North Star for Circularity

North Star for Circularity

Author:
Contentway GmbH

Date:
26/09/2023

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Closing product loops and creating added value for the environment, customers and companies. A best practice from the automotive industry.

In a functioning circular economy, one ideally sees not only the customer again, but also the products, in order to repair them – contrary to the linear economic model – refurbish them, feed them into an alternative use or recover their valuable materials for new production. Especially in the automotive industry, where complex and high-quality components are created from valuable raw materials, recycling, reuse and re-use are powerful levers to counteract the increased prices for raw materials, energy and CO² certificates in a sustainable way.

“In extending the useful life of products through repair, maintenance and take-back solutions, the automotive aftersales sector plays a key role,” says Hanno Großeschmidt, Managing Director of Encory GmbH. “This creates trust, loyalty and strengthens brand loyalty,” adds Lars Bertram, Director Sales & Marketing in the interview.

As a circular economy specialist, Encory GmbH focuses on the automotive industry and develops and operates end-to-end circular solutions for its customers. Encory provides both advisory and operational support, from strategy and product level to the implementation of a functioning logistics chain. Founded as a joint venture between the environmental service provider Interzero and car manufacturer BMW, the company has established itself as a force to be reckoned with in the industry thanks to its high level of process and system know-how.

Mr Großeschmidt, Mr Bertram, what potential does the circular economy offer for the aftersales sector?
Hanno Großeschmidt: Many of the sustainability decisions, not only in the automotive industry, are currently still driven more by regulation and are considered a cost factor. But we see a change in perspective among our customers: towards circularity as a value driver, differentiator and functioning business model. If manufacturers only offer new parts to their customers with older vehicles, there is a risk that they will leave in order to find what they are looking for on the independent spare parts market. To prevent this, we develop customised after-sales strategies and put them into practice.

What does it take to build and structure a circular aftersales product portfolio?
Lars Bertram: The first step is the will to anchor circularity as an element of the company’s continued success. This decision often takes place at the strategy level and we provide support here, for example, through our Circular Economy Roadmap, which serves as a compass for further action and identifies the topic areas that have the greatest circularity potential. In the second step, we evaluate products economically and ecologically in terms of their reparability or remanufacturability and consider the resulting market potential. As a final step, we establish a so-called circular supply chain for our customers, which ensures that circular products also find their way back in order to make circular economy possible in the first place.

What kind of products are suitable for circularity in the automotive industry?
Lars Bertram: The turbocharger is a classic for remanufacturing and, due to increasing electrification and the rising proportion of software, we are seeing growing interest in also returning, repairing or remanufacturing electronic components such as control units, electrical components and batteries from e-vehicles. In addition, high-voltage batteries and future technologies such as fuel cells are increasingly being considered under the circular approach, and we see enormous potential here. Thanks to our experience in the repurposing of high-voltage batteries, we see ourselves as very well positioned for the future challenges.

Hanno Großeschmidt: Product life extension is our focus and, from our experience, it offers the greatest economic and ecological potential. Only when all R-strategies (e.g. Reuse, Repair, Remanufacture, Repurpose) for extending the product life cycle have been exhausted do we think about recycling, which is of course also an R-strategy. But we also have to be honest enough to say that not all new products can be sold to the primary target group and many products with slight signs of use are destroyed. We offer a solution to this as well by buying up obsolete stock and distributing it through our worldwide partner network. In this way, we create a win-win situation: the products are not scrapped, but are put to further use without disrupting our customers’ primary markets.

Lars Bertram: That’s an important point, which illustrates our holistic range of activities well. Our service portfolio ranges from strategic consulting on the product level to operational logistical implementation, including product and recyclable material sorting in our own logistics centre and trading in obsolete parts. We offer a full-service package that is hard to find anywhere else on the market in its breadth and diversity.

So every strategy that you develop, you can also build and operate?
Lars Bertram: Exactly. In addition to our consulting expertise, we also have the process, operational and logistical implementation competence that enables us to not only describe the Circular Economy as an idea, but to actually implement and scale it. We thus offer a full service that brings not only experience and expertise but also the necessary infrastructure and technological solutions. We can either set up greenfield solutions, run additional products of other customers on our existing infrastructure or implement operational solutions at the customer’s site to enable circular economy through professionalised returns management.

Return procedures are often time-consuming and tie up resources and operating funds.
Hanno Großeschmidt: The issue of reverse logistics is usually an unloved child. Logisticians may be able to move parts from A to B, but there is often a lack of value-added process steps and powerful, easily adaptable and scalable processes and tools. This includes, among other things, the identification and procurement of relevant parts, the provision of an intuitive and streamlined return platform for workshops and dealers, a digitised goods receipt including documented product diagnostics, sorting and storage, as well as the active management of a refurbishment programme. Especially the IT-specific requirements are not necessarily at the top of the priority list for CIOs today and are thus hardly implemented. Transparency, standardisation and performance analysis are thus difficult to achieve, but necessary to measure the success of Circular Economy measures.

Digital processes are therefore immensely important. At Encory, every process is accompanied by smart digital solutions.
Lars Bertram: That’s right. We have our own scalable and modular IT solutions to make the backward logistics chain transparent and efficiently measurable. Our solutions can be easily integrated into existing customer architectures and enable transparent control of all processes and involved process partners through continuous tracking and customer-specific reporting. This enables us to identify and avoid inefficiencies at an early stage, control processes more efficiently and consequently reduce costs and increase customer satisfaction.

