By Vinay Raghunath & Som Kapoor
In the present decade, automotive original gear producers (OEMs) have entered an era of unprecedented uncertainty as the market faces challenges on a number of fronts. OEMs are responding to the new dimensions of mobility (connected, autonomous, shared and xEV), new types of ownership, and also an enhanced environmental concentrate across stakeholders. In addition, the Covid-19 pandemic has created the market realise the vulnerability linked with the present worth chain structure at each the customer-finish and the supplier-finish.
Environmental problems and sustainability are now amongst the key priorities with a concentrate on minimal use of non-renewable sources and minimal emission from pollutants. An crucial aspect of aggregated emission reduction is to enhance the circularity across the automotive industry’s worth chain, like new processes and operating models connected to finish-of-life automobiles (ELVs). In this context, a scrappage policy can provide some clear positive aspects connected to reduction in pollution, reduction in the fuel import bill, enhanced recycle or reuse of components, produce replacement-connected demand, and provide an impetus to structuring this component of the automotive ecosystem.
The growing use of lightweight components, electronics and multi-material ideas in automobile style has also produced challenges about import dependencies and the capability of automobiles to realize higher levels of sustainability.
The scrappage policy can act as an crucial catalyst for the Atmanirbhar Bharat and as a platform for job creation.
There is an chance to set up new company models exactly where new players and the regular automotive ecosystem come collectively in an organised manner to provide items and services to buyers. We are at a point exactly where we could see the emergence of a new company model that extends the present auto ecosystem, exactly where each new players and regular players can be involved to provide options in an organised manner. The scrappage policy will provide novel possibilities for each new and current players to create a robust go-to-marketplace and offer you buyers options to ease the finish of life of automobile resale/acquire processes.
The scrappage policy can provide an chance to new and regular players to set up an organised operating model and ease the transition into a circular economy whereby the worth embedded in relevant ELVs’ elements and components is recaptured by way of reuse, recycling and recovery. Select players in the marketplace are currently considering by way of material therapy and possibilities to maximise the preservation of material high-quality. This may perhaps also make automotive OEMs and suppliers rethink the strategies that automobiles and their components are created, constructed, employed, and handled at finish of life.
Internationally, 85-95% of the automobile is recovered with automobile styles getting nicely-suited for simple dismantling and disposal. Europe and Japan have led the way and mandated 90-95% of automobile recovery from 2015. India can discover from other nations and adopt a path that focuses on multidimensional elements of recycling and remanufacturing elements.
While there is a lot more work to be accomplished in the future, the scrappage policy does bring to the table a lot of positives. It should really lead to reduction in emissions, act as a catalyst for automobile sales, savings on imported raw components, and an expansion of the general automotive ecosystem like fitness centres, new elements of provide chain, scrapping centres, and automation.
Raghunath is companion & leader, and Kapoor is companion, Automotive Sector, EY India