International Journal of Production Research

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A framework of reverse logistics for the

automobile industry

Felix T.S. Chan , H.K. Chan & Vipul Jain

To cite this article: Felix T.S. Chan , H.K. Chan & Vipul Jain (2012) A framework of reverse
logistics for the automobile industry, International Journal of Production Research, 50:5, 1318-1331,
DOI: 10.1080/00207543.2011.571929

To link to this article: https://doi.org/10.1080/00207543.2011.571929

Published online: 06 Sep 2011.

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International Journal of Production Research
Vol. 50, No. 5, 1 March 2012, 1318–1331

A framework of reverse logistics for the automobile industry

Felix T.S. Chana*, H.K. Chanb and Vipul Jainc
a
Department of Industrial and Systems Engineering, The Hong Kong Polytechnic University, Hong Kong;
b
Norwich Business School, University of East Anglia, Norwich, UK; cDepartment of Mechanical Engineering,
Indian Institute of Technology Delhi, New Delhi, India
(Final version received February 2011)

Reverse logistics has become more and more important to the automobile industry, owing to various reasons
including unavoidable product recalls, legislative policy regarding environmental and sustainable issues, etc.
In fact, the need for recovery of returned vehicles has been receiving more attention than ever before due to
growing environmental concerns. Ironically, not many automobile manufacturers have a satisfactory reverse
logistics system for recovering and reusing returned vehicles. This is partly because the effort devoted to this
area is not very systematically investigated. In this connection, this paper aims at investigating the reverse
logistics activities of the automobile industry, and to provide a framework for those activities. Firstly, the
drivers for reverse logistics in this industry are revisited. Key components which are valuable and feasible for
reuse or remanufacture are then identified. Based on this investigation, a framework of reverse logistics for the
automobile industry is proposed. This is based on several evaluation factors (i.e. value of reversed products,
legislation perspective and cost issues). Implementation issues and managerial implications are also
summarised.
Keywords: reverse logistics; automobile industry; sustainability; environmental concerns

1. Introduction
The automobile industry is one of the largest and most important industries in the world. It involves a series of
supply chain activities in order to produce and deliver a vehicle, including sourcing and procurement, production
and all logistics management activities. More specifically, logistics activities have contributed to a rather large
proportion of the total cost. This is especially obvious in the automobile industry as its supply chains involve a large
number of parties due to globalisation. This complex structure triggers the needs for managing not only the forward
logistics well, but also the reverse logistics (RL). On the other hand, the need of RL has been changed, not only
restricted to economical factors, but also environmental or sustainable factors. Therefore, it is interesting to
investigate the role of RL in the automobile industry. Nevertheless, the nature of the automobile industry is quite
different from other industries, for example, the consumer electronics industry. The following sections summarise
the key barriers of implementing RL in the automobile industry relative to the other industries.

1.1 Management barrier

Management barriers refer to the difficulties and problems in managing the RL activities in a closed loop supply
chain, caused by the nature of supply chains of the automobile industry. This is because there are so many parties
involved in this industry. The complexity of the supply chains makes the control of RL activities difficult since
coordination and integration are difficult, if not impossible, to achieve. In addition, the closed loop system is not
really ‘closed’ as many owners may take their vehicles to garages outside the manufacturers’ supply chain system for
service or maintenance. Therefore, valuable, though used, parts or components may ‘leak’ from the system. Thus,
these items cannot be transported back to the manufacturers’ side. This is also partly related to the complexity of the
supply chains as mentioned above.
On the other hand, vehicles are normally highly customised, which means that even if different vehicles of the
same model are disassembled at the same time, the parts or components may not be as homogeneous as the products

*Corresponding author. Email: mffchan@inet.polyu.edu.hk

ISSN 0020–7543 print/ISSN 1366–588X online

ß 2012 Taylor & Francis
http://dx.doi.org/10.1080/00207543.2011.571929
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 International Journal of Production Research 1319

in other industries like consumer electronics. This introduces difficulties in forecasting the recovery of parts and
components in any RL system. Many authors have discussed and mentioned the difficulties in planning for reverse
logistics as opposed to forward logistics since RL involves a higher degree of uncertainty (Tibben-Lembke and
Rogers 2002). Finally, another problem in this regard is that recycled materials may not be used by manufacturers as
the price of them could be higher compared to those virgin materials.