Hanno Großeschmidt: Only data-transparent information in real time enables strategic decisions and thus makes Circular Economy measurable and economically operable.

What quantities are we talking about at Encory?
Hanno Großeschmidt: More than one million parts are processed annually in the logistics centres of our global network in Europe, China and the USA – and that’s just for one of our major customers. This allows us to ensure high quality and scalable reverse logistics. In addition to existing customers, we can easily onboard additional customers onto this infrastructure without having to set up additional staff or space.

Lars Bertram: Basically, we are flexible in our range of services and offer small, medium or large service packages and can offer topics such as parts procurement, dealer connections, customs clearance, logistics, sorting, storage, supplier qualification, inbound and outbound transports, third market connections, end-of-life parts management, parts inspections and support for hazardous goods transports singularly or fully integrated. For us, the customer benefit is in the foreground and we usually assess this in an initial discussion.

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Circular Economy as a goal: Encory and its partners revolutionise the aftersales sector in the automotive industry

Circular Economy as a goal: Encory and its partners revolutionise the aftersales sector in the automotive industry

Author:
Kerstin Beste-Stüker

Date:
06/02/2023

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Rethinking Circular Economy through a European-wide logistics platform for the return and reprocessing of automotive components – Encory is working on this vision together with its partners Kühne Logistics University (KLU) and Do-Tank Circularity e.V. The revolutionary goal: to increase sustainability while reducing costs in the aftersales sector at the same time through an industry-wide increase in the reprocessing of used automotive components.

The approach sounds simple: remanufacturing, recycling and buying up obsolete goods will make the spare parts-intensive automotive market more sustainable – thanks to remanufacturing logistics, the parts used are on a par with new parts in terms of quality, but are more cost-effective in the process and save valuable resources. As part of the Ce:VersA (Circular Reverse Supply Chains in Automotives) project, the three partners are planning a European alliance to establish such reverse logistics in aftersales logistics between car manufacturers (OEMs), component manufacturers (OESs) and logistics companies. The resources saved combined with created economies of scale and the shared use of a platform increase the efficiency and sustainability of an entire industry. “Our vision is to standardise the Circular Economy in the automotive industry. If all process participants use a unified platform, the cost- and CO2-efficient supply chain can soon become reality,” Marko Rehmböck, Managing Director at Encory, explains.

Focus on combustion engines and electric vehicles
At the moment, the company’s activities are focused in particular on the aspect of reprocessing end-of-life parts of conventional combustion vehicles as part of reverse logistics. The existing infrastructure already enables economies of scale in this sector, which have a cost-reducing effect and a positive impact on the sustainability of this sector. The partners are also working on a solution for the area of electric mobility. “Reverse logistics in the field of electromobility is certainly still in its infancy. But thanks to our partnership, we are already succeeding in combining the aspects of science, business and networking in a future-oriented way,” the three project partners agree.

Joint workshop as the next step
With the planning of a kick-off workshop on the KLU campus, the project partners are taking the next step in their vision. In spring 2023, in addition to the three initiators themselves, various companies from the entire automobile value chain, as well as representatives from science and politics, will take part in workshops to realise the development of the planned European-wide reverse logistics platform as a Circular Economy.

About the project partners
Since its founding in 2016, Encory has been able to build up first-hand competencies and practical expertise through its close cooperation with BMW as a German premium manufacturer on the one hand and Interzero as a pioneer in the field of waste disposal and recycling management on the other. Industry-specific know-how and the establishment of efficient logistics processes offer a promising basis for the successful expansion of the company’s activities on a European level. “Our goal is to think products ahead, i.e. to anticipate the optimal further utilisation over a second life cycle already during their production. In this way, we can move away from our linear economic processes and make circular business models the new quality feature of Germany as a business location. The Ce:VersA project is a milestone in this respect,” Hanno Großeschmidt, Managing Director at Encory, sums up his ambitions.

KLU is supporting the initiative as a renowned research institute specialised in logistics and supports the activities on a scientific level through its Center for Sustainable Logisics and Supply Chains (CLCS). As a neutral partner, the university presents its expertise in research and events. “We are also very interested in making our business location more sustainable. That is why we are making our scientific contribution to the Ce:VersA project,” comments Prof. Dr Johannes Meuer.

Circularity e.V. supports the project as a network partner and actively shapes the Circular Economy through its own expertise. By linking experts from all fields, the Do-Tank offers a subject-specific platform for networking political, economic and scientific actors and creates reach beyond the previous niche: “We promote the development and implementation of circular economy approaches through part- nerships and joint projects. This also includes the development of professional content and contributions to the development of the circular economy in Germany,” adds Dr Paul Wöbkenberg from Circularity e.V.

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Demand and acceptance of remanufactured parts as a repair solution for passenger cars

Demand and acceptance of remanufactured parts as a repair solution for passenger cars – What are important arguments for customers of automotive repair shops?

Author:
Victor Henrich

Date:
11/02/2022

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1. Executive Summary

An empirical study in the form of an online survey was used to question 202 people on the subject of “Demand and acceptance of remanufactured parts as a repair solution for passenger cars – What are important arguments for customers of automotive repair shops?”. In total, complete surveys from 180 participants were collected and evaluated.

