Circular Economy in Automotive Industry
Ms. Thananan Jindakitskulchai
Marketing Expert in Industrial Sector
If we look into parts of an Internal Combustion Engine (ICE) vehicle, both diesel and gasoline ones, we would see that there are more than 30,000 parts. When such vehicle gets old and no longer be used or when it reaches the End of Live Vehicle (ELV), where such more than 30,000 parts will be moved to. We are familiar with the sight of the garage with old cheap parts disassembled and stacked in pile; the sight of used spare parts shops selling in Xiang Gong area (used car parts). Now that, what happen to the lubricant and refrigerant liquids that stuck in the car wrecks, where do they go? Some would probably be sold as obsolete oil and some could be discharged, of course, likely to contaminate the environments.
Thailand is a leader in the automotive industry in ASEAN which accounts for the total productions of approximately 2,000,000 vehicles per year, with the domestic sales of approximately 1,000,000 vehicles per year. If the useful life of a car in Thailand is taken to average up to 20 years and that during use there will be refurbishing, repair or maintenance repeatedly using to make it useful, it could be expected that the quantity of variously used parts would be more than 240,000 million parts, considering that the average life of each part is 3 years (30,000 x 8 x 1,000,000).
Thailand still has no systematic disposal of car wrecks after the end of the life of a vehicle. Demolitions of car spare parts usually rely on the use of the mechanics’ labor forces in the garage in most cases. Such demolitions have eventually caused the environmental impact problems such as plastic wastes in the cars, wastes from dangerous substances in the car parts, batteries, contamination into the ground from lubricating oil in the engine and driving system. Liquid chemicals in the air-conditioning and cooling systems like Freon will further affect water and air quality.
Over in the past, we, in the automotive industry, focused on the productions for consumptions. The consumptions were pushed by the automotive manufacturers in a manner of the “Linear Economy” that focused on using the Take-Make-Dispose resources for the productions which consequently caused a lot of wastes. An enormous amount of natural resources had as well been used eventually causing the environmental problems.
Circular Economy: It is a “Circular” production system where the importance is significantly placed on the product garbage and waste management after consumptions. It is a system allowing the most efficient use of resources that the used products can be brought back into the production process again through the Make-Use-Return cycle. The Principle of Circular Economy is based on 3 principles as shown in the butterfly diagram which are:
Principle 1) – Preserve and enhance natural capital by controlling finite stocks and balancing renewable resource flows.
Principle 2) – Optimize resource yields by circulating products, components, and materials usage at the highest utility at all times in both “technical and biological circles”.
Principle 3) – Foster system effectiveness by designing to minimize systematic leakage and avoid the negative externalities from the products as much as possible to prevent the wastes from leaking out of the system.
There are many documented academic details related to Circular Economy. Please let me mention primarily as the introduction to enable readers to understand the basic Principle Circular Economy from the point of view of marketer. It is necessary to educate consumers to be aware of the importance of the change in the consumption behaviors and to give a perspective view on the opportunity for a change in doing business on joint participations in creating a green economy to rise in Thailand.
Circular Economy for automotive industry is very much involved in the Technical Cycles in the butterfly diagram which begins from the product design that focuses on reducing wastes. The products must be long-lasting for use; good for remanufacturing, refurbishing or repair, maintenance and can be worthwhile for reuse. The recycling process involves in making starting raw materials, upcycling process to become new products by adding value and putting new ideas and beauty into things that are about to become rubbish. Therefore, the product designs are the most important steps that prevent the waste to leak out of the production system, and should be the main focus. In making the products durable with resilience through diversity with the property of modularity, the products can be reused once again with the least energy consumptions and their original quality can as well be maintained. The Circular Economy can be in the form of Sharing Economy.
For the automotive industry in Thailand, we see the big name Japanese carmakers emerged to open showrooms to sell their own used cars which are cars under quality assurance by their respective companies with good quality for reuse.
We see leaders in the motorcycle manufactures and distributions in Thailand who adopt the Circular Economy concept in their organizations. They appointed the motorcycle dealers to be the Green Dealer Service Center. They have to oversee and manage the wastes from repairs such as obsolete tires, lubricants, and batteries from customers coming to receive services at the Green Dealer. They have to collect them for sending back to its own company for proper recycling and disposal method. Spare part repair policy is provided instead of a replacement to make the optimal use out of the resources. This will increase the efficiency on the management of wastes, raw materials and energy on 6 items of spare parts namely; front shock absorbers, cushions, keys, spools, cylinder jackets, and exhaust pipe nips. There are more options for customers wanting to buy Grade A used motorcycles that meet the standard, in which the company has made the adjustments on the motorcycle conditions by conducting repair and maintenance to be used motorcycles of good quality.
In the next issue, I would like to give accounts on car wreck recycling, a new business opportunity, which will be the systematic car wreck management for proper method of disposals. This will reduce and prevent environmental pollution from wastes leaking out of the process, and finally to increase the quality of life of the country’s population.