1.2 Technical barrier

Technical barriers refer to the problems and constraints concerning physical technical difficulties. In reality, not
every single part or component can be recycled. Lack of technological recycling solutions can make the recycled
materials far from satisfactory. Another technological constraint is the scale of disassembly of returned vehicles. A
vehicle consists of several thousand parts and components, which include various types of materials like plastics and
non-ferrous materials. Therefore, disassembling a vehicle is not as straightforward as disassembling a personal
electronic product, for example. Finally, disassembly of returned vehicles may require large-scale tools or
sophisticated dismantling techniques, making it non-economical compared to other industries.

1.3 Perspective barrier

Perspective barriers refer to the different perceptions from customers and original equipment manufacturers
(OEMs) regarding reusing useful materials, or using remanufactured materials. Their perceptions are detriment to
the success of RL. To be fair, the origin of this perception is related to the stringent safety requirements of vehicles.
Customers may feel insecure driving a vehicle that consists of reused or recycled materials, even though the quality
and the performance of the vehicle meet the required standards. Therefore, how to market such vehicles is a big
challenge to top management and marketing people.
In spite of the above, people are now more concerned about environmental issues due to increasing awareness of
environmental impacts and the legal requirements of disposing of vehicles. However, many companies consider that
cost is the top priority over the needs for RL (Chan et al. 2010). To overcome this situation, this study aims to
investigate the major drivers for RL, and to provide insights on how RL can be done efficiently in the automobile
industry. This involves a comprehensive analysis on the feasibility of reusing parts and components of returned
vehicles. The rest of this paper is organised as follows: a literature review on the basis of reverse logistics is presented
in Section 2. A view of implementation of RL on automobile industry is given is Section 3. This section also
summarises the motivation of RL and the procedures for examining returned vehicles. After that, Section 4 presents
a framework on the feasibility of vehicle pats and components for RL, and Section 5 summarises the
implementation issues of the framework, followed by a discussion on managerial implications of this study. Finally,
Section 6 is the conclusion.

2. Background of RL
RL can be defined as ‘The process of planning, implementing, and controlling the efficient, cost effective flow of raw
materials, in-process inventory, finished goods and related information from the point of consumption to the point
of origin for the purpose of recapturing value or disposal’ (Rogers and Tibben-Lembke 1999). From a narrower
view, RL refers to the movement of products or services from their final destination aiming at recapturing value
from them. Products may not necessarily be returned to the point of origin. From a broader view, RL extends to the
handling of returned products due to, for example, production defectives (production related), product recalls,
commercial returns, wrong deliveries (distribution related), etc. Fleischmann et al. (2001) further extended the
definition of RL, which is not limited only to the movement of materials from the point of consumption toward the
point of origin. In a general sense, RL can also be defined as the reverse activities of product flow.
RL has become a popular research topic since the 1990s. The importance of RL has been illustrated by many
research efforts (e.g. Pokharel and Mutha 2008). Regardless of the type of product or the nature of the industry, the
reverse activity of product flow along supply chains has been becoming a necessary business process. More and
more companies have recognised the need of managing the logistics for products return well since the reverse
logistics cost (which normally contributes from 4–9.49% of the total logistics cost) would reduced the profit and
hence application of product recovery could generate extra value (Daugherty et al. 2001). Recently, researchers also
1320 F.T.S. Chan et al.