The results show the current low prevalence of remanufactured parts as a repair solution among end consumers. Of the people who own a car and have already had it repaired, only 5.13% said they had installed a remanufactured part. The proportion of new parts, on the other hand, was 69.23%. At least 58.33% of all parts used for repair were typical parts suitable for remanufacturing. One reason for the low number of remanufactured parts was the low knowledge of the respondents. For example, 50% said they had never heard of remanufactured parts as a vehicle repair solution before the survey. However, the other half of the respondents also showed a low level of knowledge about remanufactured parts. For example, the majority did not know about at least the same quality and warranty compared to the new equivalent. This low level of knowledge can be attributed to the inadequate and, in some cases, non-existent advertising and educational work by car/part manufacturers and workshops. At the same time, the potential of remanufactured parts in vehicle repair is very high and includes a large sales potential for aftersales. In fact, 89.44% of all survey participants would generally be willing to opt for a remanufactured part. Price, quality and warranty were the most important arguments in the decision for or against a remanufactured part. However, environmental protection and resource conservation were also important to the respondents.

The following chapters go into more detail on other survey results and show current opportunities as well as problems of remanufactured parts as a repair solution for passenger cars..

2. Introduction

The automotive industry is one of the most important industrial sectors in Germany.1 It plays an important role economically and is one of the largest employers in Germany.2 Due to the impact on the environment, the pressure on the automotive industry is increasing. Manufacturers have long been bound by strict requirements to develop and produce their new vehicles more efficiently and in a more environmentally friendly manner. Responsible and ecologically sustainable action is required across all value chains. Manufacturers are taking their responsibility seriously and responding with the goal of climate neutrality.3,4,5 Such a turnaround requires significant changes to the entire production and life cycle of a vehicle. From the selection of materials to closed product and material loops, every process must be modified. In the future, a shift to a circular economy will be necessary. An economic system with the goal of eliminating waste and reusing resources throughout. A large component of this is the reuse of used parts. There are various processes that contribute to such reuse of parts and their individual components. This report focuses on the process of remanufacturing, specifically on remanufactured parts for passenger cars. A precise definition of remanufacturing is given in chapter 3.1.

An empirical study conducted in the form of an online survey is intended to show the current popularity of remanufactured parts among consumers and identify potential problems. In this context, important arguments for customers in the repair of passenger cars are to be ranked.

3. Remanufactured parts as a repair solution for passenger cars

3.1 Definition of Remanufacturing

Remanufacturing is the reprocessing of a used product to at least the same product specification of the original equipment manufacturer (OEM) and providing the final product with a warranty at least equal to that of a newly manufactured equivalent.6 The British standard BS 8887-2:2009 is also based on this definition and describes remanufacturing as restoring the performance of a product to equal or better than a newly manufactured equivalent. The standard also includes a warranty on the remanufactured part that is also at least equivalent to that of a new part.7 This standard is followed by several major European associations in the automotive and supplier industry. They have agreed on a common definition. This additionally includes that end-of-life parts are remanufactured by standardized industrial processes and marked as remanufactured parts.8,9 The processes look slightly different depending on the remanufacturer but can generally be described as follows: In a first step, the old parts (cores) are identified and quality checked. They are broken down into their individual components, cleaned and inspected separately. This is followed by the actual remanufacturing and processing of the components. Depending on the part and component, different processes are used here. In certain cases, it is even possible to remanufacture the old parts using a more modern and better process compared to the initial production. In some cases, they are of a higher quality after remanufacturing than their new equivalent, which was manufactured using old processes. Once this has been completed, the components can be reassembled into a single part. A so-called end-of-life test is carried out to determine the reliability and technological limits of the components. Finally, the remanufactured parts are relabeled and packaged accordingly. After this final step, they are ready for sale and reuse.10

3.2 The Remanufacturing Industry in Germany

According to the current calculation (June 2021) of the VDI Centre for Resource Efficiency (VDI ZRE), the turnover of the remanufacturing industry in Germany increased in the period from 2015 to 2017 from 8,728 to 10,226 million euros.11 This corresponds to an overall increase of around 17%. An even stronger growth was recorded in the automotive sector. There was an increase from 3,478 to 4,117 million euros.12 This corresponds to a growth of over 20%. According to VDI ZRE and own research, there is no more up-to-date, systematically collected market data available.13 By comparison, sales growth in the automotive industry in these years was only around 4.49%, corresponding to an increase from 404,768 to 422,957 million euros in sales.
Remanufacturing in Germany leads the European market in terms of sales in all sectors except furniture and marine. The remanufacturing sector employs around 43,000 people and remanufactures around 23 million used parts per year. The evaluation of the remanufacturing market forecasts steady growth in the coming years to at least 43 billion euros in 2030.14
These figures make it clear that remanufacturing not only makes sense for ecological reasons, but also represents a growing and non-negligible part of aftersales in economic terms.

