Samil PwC "Circular Economy, Essential Strategy for the Car Industry"

EU Tightens Environmental Regulations
Automakers Urged to Embrace Circular Economy Beyond Compliance

As environmental regulations in the European Union (EU) have recently tightened, there are recommendations that automobile manufacturers must adopt the circular economy as an essential strategy beyond mere regulatory compliance.

According to a report published by Samil PwC on the 5th, the EU is enforcing the ‘ELV (End-of-Life Vehicles) Directive,’ which requires 95% of a vehicle’s weight to be reused or recovered. Furthermore, it plans to introduce stricter regulations mandating that 25-35% of plastics used in new vehicles come from recycled materials.

The report emphasized that the circular economy can create new market opportunities in the automotive industry. It stated, “Original Equipment Manufacturers (OEMs), parts suppliers, recyclers, and waste management companies can generate higher profits from new value pools,” and explained, “Since the pandemic, prices of steel scrap have surged sharply due to eco-friendly regulations and geopolitical conflicts, making effective management of steel scrap positively impact profitability.”

It added, “In particular, OEM companies can reduce raw material costs by recycling ELV parts and secure differentiated competitiveness by utilizing high-quality recycled materials,” and “there is also an opportunity to enhance sustainable brand value in line with consumer trends favoring eco-friendly policies.”

Jeon Yong-wook, Partner of the Mobility Industry Dedicated Team at Samil PwC, said, “This report summarizes the key concepts of the automotive circular economy and presents strategic benchmarks to promote the recycling and reuse of automotive parts,” adding, “We hope it will help industry stakeholders optimize ELV collection and recycling processes and explore new market opportunities.”