linked RL to environmental and sustainability issues. The associated benefits, like environmental protection and
materials sustainability, have extended the RL with green supply chain management (Bowen et al. 2001).
Regardless of the reasons for RL, companies may recover some value from the returned products if the RL
activities are carried out properly. Thierry et al. (1995) pointed out that there are mainly five product recovery
options, which are repair, refurbishing, remanufacturing, cannibalisation and recycling. Products are returned for
repair mainly due to failure of quality conformity. On the other hand, refurbishing refers to refining, renovating or
cleaning the returned or collected products or parts. Remanufacturing means making use of the returned, and in
most cases disassembled, products or parts to re-produce new products. It may also involve the refurbishment of
parts or products before they can be remanufactured. This is sometimes related to cannibalisation, which refers to
the process of removing part of the products and using them in another one. If the remaining disassembled parts are
not feasible for the above options, they would be shredded or crushed for recycling, or as scrap. Recycling denotes
the process of using abandoned materials so as to produce new materials.
There are various reasons or divers for engaging RL. It is obvious that RL cannot be avoided since products at
the end of a supply chain always have a chance to flow backward due to products recalls, warranties, etc. Ranade
(1999) suggested that economic, marketing and legislative motives are the common drivers for RL. Ravi et al. (2005)
stated that economic, corporate citizenship, legislation and environmental and green issues are the main reasons for
RL. De Brito and Dekker (2004) pointed out that economics (direct and indirect), legislation and extended
responsibility are the causes for engaging RL. Table 1 summarises and explains some general reasons behind RL as
discussed above.
In forward logistics, raw materials are transported to manufacturers for producing products, which are then
transferred for distribution. On the other hand, RL consists of a series of activities such as disassembly of products,

Table 1. Key drivers for reverse logistics.

Reasons Details

1 Unavoidable There are several reasons for unavoidable returns of products. For example, products suffered from
returns production defects, which then resulted in product recall. One of the largest events in recent years
is the recall of notebook batteries (Kierkegaard 2007). After being sold, products failed to meet
the quality conformities, consequently warranties applied. Customers would bring their products
back to repair centre where RL started.
2 Environmental People are now much more focused on the green and environmental issues. Fleischmann et al. (2001)
and green mentioned that people are amendable to green branding and the setup of new markets for
concerns returned goods. The concept of environmental and green issues is related to waste disposal
handling. It is suggested that used products may not necessarily be disposed of in landfills, but
reused or recycled. Thus, less waste will be generated and useful materials will be thoughtfully
used as a means to protecting the environment. This is the concept of ‘cradle to cradle’ (Kumar
and Putnam 2008).
3 Enforced Legislation can also encourage the implementation of RL (Chan 2007). Today, many countries have
legislation enforced legislation for recovering end-of-life products. Manufacturers must pay for the waste
handling costs, and collect and reuse the unused products if possible. Recycling and reusing useful
materials from end-of-life products can reduce the size and volume of waste generated.
4 Economics Successful control of RL can facilitate supply chain members, and can improve both environmental
and economic efficiency, making the progress more efficient and cost effective. Companies can
gain extra opportunities to earn a profit or to cover the cost of handling wastes by repairing,
reusing refurbishing, remanufacturing or recycling useful and valuable products or materials. For
example, ReCellular can take the economic advantage by collecting and refurbishing cell phones
(Guide et al. 2003). In Europe and the US, as high as 70% of returned cell phones could be reused
economically (Franke et al. 2006).
5 Corporate Companies can pay more effort to RL in order to commit to Corporate Social Responsibility which
citizenship is expected by customers. Companies can also consider RL as a means to maintain their brand
reputations, to market their products as well as to gain competitive advantages (Marien 1998). It
is important for the leading companies to develop environmentally sustainable business because
environmentally unfriendly products would be harmful to companies’ reputations and then could
cause a substantial loss.
 International Journal of Production Research 1321

Customers

Scraping parts
Repair or
Collection Refurbishing
Manufactures centre
Centre

Secondary
market

Primary
market

Figure 1. Reverse Logistics network with consideration of market (adapted from Srivastava and Srivastava 2006).

inspection, recycling, repair, refurbishing, remanufacturing or final disposal during various stages in the supply
chain. Figure 1 shows a basic reverse logistics flow, which is adapted from Srivastava and Srivastava (2006). From
Figure 1, the RL flow starts from the customer side. A product can be returned to the supply chain if it needs repair
or reaches its end of life. In this case, the returned product may be transferred to a repair centre or even to
a manufacturing plant through a collection centre. The product will then be inspected and tested. After that, the
products are disassembled and useful materials or parts are passed back to the supply chain according to their
quality conditions. However, products may not necessarily be flowed back to the original (primary) market as
shown in Figure 1. In reality, the products or parts can be sold to the secondary market, if they are not with the
compliance of the original manufacturer, for example. If the product or disassembled parts have no value, they will
then be disposed of.