3.3 Evaluation of the survey and analysis of the results

3.3.1 Question group – Your personality

To ensure a reliable evaluation and subsequent interpretation of the survey results, it is first useful to look at the characteristics of the target group surveyed. In this way, any conspicuous features within the sample can be identified and considered in the evaluation. A total of 202 people took part in the survey. Of these 202 people, 22 aborted during the survey and did not complete the survey in full. This corresponds to a bounce rate of 10.89%. The following evaluation has been adjusted for the bounce rate and thus only considers the responses of all 180 remaining and fully completed surveys. A total of people between the ages of 18 and 71 were surveyed. The average age (arithmetic mean) of the respondents was 36.48 years. The standard deviation was 14.72 years. The majority of the respondents were between 22 (Q1 lower quartile) and 51 years old (Q3 upper quartile). 43.33% of the respondents stated that they were female and 55.56% male (0.00% diverse and 1.11% did not answer). Comparing this data with the data from the German Kraftfahrt-Bundesamt (KBA) shows that the sample from this survey has a very similar age structure to reality (Figure 1). This provides an initial basis for reliable results.

 

Source: Own representation according to (Kraftfahrt-Bundesamt, 2021)

With 65.56% of all participants, most people are fully employed. 17.78% are studying and 8.33% stated other situations. These include part-time work, dual studies, unemployment, retirement and parental leave. The slightly higher proportion of students is notable here.
Figure 2 shows the gross monthly income of the respondents.

Figure 2: Percentage distribution of gross monthly income of survey participants in euros  

Source: Own representation

3.3.2 Question group – movement and vehicle

The first group of questions to be answered by the participants included questions on the topics of movement and vehicle. It primarily served to assess the individual vehicle owners and their vehicles. For example, it can be assumed that the vehicle owners with high mileage have already had experience with repairs.
Overall, of the 180 respondents, 69.44% reported using a car as their most common means of transportation. A percentage of 84.44 % owned a car. These individuals form the cornerstone of this survey, as many questions relate to car owners and could only be answered by them. For the percentages in this written analysis, all 180 individuals are considered. In individual cases, the persons who were not shown a question were excluded. In these cases, reference is made to the alternative calculation of the results.
The majority of all respondents, 36.67%, have owned their current car for 1 to 3 years. 17.78 % have had their vehicle for 4 to 5 years. 10.00% of all respondents have driven their car for less than one year or between 6 to 7 years. The following percentages refer to the responses of people who own a car. They do not include the responses in the “Not shown” category. At 39.87% of all vehicles, most were built between the years 2016 and 2020. 26.80% were built between 2011 and 2015 and 20.26% between 2006 and 2010. Most vehicles, 26.14%, have a mileage of between 100,001 and 150,000 km. 17.65% of the cars have already run more than 150,000 km. Mileage is an important factor in putting later questions about repair in the appropriate context. Vehicles with a higher mileage tend to have already been in a workshop more often or will need repairs in the near future.  But the mileage per year is also relevant. Annually a majority of 33.33% drives between 10,001 to 20,000 km. 29.41% drive between 5,000 and 10,000 km in a year. A mileage of 20,001 to 30,000 km was indicated by 20.26 %. A total of 9.80% drive over 30,001 km in a year. Only 6.54 % drive less than 5,000 km. By comparison, the average in Germany in 2020 was 13,730 km.15 Most of the participants’ vehicles, 86.27%, are private. Only 13.07 % are company vehicles. This is an important information, because in case of repair, the costs can be covered by different parties. Depending on whether the private individual or a company pays for the costs, the selection criteria for or against a particular part may differ. The value of the vehicle can also influence this decision. It is reasonable to assume that workshop customers who have a higher vehicle value will also pay more for a new part. More than half of all vehicles, 67.32%, have an owner-estimated value of €20,000 or less. 47.71% of all vehicles fall within the German average of used car prices from 2020 with a value of €5,000 to €20,000. The German average of used car prices from 2020 was 18,750 for brand dealers, €13,310 for independent dealers and €9,740 for private dealers.16

3.3.3 Question group – car repair

This group of questions was intended to capture the experience regarding car repairs of the survey participants. It followed in second place after the question group “movement and vehicle”. The first question was designed to identify all those who already had to take their own car to a workshop. 81.7% of all car owners had to visit a workshop with their current vehicle. Of these, 49.21% stated that they were at an authorized workshop of the car manufacturer. 46.03% stated that they visited an independent workshop. 69.84% of these people had to have a part replaced for repair reasons. 69.23% of those installed parts were new parts and only 5.13% were remanufactured parts. In addition, 19.66% did not provide an answer. It can be assumed that these people did not know about the condition of the exchange part. Thus, an even higher percentage of new parts can be assumed. At 30.58%, most people named the warranty as the reason for choosing the respective part. 23.97% were not aware of any alternatives, and the third most important reason mentioned by 18.18% was the quality of the part. Only 2.38% chose the respective part due to environmental protection and resource conservation. These figures show that new parts clearly predominate in car repairs in Germany. But the percentage of 19.66% of people who did not answer the question about the type of part installed also suggests that in many cases the type of the installed part is not communicated at all or is of relevance to the customer. There seems to be no information from the workshop to the customer. In addition, customers do not inform themselves whether there are alternatives to a new part. This observation is particularly relevant when looking at which parts were replaced in the vehicles of the respondents. In this question, a total of 14 parts were listed and the participants could also name additional parts in a free text field. These 14 parts listed were typical parts for remanufacturing.17 The evaluation of the question shows that 58.33 % of the parts used in the repair belong to these 14 typical remanufactured parts. If people would choose a remanufactured part instead of a new part, there would be the theoretical potential to reduce the new parts share significantly. This would not only reduce the energy consumption of parts manufacturers and protect the environment and resources, but also mean lower costs for most customers.

