Essential information for end of life vehicle dismantling, depollution and recycling

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How the changing power of vehicle manufacturers could affect the vehicle recycling industry

Andrew Marsh FIMI, Engineering Director at Automotive Industry Consulting Ltd, provides his view on why vehicle manufacturing is financially challenged, the effect of changes in taxation regimes and the impact on how vehicles are built. 

How the changing power of vehicle manufacturers could affect the vehicle recycling industry
Andrew Marsh

The last short article looked at how recyclers are at the centre of the automotive world going forwards. Now let’s look at how the power of the vehicle manufacturers is changing.

Until about three decades ago, vehicle manufacturers created products with little or no external assistance; controlled sales of both vehicles and parts as well as usually dominating at least one national market. The control was absolute: The manufacturer chose which retail partners to use, what their allowable profit margin would be and which products they could sell.

Vehicle technology and sophistication began to mushroom, driven in part by the reduction of tailpipe emissions and then as that got into full swing, safety. To keep up, and access the best technology on offer, vehicle manufacturers engaged with suppliers – no longer did they buy products off the shelf, but worked jointly. In the last two decades, the balance of technology, therefore, power has moved from the vehicle manufacturer to the suppliers. Effectively, a vehicle manufacturer is the assembly point for lots of components created by suppliers, with less than a third by mass originating from inside the company.

The results today are super companies such as ZF which includes the giant TRW, and Samsung, which includes Harmann as well as B&O. Such companies are now as big, if not bigger than some of their clients.

If we reverse engineer a €20,000 new vehicle, we can remove around half the retail price with direct and indirect tax (the lion’s share), support for the dealer network as well as transport from the factory to a final destination. Around €2500 will pay for the design, development and manufacturing equipment investment, so we are left with  €7500 to make all the parts as well as building them into the vehicle.

The proportion of cash going into the vehicle manufacturers has increased over the past three decades. The investment to make each new vehicle project happen has grown from a few hundred million dollars to more than $1 billion with carryover powertrains, or closer to $3 billion for more prominent programmes with many new powertrains. Whereas in the 1950s, the effective profit margin was more than 10 per cent, now most vehicle manufacturers struggle to make a 4 per cent margin.

The ballooning investment costs and relatively low returns have made vehicle manufacturers evolve from complete control of their destiny to an integration partner. That evolution is continuing and some of the things that might be left behind – very unwillingly – will include servicing, repair and recycling. Quite simply, a vehicle manufacturer can choose to be a ‘provider of transportation services’ which already has some serious bidders in place. Or it can ensure it has an essential position within a network of partners while only really building new vehicles.

From the start of January 2020, the vehicles sold across the EU are subject to an average CO2 figure of 95 g/km. Theoretically, all of the vehicles sold in all EU member states by a vehicle manufacturer emit no more than 95 g/km of CO2 – but if the limit is exceeded, the fine, paid directly by the manufacturer, is €95 per g/km, per vehicle over the limit. It has caused a stampede to add electric drive systems to existing powertrains or sell pure electric cars. Most vehicle manufacturers know already that even the shift to hybrid drive will reduce routine service business by 10 to 30 per cent.

Next up? Taxation of parts logistics pre-vehicle assembly is due to start rolling-out by the middle of the decade, which will cause changes in where the parts come from as well as vehicle assembly locations. That will spread to the price of parts for repair, making the argument for intelligent re-use of good quality parts stronger than it is today. Why do this? Quite simply Governments need a source of tax revenue, and if the use of petrol/diesel declines, that revenue has to be generated from somewhere. 

That will drive yet more user behaviour changes, and in turn cause vehicle manufacturers as we know them today, to change shape again. It will drive the move towards standard modules shared by multiple vehicle manufacturers – such ideas only exist today inside individual manufacturers.

The next decade will see considerable changes in the way vehicles are built. Part of the whole picture is the support for vehicles once they are made, and that’s where the recycling sector can assist not only to help keep vehicles on the road but to do so with lower carbon impact. For all involved in the recycling business, the opportunities are increasing rapidly. 

In the following article, we shall explore how ‘electrification’ is going to change over the next decade and the difficulties that are already evident. 


Ezi-Methods provides technical information and technical advisory services to the global collision repair industry.

How the changing power of vehicle manufacturers could affect the vehicle recycling industry    How the changing power of vehicle manufacturers could affect the vehicle recycling industry


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Owain Griffiths

Owain Griffiths

Head of Circular Economy at Volvo Cars

Owain joined Volvo Cars in June 2021 to lead Circular Economy in the Global Sustainability Team. The company has committed to being a circular business by 2040 and has financial, recycled content and CO2 based targets for 2025, all of which Owain is working across the company to make happen. Owain previously worked for circular economy consultancy Oakdene Hollins where he advised businesses on evidence led circular economy implementation. 

Turning into a circular business and the importance of vehicle reuse and recycling.

The presentation will cover the work Volvo Cars is doing to achieve 2025 but mainly focus on the transformational work towards 2040 and the business and value chain changes being considered. Attention will be paid to the way vehicles are being dealt with at the end of life and the complexities of closing material and component loops. Opportunities and challenges which Volvo Cars is facing will be presented including engagement with 3rd parties and increasing pressure from stakeholders.

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e2e Total Loss Vehicle Management [e2e] is the UK’s only salvage and automotive recycling network with nationwide, environmentally compliant sites delivering performance resilience and service reliability to the insurance and fleet markets.  The network’s online salvage auction drives strong salvage resale values and faster sales.  e2e’s salvage clients have access to the network’s stocks of over 5 million quality graded, warranty assured reclaimed parts. 

The power of the network model means e2e has the ability to influence industry standards and is committed to continually raising the bar whilst redefining the role and perceived value of the salvage operator.  Network members adhere to robust service level agreements, against which they are audited, in order to ensure performance consistency and a market leading customer experience.  

The salvage and recycling operating environment is evolving rapidly, and e2e is anticipating, listening and responding to changing market needs.  Regulatory compliance, ESG, reclaimed parts, customer experience, EVs, new vehicle technologies, data and reputation risk are just some of many considerations linked to the procurement of salvage services.  e2e will drive further added value to clients and members through the adoption and application of emerging technologies, continuing to differentiate its proposition and position salvage services as a professional partnership. 

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