3. The automobile industry

3.1 Characteristics of the automobile industry
The automobile industry is one of the largest industries in the world. The total number of commercial vehicles that
were produced in 2007 was over 73.15 million and about 71.9 million new automobiles were sold in 2007.1
Therefore, RL in the automobile industry involves a huge amount of resources and value in real terms. For example,
steel from returned vehicles can been recycled which could then flow backwards along a supply chain as raw
material (not only to the automobile industry) (Bellmann and Khare 2000). However, RL has become more
important not only because of economic factors, but owing to increasing awareness of environmental impacts of
vehicle disposal and enforced legislation.
A general and basic logistics flow of automobiles was depicted in Figure 2(a). Auto part suppliers supply parts
and automobile components to original equipment manufacturers (OEMs). After manufacturing, the final products,
motor vehicles, would be passed on to authorised national or global dealers, from where consumers can buy a
vehicle. The reverse logistics started from consumers due to various reasons as discussed above. Consumers would
bring the vehicles back to vehicle dismantlers or recycling centres. Ideally, the dismantlers would sell the useful
components to the manufacturers, if they form a partnership with the manufacturers. However, parts and
components may not flow back to the manufactures directly from the dismantlers, but be sold to the secondary
markets. This situation is demonstrated in Figure 2(b).
In reality, the reverse logistics flow is much more complicated. Consumers may pass the used vehicle to
collectors, which could be or could not be authorised. After retrieving useful materials from the vehicles, collectors
would transport those parts and components to independent companies for recycling or refurbishing. The
interesting point is that the recycled materials or refurbished parts and components would either be sold to
consumers (as second-hand parts) or be flowed back to auto parts suppliers or OEMs. They may not be the one who
1322 F.T.S. Chan et al.
(a)

Auto Parts OEMs

Original Equipment Authorised
Suppliers Consumers
Manufacturers Dealers

Third Parties
(Collectors)

Forward Flow

Backward Flow

(b)

OEMs
Auto Parts Original Authorised Third
Suppliers Equipment Dealers Consumers Parties
Manufacturers (Collectors)

Independent
Retrievers Consumers

Auto Parts OEMs Authorised Third

Suppliers Original Dealers Consumers Parties
Equipment (Collectors)
Manufacturers

Forward Flow
Backward Flow

Figure 2. Supply chain of the automobile industry (a) Basic view, (b) Extended view.

manufactured the products. In other words, there is a need to adopt a systematic approach to retrieve value from the
returned vehicles.

3.2 Motivation for RL in the automobile industry

The reasons for engaging RL may vary from industry to industry. Apart from the general reasons for RL mentioned
in the preceding section, a more focused view of RL drivers for the automobile industry is suggested. They are
named as product recalls, laws of disposal and value of returned parts and components.

3.2.1 Product recall

Today, companies have spent lots of effort to improve and ensure the quality of product conformity (Kierkegaard
2007). Nevertheless, it is impossible to avoid defects. Another reason is product warranty. Automobile companies
usually provide warranty to new vehicles for three years. As a result, companies must prepare for vehicle returns and
provide repair services for customers in order to maintain a high customer service level.

3.2.2 Laws of disposal

Legislation is definitely the most effective driver for RL (Chan 2007). One form of legislation is the End of Life
Vehicles (ELV) Directive (ELV Directive 2000/53/EC, 2006/12/EC). The directive was enforced since the disposal
of vehicles could be significantly harmful to the environment. For example, one litre of waste oil from vehicles is
sufficient to contaminate one million litres of water and the oil poured onto the ground will affect soil fertility. Also,
tyres being disposed of in landfills will cause the long term settlement problem of land because the tyres’ volume is so
 International Journal of Production Research 1323

great that it increases and raises the surface of the landfill site. Thus, the need of the ELV Directive was driven. The
ultimate objective of the directive is waste prevention.
Besides, with the setting of directives from the European Union and the legislation of complying countries,
automobile manufacturers should be responsible for discarded vehicles and have to pay for the associated treatment
of disposed products and parts. Since they need to spend effort on the used vehicles, manufacturers may consider
reversing the useful backward to the supply chain to capture the products’ and parts value.