3.3.4 Question group – Remanufactured parts as a repair solution for passenger cars

The previous section revealed the theoretical potential of remanufactured parts in vehicle repair. However, in order to utilize such potential, customers must also choose a remanufactured part. The following group of questions serves to determine the demand and acceptance of the respondents towards remanufactured parts.

Before the survey participants could be asked in more detail about this topic, it was necessary to ensure that all respondents knew a definition of remanufacturing. A corresponding definition was placed at the beginning of the survey and at the beginning of each group of questions. In this way, it can be assumed in the evaluation that all participants had at least the required level of knowledge to be able to answer the following questions.

The first question of the topic group already revealed an important observation. 50.00% of all respondents stated that they had never heard of remanufactured parts in vehicle repair before this survey. This result partly explains why the percentage of remanufactured parts used in repair is so low. In addition, 68.89% of the participants did not know that a remanufactured part is of at least the same quality as its new equivalent. That remanufactured parts have at least the same warranty as new parts was not known by 78.89%. Not only is it striking that half of all respondents have never heard of remanufactured parts, but it is evident that even among those who already know about remanufactured parts, knowledge is low. 18.89% know about remanufactured parts but are not aware of the same quality compared to a new part. This becomes even clearer when it comes to the topic of equal warranty. Here it is a full 28.89% who do not know. The lack of knowledge was also evident in the evaluation of the next question. 82.78% said they did not know whether their workshop offers remanufactured parts for repairs. Only a total of 15.00% knew about the offer at their workshop. This is by no means the fault of the respondents. Rather, it is the lack of advertising and awareness raising on the part of the workshops and the car manufacturers that is evident here. Only 8.89% could confirm that remanufactured parts are offered in their workshop. 6.11% knew that such an offer did not exist. In most cases, customers were informed by the workshop about the alternative to a new part before the repair. This was stated by 47.06% of all those who were already aware of the workshop’s offer. None of the respondents found out about it through the vehicle manufacturer’s advertising. It is reasonable to assume that customers have little demand for remanufactured parts. This would be a possible argument for the lack of advertising on the part of the repair shops and manufacturers and would explain the low knowledge level of the sample. However, the results of the next question refute this hypothesis. Despite the lack of information, according to the evaluation 89.44 % of all respondents would in principle be willing to have a remanufactured part installed in their car. Only 6.11 % are against it. 4.44% gave no answer. At this point, it should be noted that, apart from a definition, the respondents were not given any further general conditions, such as the exact price, delivery and repair time, etc. This also applies to the following two questions, in which the participants were asked to indicate which part they would choose if they were to pay for the part and the repair, or if the cost would be covered by another party (for example, insurance). Of those who, based on the previous question, would in principle be willing to have a remanufactured part installed, 75.15% would choose one if they had to pay for the cost themselves. If the costs were not to be paid by the respondent, 29.59% would still opt for a remanufactured part. At 63.31%, most would opt for a new part in this case. Based on these results, it can be assumed that the price, as well as a certain skepticism towards a remanufactured part, has a significant influence on the buyers’ decision.

The next question was to confirm this assumption and to order further arguments for or against the decision to a reprocessed part. The respondents were asked to sort the following arguments in order of importance. First, arguments for the decision to a remanufactured part were ordered. The following were available for selection: attractive price, warranty, quality, environmental protection / resource conservation, duration of repair (delivery time of the part) and status symbol. The survey participants did not have to select all arguments. For example, if only two arguments were relevant to the respondents, there was also the option to rank only these two and ignore the rest.
Tables 2 to 7 are intended to visually illustrate the results of the question.

The evaluation confirms that an attractive price is one of the most important arguments for choosing a remanufactured part. Of all the participants, 39.44 % stated an attractive price as the most important argument. 24.22 % of the respondents stated that they consider environmental protection / resource conservation as the most important argument in their decision. This puts it ahead of the quality argument, which was voted into first place by 20.00 % of respondents.

Table 2: Evaluation of the question “What are the most important arguments why you choose a remanufactured part?” – Arguments most frequently voted first place

1st place (most important argument)

Argument Percentage of people who selected the argument in first place.
(Percentage adjusted for people who did not answer the question)
Attractive price 39.44% (42.51%)
Environmental / resource conservation 24.22% (26.35%)
Quality 20.00% (21.56%)

Source: Own representation

Quality was voted the second most important argument by most people. At 25.56%, the majority saw quality in second place. It was again followed by environmental protection / resource conservation and the attractive price. With a small gap, 21.22% stated these two arguments as the second most important. This was followed by the warranty, which was voted into second place by 18.89%.

Table 3: Evaluation of the question “What are the most important arguments why you choose a remanufactured part?” – Arguments most frequently voted into second place

2nd place (second most important argument)

Argument Percentage of people who selected the argument in second place.
(Percentage adjusted for people who did not answer the question)
Quality 25.56% (27.71%)
Environmental / resource conservation
& attractive price
21.11% (22.75%)
Warranty 18.89% (20.36%)

Source: Own representation

Most of the respondents saw the warranty as the third most important argument, at 22.78%. Quality was close behind with 21.22%. 15.56% ranked environmental protection / resource conservation in third place.

