On the road to the circular car

by: David Kemps , Roderick Vos

How car component suppliers can become future-proof by applying circular economy principles

The emergence of digital technology and social media has given consumers more power than ever before. With smart devices connecting every aspect of our lives, we are increasingly controlling how and where we engage with companies. With this increased access to information, transactions are occurring in real time and as consumers we have come to expect more from businesses. Greater trust, convenience, and a sense of community are fueling rapid innovation and pushing the adoption of the sharing economy forward.

“Private ownership of cars will disappear – though not completely – and cars will be owned by the manufacturer in the next 10-15 years. This will result in fewer cars, due to the fact that cars will be more heavily utilised through sharing.”

– Thijs Jasink – COO, ACtronics

The growing role of consumers is transforming the function of cars, making them smarter and more connected. The ever more rapid development cycles of new products and services and increasing technological complexity, require a complete restructuring of the automotive supply chain. As a result, car manufacturers are pursuing new differentiation strategies and engaging with their supply chains in order to meet these new, consumer demands.

smart car

“Suppliers need to be able to adapt to these changes quickly in order to stay relevant and avoid becoming the ‘Kodak’ of the automotive industry.”

– Ralph Ramaekers – Marketing Director Automotive, DSM Engineering Plastics

The report “On the Road to the Circular Car”, published by ABN AMRO and Circle Economy, argues that car parts manufacturers are in a unique position to answer to these rapidly changing demands by adopting circular strategies. These strategies range from integrating modularity into the design of the car in order to make quick and affordable repairs, to shifting ownership so that car manufacturers remain owners of the cars themselves. The report explores what it would be like if cars were not purchased and owned by individuals, but instead shared with the community and maintained by the manufacturers themselves.

“Consumer needs require new business models that radically alter the traditional automotive chain. We have to redesign the car completely and reorganise the chain”.

– Jan-Paul Kimmel, CLAUT

To drive successful innovation, the automotive industry needs to collaborate across the entire value chain; this is where bottom-up, circular innovation from parts and component suppliers will play a crucial role.

Read the full report featuring examples of leading circular innovators and recommendations on how to future proof the Dutch automotive industry with circular business strategies through the link below.


ABN-AMRO - The circular car (English) ()