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Recycle, Reuse, Reinvent for a resource-efficient auto sector, ET Auto

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November 8, 2024
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<p>These recycled materials typically find their way into body panels, body parts, bumpers, wiring and electrical components, tyres, insulation materials and seating.</p>
These recycled materials typically find their way into body panels, body parts, bumpers, wiring and electrical components, tyres, insulation materials and seating.

New Delhi: The use of recycled materials in new vehicle production, and the recyclability of vehicles itself within the End-of-Life Vehicle (ELV) ecosystem are two critical sides of the same coin. To achieve greater efficiency and sustainability, the automotive sector needs to closely integrate both aspects, fostering a more circular and resource-efficient industry.

While multiple OEMs, such as Tata Motors Limited (TML) with its Re.Wi.Re initiative, M&M’s CERO, and Maruti Suzuki Toyotsu India Pvt. Ltd., have entered the End-of-Life Vehicle (ELV) ecosystem to streamline recycling processes and integrate recycled materials into their supply chains, the landscape in India remains dominated by unorganised players. This fragmentation poses challenges for tracking and controlling recycling processes. Additionally, it directly impacts the use of recycled materials in new vehicle production, which is challenged by supply chain complexity, quality control, safety and technology limitations, as well as consumer perceptions and performance concerns.

“The procurement of recycled materials often involves navigating a complex supply chain since the industry is unorganised. Sourcing from multiple suppliers can lead to logistical challenges, including tracking material origin and ensuring reliable and continuous availability,” explains Rajat Mahajan, Partner, Deloitte India. He adds that variability in the source materials may lead to inconsistencies in properties, affecting performance and safety. “Establishing stringent quality standards is crucial but can be challenging.” He further adds that to make the concept of recyclability and usage of recycled materials in new production a reality, it is critical to have higher number of RVSF (registered vehicle scrapping facility), as of early 2024 there are less than 100 such facilities. Highlighting a global rise in the use of recycled materials in vehicle manufacturing—led by Europe, where some OEMs incorporate 25-30% recycled content—Mahajan notes, “Currently, there is no exact estimate for the percentage of recycled materials used in vehicles manufactured in India. However, some domestic OEMs disclose recycled material usage in their sustainability reporting.” In India, the two-wheeler industry is making strides, with certain OEMs reaching as high as 18% recycled content. “One major passenger vehicle OEM has also made significant progress, achieving close to 6% recycled material in new vehicles,” he adds.Recycled materials that are commonly used in new vehicle production include steel, aluminum, plastics, rubber, copper and glass. These recycled materials typically find their way into body panels, body parts, bumpers, wiring and electrical components, tyres, insulation materials and seating.

A spokesperson from TML shares, “The company is using recycled materials such as upto 7% recycled steel, 40% recycled aluminium and 20% recycled glass in vehicle components.” Currently, over 85% of materials used in TML vehicles are recyclable and recoverable. In its Integrated Annual Report 2023-24. Re.Wi.Re facilities have scrapped and dismantled over 4,000 vehicles so far. The company is streamlining its design for longer life and end-of-life management while promoting end-of-life management of its products.

MSIL reports that its vehicles are currently 92% recyclable and 98% recoverable. According to its 2023-24 Annual Report, 100% of metallic scrap, including steel and aluminum generated during car manufacturing, is recycled. Through its collaborative venture, Maruti Suzuki Toyotsu India Pvt. Ltd., over 3,500 metric tonnes of scrap have been generated from more than 5,000 ELVs since 2021, with recovered materials processed by authorised recyclers to support a circular economy. Similarly, Hero MotoCorp’s 2023-24 Annual Report highlights a notable 18.3% use of recycled materials in its manufacturing processes.

Percentage of recycled or reused input material to total material (by value) used in production (for manufacturing industry) or providing services (for service industry) –

CompanyMSILTMLHero MotoCorp
Input material (FY24)
Aluminium6.60% (ADC12)30-40% (used in alloy wheels and engines) *60.5%
Scrap5.66% (CR Steel)
Steel1.43% (Casting)6-7% (used in BIW) *12.7%

*As per supplier declarations
Source: TML, MSIL, Hero MotoCorp Annual Reports 2023-24.

With the government planning to mandate use of 20% recycled materials in production of new automobiles by 2026-27, and this quantum expected to be kept unchanged until 2027-28 and increased to 30% for 2028-29 and 2029-30, it is imperative for the automotive sector to align its design, R&D, production processes and supply chain for a smooth transition. Industry experts point on the cost effectiveness of the entire recycling process and how it would also improve the overall raw material market dynamics with an advantage over recycled materials pricing against virgin materials. It is expected to also improve country’s dependency over imports of certain raw materials as well as improve its resource efficiency.

Over the past few years central as well as state governments have been focusing on bringing in sustainability across sector. Government of India (GoI)’s various policy initiatives such as the Vehicle Scrappage (2021), Steel Scrap Recycling (2019), Non-ferrous Scrap Policy (2020), and the latest draft regulations on Extended Producer Responsibility (EPR) for ELV (2024) by The Indian Ministry of Environment, Forests, and Climate Change (MoEFCC) that calls out for OEMs to manage the entire ELV process, are all aligned towards creating a sustainable ecosystem led by circular economy and Net Zero goals.

Source: Deloitte Touche Tohmatsu India LLP.

Source: Deloitte India.

Source: Vahan (MoRTH) and Deloitte Analysis.

  • Published On Nov 8, 2024 at 08:06 AM IST

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