manufacturers must now work together as one

True car-to-car recycling remains difficult because today’s fragmented, shredder-led system cannot consistently deliver traceable, automotive-grade materials. DENSO argues recyclers and manufacturers must collaborate on design, dismantling, data and investment, enabling recyclers to become material partners and creating a viable closed-loop supply chain for future vehicle production.

DENSO executives Masaomi Dobashi and Fumihito Terai discuss collaboration between recyclers and manufacturers. — L-R: Masaomi Dobashi and Fumihito Terai

Masaomi Dobashi, Director of the Circular Economy Business Development Division at DENSO Corporation, and Fumihito Terai, Director and Head of Production System R&D at DENSO International Europe, examine why true car-to-car recycling remains difficult to achieve. They argue that recyclers and manufacturers must work more closely to deliver traceable, high-quality materials back into vehicle production.

Despite years of focus on circularity, true car-to-car recycling has yet to materialise. Even as end-of-life vehicles are dismantled, shredded, and processed at scale, much of the recovered material still cannot be used in new vehicle manufacturing in a meaningful way. Instead, valuable resources are often downcycled or diverted into lower-value uses.

At its core, the challenge facing automotive circularity is not a lack of awareness or intent, but a structural one: the current recycling model was not built to deliver high-quality, traceable materials back into manufacturing.

For that to change, the relationship between the manufacturing and recycling sides of the industry must also evolve. Closer collaboration between recyclers and manufacturers is essential for true circularity to become a reality.

Why today’s recycling model cannot deliver true circularity

The current automotive recycling system is largely based on shredding. While this approach is effective from an economic perspective, it is not suited to the quality requirements of modern vehicle manufacturing.

Breaking vehicles down into mixed material streams and separating them at speed makes it extremely difficult to eliminate contamination. As a result, maintaining the integrity required for automotive-grade materials is a significant challenge, particularly as vehicles become more complex.

Over time, manufacturers have developed highly specialised materials to improve performance, durability and efficiency. While this has driven innovation, it has also made materials far more difficult to recover at end of life. As a result, much of what is recovered today cannot be reused within the automotive sector. In other words, the industry has optimised for performance and efficiency over circularity.

From recyclers to material partners

Recyclers have long played an essential role in the automotive value chain, but historically that role has centred on waste processing and parts recovery, with much of the value coming from second-hand components rather than materials.

That dynamic is now shifting. As demand for high-quality recycled content grows, driven by regulation and increasing resource pressure, recyclers have a clear opportunity to move up the value chain and become suppliers of high-quality secondary raw materials.

For those able to make this transition, the opportunity is significant. However, unlocking it will require capabilities that go beyond what today’s recycling systems can deliver.

Advanced dismantling and material recovery demand investment, while increasing vehicle complexity continues to raise the technical bar. At the same time, the value chain remains fragmented, with recyclers expected to deliver circularity without being fully integrated into the system.

If recyclers are to become true material suppliers, this model must change.

Circularity cannot be delivered in isolation. It requires closer collaboration across the value chain, with shared investment and aligned priorities.

An alliance for true automotive circularity

A fundamental shift in how the automotive value chain is designed is essential, with circularity built into the system from the very outset.

This is the thinking behind DENSO’s automated precision dismantling system and BlueRebirth, a DENSO-led initiative designed to seamlessly unite the production and end-of-life sides of the automotive industry. The aim is to bring together recyclers, technology providers, and material manufacturers to overcome some of the most pressing technical, economic, and operational barriers to circularity, while building a value chain capable of delivering traceable, high-quality recycled materials back into automotive production.

What sets DENSO apart and enables it to offer significantly greater value is the breadth and integration of its technological expertise, built on decades of accumulated knowledge in automation, production, and logistics management, combined with proprietary robotics and AI technologies, as well as advanced material-processing capabilities. This unique combination allows DENSO to tackle dismantling not as a single-process challenge but as a fully integrated end-to-end system, simultaneously optimising productivity, material quality, and economic viability.

While the initiative has global ambitions, its relevance to Europe is immediate, where recyclers are under increasing pressure to meet rising regulatory, economic, and operational demands.

By combining technology, data and collaboration across stakeholders, the aim is to enable European recyclers to become suppliers of high-quality materials and to make car-to-car recycling viable at scale. In this model, recycling is no longer the final step, but a core part of how vehicles are designed and produced, elevating the importance of recyclers within the value chain while enabling profitability gains through higher productivity and value creation.

Unlocking that opportunity will depend on stronger collaboration across the value chain. This new challenge is an open invitation to partners ready to help shape this next phase. The direction of travel is clear. Without a coordinated approach and the courage to embrace system-level change, however, true circularity will simply remain an ambition.