Table 4: Evaluation of the question “What are the most important arguments why you choose a remanufactured part?” – Arguments most frequently voted into third place

3rd place (third most important argument)

Argument Percentage of people who selected the argument in third place.
(Percentage adjusted for people who did not answer the question)
Warranty 22.78% (26.28%)
Quality 21.11% (22.75%)
Environmental / resource conservation 15.56% (16.77%)

Source: Own representation

The duration of the repair was the fourth most important argument with 22.78%. 20.56% ranked the warranty in fourth place. 11.11% chose environmental protection / resource conservation and an attractive price as their fourth most important argument.

Table 5: Evaluation of the question “What are the most important arguments why you choose a remanufactured part?” – Arguments most frequently voted into fourth place

4th place (fourth most important argument)

Argument Percentage of people who selected the argument in fourth place.
(Percentage adjusted for people who did not answer the question)
Duration of repair 22.78% (26.28%)
Warranty 20.56% (22.16%)
Environmental / resource conservation
& attractive price
11.11% (11.98%)

Source: Own representation

The duration of the repair was also selected as the fifth most important argument with a percentage share of 28.33%. Warranty was ranked fifth by 15.00% and environmental protection/resource conservation by 13.33%.

Table 6: Evaluation of the question “What are the most important arguments why you choose a remanufactured part?” – Arguments most frequently voted in fifth place

5th place (fifth most important argument)

Argument Percentage of people who selected the argument in fifth place.
(Percentage adjusted for people who did not answer the question)
Duration of repair 28.33% (30.54%)
Warranty 15.00% (16.17%)
Environmental / resource conservation 13.33% (14.37%)

Source: Own representation

The sixth and least important argument, at 57.22%, was the effect as a status symbol. Only 3.89% voted the duration of the repair into last place. For 3.33%, environmental protection / resource conservation was in sixth place.

Table 7: Evaluation of the question “What are the most important arguments why you choose a remanufactured part?” – Arguments most frequently voted to the last place

6th place (least important argument)

Argument Percentage of people who selected the argument in last place.
(Percentage adjusted for people who did not answer the question)
Status symbol 57.22% (61.68%)
Duration of the repair (delivery time of the part) 3.89% (4.19%)
Environmental / resource conservation 3.33% (3.59%)

Source: Own representation

In the following, arguments against the decision to use a remanufactured part were to be sorted. The choices were: Price, doubts regarding warranty, doubts regarding quality, doubts regarding environmental protection / resource conservation, duration of repair (delivery time of the part) and other status symbol effect than a new part. This question and the evaluation follow the same logic as the previous question. Tables 8 to 13 are again intended to visually illustrate the results of the question.

The evaluation of the question shows that most people decide against a remanufactured part because of doubts regarding the quality. 40.00% of all respondents put this argument in first place. With a clear gap, 12.22% saw doubts regarding warranty in first place. For 8.33% it was the duration of the repair (delivery time of the part).

Table 8: Evaluation of the question “What are the most important arguments why you decide against a remanufactured part?” – Arguments most frequently voted first place

1st place (most important argument)

Argument Percentage of people who selected the argument in first place.
(Percentage adjusted for people who did not answer the question)
Doubts regarding the quality 40.00% (59.02%)
Doubts regarding the warranty 12.22% (18.09%)
Duration of the repair (delivery time of the part) 8.33% (12.30%)

Source: Own representation

The second most important argument against a remanufactured part, at 32.78 % was doubt regarding the warranty. Also by a clear margin, as in comparison only 15.56% of respondents chose doubt regarding quality in second place. 7.78% saw the duration of the repair (delivery time of the part) in second place.

Table 9: Evaluation of the question “What are the most important arguments why you decide against a remanufactured part?” – Arguments most frequently voted into second place

2nd place (second most important argument)

Argument Percentage of people who selected the argument in second place.
(Percentage adjusted for people who did not answer the question)
Doubts regarding the warranty 32.78% (48.36%)
Doubts regarding the quality 15.56% (22.95%)
Duration of the repair (delivery time of the part) 7.78% (11.48%)

Source: Own representation

The duration of the repair (delivery time of the part) was voted third by most with 19.44%. 11.11% ranked doubts about environmental protection/resource conservation in third place, and 10.56% price.

Table 10: Evaluation of the question “What are the most important arguments why you decide against a remanufactured part?” – Arguments most frequently voted into third place

3rd place (third most important argument)

Argument Percentage of people who selected the argument in third place.
(Percentage adjusted for people who did not answer the question)
Duration of the repair (delivery time of the part) 19,.44% (28.69%)
Doubts regarding environmental / resource conservation 11.11% (16.39%)
Price 10.56% (15.57%)

Source: Own representation

 

The fourth most frequently selected argument is price, at 21.67%. This is followed by the argument of doubts regarding environmental protection/resource conservation, which 13.33% ranked it fourth. The duration of the repair (delivery time of the part) was the fourth most important argument for 8.33%.

