Millions of used vehicles every year are exported from Europe, the USA and Japan to low- and middle-income countries, posing environmental and health risks and hindering the transition to net-zero transport. However, private-sector action can play a crucial role in complementing policy efforts to transform the used vehicle trade into a catalyst for a circular automotive industry.
Systemiq has today published a white paper titled Turning the used vehicle trade from burden to opportunity. It proposes an industry-led work programme that addresses the challenges of the used vehicle trade while aligning with existing international initiatives.
Used vehicle trade: Challenges and action areas
The white paper emphasises three key action areas to enhance the sustainability of the used vehicle trade.
- Curbing the export of poor-quality end-of-life vehicles (ELVs) to prevent the influx of outdated and highly polluting vehicles into importing countries.
- Repairing and upgrading vehicles that fail to meet minimum import requirements can improve safety and emissions standards.
- Ensuring proper vehicle lifetime extension and end-of-life management in importing countries is crucial for a sustainable approach.
Addressing the gaps
While various international organisations are already working to tackle these issues, most programmes and actions currently focus on filling data and policy gaps to minimise the burden associated with the existing state of the used vehicle trade.
The white paper argues that current actions do not focus on developing profitable circular business models that help make the used vehicle trade fair and equitable. It identifies three gaps in the current efforts:
- There is a need to assess the economic and business value surrounding the used vehicle trade to better understand profit pools.
- Research is necessary to identify scalable circular processes and technologies that can be commercialised effectively.
- A proof of concept for circular business models in importing countries is crucial to demonstrate the viability and benefits of vehicle recycling.
“We see a gap between industry action and the development of profitable business models that help make the used vehicle trade fair and equitable. By mobilising the private sector, we can complement and support policy efforts to regulate the global vehicle trade and develop clear business cases for a more circular automotive industry.
Tilmann Vahle, Director – Sustainable Mobility and Batteries, Systemiq
Proposed pilot programmes
The proposed work programme for industry action takes a two-fold approach: a top-down perspective and a bottom-up implementation strategy.
- The top-down approach focuses on developing an industry-wide perspective on transitioning to a circular used vehicle trade, evaluating profit pools of circular business models, pinpointing solution pathways, and garnering industry support for international initiatives.
- The bottom-up approach aims to establish an on-the-ground proof of concept for end-of-life vehicle management and recycling in low and medium-income countries, while identifying the necessary policy, technology, and investment requirements for scaling circular business models.
What’s next?
Drawing inspiration from the Mission Possible Partnership and Project STOP, we are now bringing together stakeholders from the automotive value chain, financiers, and other industry actors to develop a strategy and begin implementation. In the coming months, we will be refining the work programme in collaboration with industry leaders, OEMs, policy makers and other key stakeholders, with the aim to launch an industry-validated and backed work programme on the used vehicle trade.
If you are interested in joining us or would like to find out more, contact Tilmann Vahle, Subin Kang or Dr Carl Kuehl.
This whitepaper was published by Systemiq and made possible by the Climate Compatible Growth Programme (CCG) with funding from the UK’s Foreign, Commonwealth and Development Office (FCDO).
