February 22, 2024

Automotive Parts Remanufacturing Market is Estimated to Witness High Growth Owing to Increased Focus on Circular Economy

Remanufactured automotive parts offer a cost-effective and environment-friendly alternative compared to the production of new parts. As emissions regulations become more stringent worldwide, remanufacturing plays a vital role in achieving sustainable production and consumption.

The Global automotive parts remanufacturing Market is estimated to be valued at US$ 2928.17 Bn in 2024 and is expected to exhibit a CAGR of 14% over the forecast period 2024 to 2030.

Key Takeaways

Key players operating in the automotive parts remanufacturing are Aerostar International, Inc., Raytheon Company, ILC Dover LP, Worldwide Aeros Corporation, Israel Aerospace Industries Ltd., TCOM L.P., Lindstrand Technologies, Ltd., RT Aerostat Systems, Inc., Lockheed Martin Corporation, and RosAeroSystems, International Ltd. Remanufactured parts provide significant cost savings of around 30-70% compared to new parts, thereby opening profitable opportunities for manufacturers, retail segments as well as end-users. Technological advancements such as 3D printing and AI-enabled defect detection systems are helping optimize remanufacturing processes and quality control.

Market drivers

Stringent emission regulations stipulating reduced vehicular emissions are driving the demand for remanufactured components. Reusing automotive components effectively helps minimize waste generation and supports circular economy initiatives. The cost benefits of around 30-70% for remanufactured parts compared to new ones is a key factor for their increasing preference. Predictive maintenance techniques also allow targeted remanufacturing of only those vehicle parts that strictly require replacement, helping optimize investments and turnaround times.

Current Challenges in the Automotive Parts Remanufacturing Market
Some of the key challenges currently faced by the automotive parts remanufacturing market include rising price of raw materials, the increasing popularity of electric vehicles, and stringent emission regulations. The prices of key raw materials used for remanufacturing such as metals have increased sharply in recent years, putting pressure on profit margins. Moreover, the growing focus on electric mobility is reducing the demand for conventional engine parts. Finally, stringent emission norms in regions like Europe are accelerating the replacement of older vehicles, diminishing the pool of core components available for remanufacturing.

SWOT Analysis
Strength: Automotive Parts Remanufacturing Market Size reuses existing components multiple times, helping reduce industrial waste and lower carbon footprint. It is also more cost effective than producing new components from scratch.
Weakness: Remanufacturing depends on the availability of used components to rebuild. The transition towards electric vehicles poses a threat due to different component requirements of EVs.
Opportunity: Growing vehicle fleet worldwide and tighter environmental regulations are increasing the emphasis on circular economy practices like remanufacturing. Emerging markets offer strong potential for aftermarket parts demand.
Threats: Original equipment manufacturers are expanding their genuine and non-genuine repair parts business, raising competition. Technological changes in drivetrains affect compatibility of reused parts.

Geographically, North America currently accounts for the largest share in the global automotive parts remanufacturing market, both in terms of value and volume. The region benefits from the presence of a well-established automotive aftermarket industry and infrastructure to support core collection and redistribution. Going forward, Asia Pacific is projected to witness the fastest CAGR during the forecast period, led by China, India, and ASEAN countries. Factors such as rising vehicle parc, increasing disposable incomes, and rapid development of automotive hubs are expected to drive the demand for remanufactured components in Asia Pacific.

Europe follows North America among major automotive parts remanufacturing markets in terms of value presently. Countries like Germany, UK, France, and Italy have contributed significantly to the regional market value owing to strict environmental regulations and circular economy initiatives. The collective recycling efforts of OEMs and independent operators through initiatives like EUREF have boosted core availability to serve the European remanufacturing industry over the years.

Note:
1. Source: Coherent Market Insights, Public sources, Desk research
2. We have leveraged AI tools to mine information and compile it