Table 11: Evaluation of the question “What are the most important arguments why you decide against a remanufactured part?” – Arguments most frequently voted into fourth place

4th place (fourth most important argument)

Argument Percentage of people who selected the argument in fourth place.
(Percentage adjusted for people who did not answer the question)
Price 21.67% (31.97%)
Doubts regarding environmental / resource conservation 13.33% (19.67%)
Duration of the repair (delivery time of the part) 8.33% (12.30%)

Source: Own representation

In fifth and penultimate place, the argument of doubt with regard to environmental protection/resource conservation was most frequently selected at 17.22%. A status symbol effect other than a new part was ranked second to last by 12.22%. This was followed by the duration of the repair (delivery time of the part) with 10.56%.

Table 12: Evaluation of the question “What are the most important arguments why you decide against a remanufactured part?” – Arguments most frequently voted into fifth place

5th place (fifth most important argument)

Argument Percentage of people who selected the argument in fifth place.
(Percentage adjusted for people who did not answer the question)
Doubts regarding environmental / resource conservation 17.22% (25.41%)
Status symbol effect other than a new part 12.22% (18.03%)
Duration of the repair (delivery time of the part) 10.56% (15.57%)

Source: Own representation

The least important argument for deciding against a remanufactured part is the different status symbol effect than a new part. 30.00% of the participants ranked it last. For 8.89% it was the price and 7.78% stated the doubts regarding environmental protection / resource conservation as the least important argument in the decision against a remanufactured part.

Table 13: Evaluation of the question “What are the most important arguments why you decide against a remanufactured part?” – Arguments most frequently voted into last place

6th place (least important argument)

Argument Percentage of people who selected the argument in last place.
(Percentage adjusted for people who did not answer the question)
Status symbol effect other than a new part 30.00% (44.26%)
Price 8.89% (13.11%)
Doubts regarding environmental / resource conservation 7.78% (11.48%)

Source: Own representation

At the end of the question group “Remanufactured parts as a repair solution for passenger cars”, the survey participants were asked whether every workshop should offer remanufactured parts in vehicle repair. This concept, that workshops must always offer an alternative to a new part when repairing a vehicle, is mandatory by law in other countries such as France.18 The evaluation of the question reveals a clear result. 83.89% are of the opinion that such an alternative should be offered by workshops. 11.67% do not mind and only 2.78% of respondents are against it. However, as the previous results have already shown, price is a significant factor. The last question was used to determine the willingness to pay for a remanufactured part compared to a new part. At 66.67%, the majority would be willing to take a remanufactured part only at a lower price than the new equivalent. However, 25.00% of all participants said they would pay the same price. Only 1.11% would pay more for a remanufactured part.

4. Conclusion

The survey conducted for this report was intended to investigate the demand and acceptance of remanufactured parts as a repair solution for passenger cars. In this regard, arguments for customers of automotive repair shops were to be sorted. A total of 202 people were surveyed. 180 complete surveys were evaluated.

The car is the most frequently used means of transport among the survey participants. A clear majority own a car and have already had to take it to the workshop for repairs. The survey showed that at least 69.23% of all parts installed during repairs were new parts. Only 5.13% were remanufactured parts. This is a small percentage, especially considering that the majority of all new parts installed (58.33%) were typical remanufactured parts. Further analysis of the survey results revealed a clear lack of knowledge among workshop customers regarding remanufactured parts. 50.00% of the sample had never heard of remanufactured parts in vehicle repair prior to the survey. Even among half of the respondents who were aware of the remanufactured parts alternative, a lack of knowledge about the benefits was identified. 68.89% did not know about the same quality compared to the new part and 78.89% did not know about the same warranty. These are two very relevant arguments when deciding to buy a new part. Finally, warranty (30.58%) and quality (18.18%) were the two most frequently chosen arguments when deciding which part to buy. In addition, there were deficits in communication on the part of vehicle manufacturers and workshops. 82.78% of all respondents did not know whether their workshop even offered remanufactured parts. Nevertheless, 89.44% would be willing to opt for such a part when repairing their vehicle.

The attractive price was the most important argument in the decision for a remanufactured part. The second most important argument was the quality of the parts. The third most important was the warranty. But the aspect of environmental protection / resource conservation also played an important role for the survey participants. Although this argument never made it to the top of the rankings, it often fell short of this ranking by just a few percentage points. The biggest argument against remanufactured parts was doubt regarding quality. Followed by the doubt regarding warranty. The duration of the repair (delivery time of the part) is the argument that was mentioned third most often for the decision against a remanufactured part. This order of arguments shows that the two biggest arguments against choosing remanufactured parts (doubts about quality and warranty) are purely psychological and based on the low knowledge of the customers.

By definition, remanufactured parts always have at least the same quality and warranty as their new equivalent. However, the group of people who would fundamentally decide against a remanufactured part is relatively small, at 6.11% of all respondents. The results of this survey show that there is a high, albeit initially theoretical, demand for remanufactured parts. In reality, the greatest obstacle to demand is the current lack of knowledge on the part of many customers. There is an urgent need for action here in the communication of the vehicle / parts manufacturers and the workshops. It must be the goal of the manufacturer and the workshop to eliminate the lack of knowledge on the part of the customer. Remanufactured parts offer great sales potential for aftersales, and this sales potential can only be utilized through targeted advertising measures and intensive customer consultation.

