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Remanufacturing, automotive component’s second life, is a growing business. But beware of counterfeits
Dino Collazzo
Sustainability, low cost and reuse, are the pillars underpinning the development of the automotive remanufacturing sector. A market worth 7.4 billion Euro in Europe alone which, according to many analysts, is expected to grow further over the next few years. Nevertheless, a great threat to the whole sector is represented by a well known phenomena, counterfeits! Which translates into a 10 billion Euro loss each year for official EU suppliers of mechanical parts, accessories and electrical devices.
Nothing is thrown away! Once a vehicle reaches the end of its useful life it can still turn out to be a real gold mine for remanufacturing companies as components in good condition can be regenerated and receive a second life. The growth of this market though, - but the same applies to original spare parts producers – is weighed down by counterfeiting practices which, besides harming the trade, constitute a danger as far as road safety is concerned. Remanufactured vehicle components reuse parts which are still functional and that would otherwise have been destroyed. In fact, engine parts, clutches, brake calipers, injection systems and tires can have a second useful life thanks to a remanufacturing process. In practice, starting from an existing spare part – or core – a number of still efficient parts are reused in turning an original worn out part into a useful spare part again, whether for a car or a truck. The result thus obtained represents a great saving in terms of costs and raw materials compared to producing new parts from scratch. Wanting to quantify such savings we can speak of about 88% less raw materials, 56% less energy consumption and a reduction of Co2 emissions in the region of 53%. Thus, remanufactured spare parts – which are subjected to grueling tests in order to obtain a warranty certificate – are equivalent in all respects to new ones. This is essentially a circular economy model based on recycling which is attracting increasing interest by an ever increasing number of companies.
In Europe, according to a study carried out by the Ern (European remanufacturing network), a project financed by the European Commission, it is estimated that the number of automotive companies active in the process of recycling and reusing spare parts are 2,363. With a production capacity of approximately 27 million remanufactured items each year – the ratio between remanufactured and new production is 1.1% – with a turnover of nearly 7.4 billion Euro. Figures that, if compared to the United States where the turnover exceeds 30 billion Euro, show how Europe is still lagging way behind. This disparity can hardly be explained blaming only the rather slow approach of European companies. In fact, pushing up sales in the US are the more frequent replacement of spare parts, a higher cost of original spare parts partly responsible for the rather high popularity rate for remanufactured items among the end users. This situation, though, is likely to change within a few years. And this is shown by the number of investments made in recent years by specialized European companies in this specific sector. To keep up with the changes currently affecting the automotive industry, Oem manufacturers and Tier One suppliers, independent and local remanufacturers alike, must devote a portion of their financial resources to the expansion of production facilities, test facilities, know-how and skilled personnel. In order to capture the full potential of the remanufacturing market. According to what we read in Ern’s research, the beating heart of this circular economy in Europe is represented by Germany which generates, on its own, 32 percent of the total continental turnover, followed by the United Kingdom and Ireland together with 10.3%, France with 10.1% and Italy with 9.4%. Among the parts that end up in remanufacturing plants we find starters and alternators, power steering units, gearboxes, clutches, transmissions and injection systems, brake calipers, complete engines as well as tires. Components whose parts are dismantled, selected, cleaned and made efficient once again before being reassembled into a product similar to the original. A process following strict industrial guidelines and principles before undergoing a final test.
Which is exactly what does not happen with fakes. One of the major problems in the field of spare parts – whether remanufactured or original – is the phenomenon of counterfeiting. An illegal market that, according to recent European data, translates into a 10 billion Euro loss each year for official EU suppliers of mechanical parts, accessories and electrical devices, besides constituting a great threat to road safety. Among the most commonly forged parts we find brake pads, belts, water pumps, headlights, rear lights and license plate lights, valves, alternators and starters. Not to mention spark plugs, wiper blades, clutches and wheel covers. We're looking at a business that is rapidly growing in both sales volumes and revenues and becoming ever more popular on online sales channels where, between a super deal and a huge discounts the risk to stumble across counterfeit spare parts, which simply lack even the most basic legal compliance, is much higher. It is an increasingly widespread and structured system. In Italy, which along with Germany has the most flourishing market of counterfeit parts, fake parts sales account for roughly 120 million Euro. Compared with other sectors, for example clothing, electronic devices and food, it might not seem such a big deal, but over the years has experienced a strong growth rate with online sales alone growing 10% each year. Taking decisive action now, might prevent this phenomena to escalate further and perhaps not only in the automotive industry.
In Europe, according to a study carried out by the Ern (European remanufacturing network), a project financed by the European Commission, it is estimated that the number of automotive companies active in the process of recycling and reusing spare parts are 2,363. With a production capacity of approximately 27 million remanufactured items each year – the ratio between remanufactured and new production is 1.1% – with a turnover of nearly 7.4 billion Euro. Figures that, if compared to the United States where the turnover exceeds 30 billion Euro, show how Europe is still lagging way behind. This disparity can hardly be explained blaming only the rather slow approach of European companies. In fact, pushing up sales in the US are the more frequent replacement of spare parts, a higher cost of original spare parts partly responsible for the rather high popularity rate for remanufactured items among the end users. This situation, though, is likely to change within a few years. And this is shown by the number of investments made in recent years by specialized European companies in this specific sector. To keep up with the changes currently affecting the automotive industry, Oem manufacturers and Tier One suppliers, independent and local remanufacturers alike, must devote a portion of their financial resources to the expansion of production facilities, test facilities, know-how and skilled personnel. In order to capture the full potential of the remanufacturing market. According to what we read in Ern’s research, the beating heart of this circular economy in Europe is represented by Germany which generates, on its own, 32 percent of the total continental turnover, followed by the United Kingdom and Ireland together with 10.3%, France with 10.1% and Italy with 9.4%. Among the parts that end up in remanufacturing plants we find starters and alternators, power steering units, gearboxes, clutches, transmissions and injection systems, brake calipers, complete engines as well as tires. Components whose parts are dismantled, selected, cleaned and made efficient once again before being reassembled into a product similar to the original. A process following strict industrial guidelines and principles before undergoing a final test.
Which is exactly what does not happen with fakes. One of the major problems in the field of spare parts – whether remanufactured or original – is the phenomenon of counterfeiting. An illegal market that, according to recent European data, translates into a 10 billion Euro loss each year for official EU suppliers of mechanical parts, accessories and electrical devices, besides constituting a great threat to road safety. Among the most commonly forged parts we find brake pads, belts, water pumps, headlights, rear lights and license plate lights, valves, alternators and starters. Not to mention spark plugs, wiper blades, clutches and wheel covers. We're looking at a business that is rapidly growing in both sales volumes and revenues and becoming ever more popular on online sales channels where, between a super deal and a huge discounts the risk to stumble across counterfeit spare parts, which simply lack even the most basic legal compliance, is much higher. It is an increasingly widespread and structured system. In Italy, which along with Germany has the most flourishing market of counterfeit parts, fake parts sales account for roughly 120 million Euro. Compared with other sectors, for example clothing, electronic devices and food, it might not seem such a big deal, but over the years has experienced a strong growth rate with online sales alone growing 10% each year. Taking decisive action now, might prevent this phenomena to escalate further and perhaps not only in the automotive industry.
