Automotive Sector Can Harness New Revenue Through Parts Lifecycle Value-Retention
In the automotive sector, prospective revenue streams can be achieved by original equipment manufacturers (OEMs) that embrace greater value-retention practices for parts utilization beyond traditional service lifecycles. The basic tenants of value-retention found in circular economy principles seek to recover all products, components and materials at their highest utility and value. New revenue opportunities for OEMs derive from those whom incorporate circular economy philosophies such as direct reuse, repair, refurbishment and remanufacturing. These practices help to retain value through enhanced resource efficiency and decreased environmental impacts.
Today, motor vehicles stay on the roads and highways in the United States much longer than previously. This provides a replacement part market for repairs that is much different than 25 years ago when the average age of motor vehicles was 8.1 years. If fact, the average age of an American motor vehicle fleet has risen to an all-time high of 11.7 years. It is forecasted that the average motor vehicle’s age will rise by another 10 percent in the next several years.
This higher part demand from a fleet of older vehicles provide an opportunity for automakers to actually collaborate with other industry partners. Through active education and awareness initiatives, automakers can cultivate greater market support of part alternatives that reduce the environmental footprint of their vehicle components and operations. These efforts can also enhance manufacturers’ ability to meet greenhouse gas emission commitments and other sustainability goals, as well as reach regulatory compliance with sustainability and circular economy requirements in markets around the globe.