The reasons for the low marketing and information efforts to date can only be surmised at first. One possibility could be a potential conflict between the sales of remanufactured parts and new parts. If the profit margin for new parts is greater than that for remanufactured parts, there is no interest from an economic point of view in increasing the sales figures for remanufactured parts. Especially if the new parts are cannibalized and the new part sales decrease. The business with remanufactured parts must be economically attractive for the OEM as well as for the workshop.
Another reason could be a logistical problem. In order to be able to offer remanufactured parts to customers, it is necessary to have a functional and efficient reverse logistics that ensure the supply of sufficient cores. This ist the only way to ensure that enough parts are remanufactured and sold to the customer. Establishing such reverse logistics is complex and costly. There is a presumption that many manufacturers lack the appropriate reverse logistics infrastructure to meet customer demand. Increased demand would only lead to further bottlenecks and ultimately to low customer satisfaction.
However, these assumptions cannot be substantiated within this report.

Under these circumstances, it was impossible for OEMs to fulfill the planned production levels of 2020. With primary products not being delivered and the need for a vehicle constantly decreasing, the crisis brought automotive production to a standstill. With remote work being forced, demand decreased further causing every second supplier to consider further personnel reduction.7 Since production is constantly oriented to customer demand, just-in-time production created further problems and a combination of demand-side shocks and supply-side disruptions defined the automotive crisis.

The consequences on supply chains are still to be observed in July 2021. Delivery bottlenecks for semiconductors prevented the production of two to four million vehicles in Europe.8 There are many industries depending on chips, automobile industry only holds 12% of the demand resulting in a relatively minor purchasing power.9 However, the low purchasing power does not coincide with the need. To produce an average car, the manufacturer needs between 50 to 150 chips, and since the pandemic raised the demand for electronics while decreasing the demand for vehicles, the monopole manufacturer of chips was commissioned to fulfill the increased demand.  Automobile manufacturers canceled their orders in the middle of the crisis last year to cope up with their demand side, which when the demand bounced back resulted in a late crisis. Since May 2021 OEMs have been closing their production facilities for short terms because of this supply chain disruption. This disruption resulted in the realization of Europe’s and the USA’s high dependency on Asian production, encouraging the USA to implement a plan for local production.

Problems with the unstable supply chains raised more questions on how to prevent delivery bottlenecks in the future. Hyper localization and near-shoring were some of the recommended ideas. Meaning all the production processes will be done in European neighboring lands, and deliveries would conclude with minimal problems and delays. Even though this idea might seem perfect in theory, realizing it is neither practical nor economical, which preventing this action from being taken.

Another realization was what the lack of communication and coordination could do. After the first lockdown measures were eased, the recovery did not go as expected. Missing online and aftersales offers caused massive challenges to OEMs. Also not being able to coordinate the recovery, made it clear that the companies have not been benefitting from the technologies adequately. The lack of cloud technologies and joint data rooms, if established could prevent further global crises.

As a lesson learned from the crisis every business should analyze their structural supply chain fragility.  Identifying delivery bottlenecks, not only in the primary supply chain but also in the external supply chains became vital to prevent shortages in the future.

Customer behavior

Pandemic also had massive effects on customers. The rising trend of digitization once again gained a boost. At the beginning of the pandemic, consumers hesitated to purchase vehicles. Surely decreasing need for transportation caused by remote work and uncertainty of income had massive effects on these decisions. On the other hand, hygiene concerns encouraged individual travel instead of the rising shared economy trend. This customer attitude may result in changing business models in the future depending on the persistence.

Another question on customer behavior is how the crisis will change the buying behavior in the future. According to a McKinsey study based on Google search trends, contactless car buying is a rising trend. Despite the fact that car buying searches have plummeted due to reduced demand for mobility, interest is entirely regained at the end of 2020. The study shows that 60 percent of customers under the age of 45 are considering buying their vehicles online instead of visiting dealerships. With increasing age, this ratio does not change drastically. 45% of potential buyers under the age of 65 also prefer buying online.10 Which brings dealers to take immediate action. The change in buying behavior is rather unlikely to disappear.

Dealerships need to hasten their digitization processes and come up with suitable offers. Since the crisis encouraged needs like delivery of the vehicle straight to the buyer’s home, businesses need to make use of recent technologies, in order to answer how this behavior change is going to shape their future. Making use of cloud technologies and advancing customer data management systems can be a good starting point.

Since the pandemic also increased the importance of sustainability issue, it is safe to say micro-mobility trends such as bicycles, e-scooters, and mopeds will gain higher importance. These could decrease the demand for automobiles, especially in metropolitan regions.

Figure 1: Number of driver’s licenses for passenger cars in Germany by age and gender in 2021

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1,2Statistisches Bundesamt 2021
3Volkswagen AG, 2021, S. 7
4BMW Group, 2021, S. 27
5Daimler, 2021, S. 26
6Ijomah W. , 2002, S. 3, 106
7BS 8887-2:2009, 2009
8APRA Europe AISBL, 2014
9Parker & Butler, 2007
10Encory GmbH, 2021
11,12VDI ZRE calculation based on (Parker, et al., 2015) & (Eurostat SBS, 2020)
13VDI Zentrum Ressourceneffizienz GmbH, 2021, S. 33ff
14VDI Verein Deutscher Ingenieure e.V., 2019, S. 4
15Deutsche Automobil Treuhand GmbH, 2021, S. 9
16Deutsche Automobil Treuhand GmbH, 2021
17Encory GmbH, 2021
18Parlement français, 2018

 

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