3.2.3 Value of returned parts and components

Many researchers advocate that returned vehicles have the value of recycling. Due to limited resources such as steel,
aluminium, copper, etc., recycling these materials would be beneficial. The automotive industry substantially drives
and relies on recycled steel (Kumar and Putnam 2008). This drives automobile companies to look into details about
recycling the useful materials from the returned vehicles. By retrieving products or parts such as batteries and
starters for subsequent refurbishing or remanufacturing for resale, automobile companies can reclaim value and
gain significant revenue (Daugherty et al. 2005). In order to capture the value of the returned products, automobile
manufacturers have been spending more efforts on RL and working with the dismantlers and other related parties.
Nevertheless, whether all parts and components are worth reversing is discussed latter. One of the critical
motivations for product manufacturing or furbishing is the possibility to resell the product (Schultmann et al. 2006).
Companies can have the choice to strengthen the RL for remanufacturing the products or refurbishing the products
through the establishment of a network of authorised recovery.

3.3 Procedures for examining returned vehicles

In this section, processes of disassembling returned vehicles and the conditions for examining them are investigated.
It provides a fundamental knowledge of how useful materials are extracted from an end of life vehicle. A general
framework is shown in Figure 3. When a vehicle is no longer needed, a consumer has two choices to dispose of it.
The consumer could bring it back to the dealers or bring it to a used vehicle dealer, a repair shop or directly to an
automobile salvage yard or dismantler for reuse. Those parties would first do testing and inspection on the returned
vehicle. If the vehicle is in good condition, the dealer may not necessarily send the vehicle to a dismantler. The dealer
could either resell the vehicle to the secondary market or refurbish the vehicle and collaborate with an automobile
manufacturer to have it exported.
If the returned vehicle does not carry a profitable resale value, it will then be transported to an automobile
salvage yard or an automobile dismantler for cannibalisation or recycling. The dismantlers would make a second
assessment on the component condition of the vehicle. For the parts and components that are still reusable without
any additional repairing or work required, they will be removed and sold. For parts and components that are in
fairly good condition and contain resale value, they will be removed for refurbishment or remanufacturing.
Refurbishment or remanufacturing can be done by the dismantlers or the automobile manufacturers. In the latter
case, the parts and components will be sent back to the manufacturing plants. After removing all the useful parts
and components, the remainder of the vehicle would be crushed or shredded by a shredding company. Finally, the
shredded metals would be recycled and the non-metal parts would eventually be disposed of in a landfill. Similar to
the argument mentioned previously, the returned materials or parts and components may not be flowed back to the
original parties.

4. Framework of RL on automotive parts and components

4.1 Form of reuse of parts and components
One of the aims of this paper is to construct a framework for the RL activities of vehicle parts and components. As
discussed in preceding sections, returned products would mainly be handled in one of three different ways. These are
direct reuse, product recovery and waste handling. Direct reuse means to reuse the returned products directly, such
as through resale. Regarding used products, product recovery, including report, reuse, refurbishing, remanufactur-
ing, cannibalisation and recycling, is the major route for retrieving value as stated in Section 2. Waste handling
means the options of incineration or landfill. As the focus of this paper is put on the vehicle parts and components,
1324 F.T.S. Chan et al.

Used
vehicle

Vehicle in good
Dealers condition Resell Or
used car shops use vehicle
repair shops abroad

Auto salvage yards

Or
Auto dismantlers

Assessment
of
Fairly working components
parts or Working parts or
components components

Refurbishing or Removed
Residue
remanufacturing and solding

Crushing or
Shredding

Figure 3. Framework of returned car examination.

direct reuse of products will not be considered in the framework. Recycling, refurbishing and remanufacturing are
the forms used in the classification of used parts and components. They are briefly discussed below.

4.1.1 Recycling
The purpose of recycling is to recover and reuse materials from returned products and parts or components.
Normally, the functions and the appearances of the products and parts or components are destroyed. Usually,
crushing and shredding are applied to the items. By recycling, the disposal cost can be reduced.

4.1.2 Refurbishing
Replacement of dated parts or components by ones with a higher level of technology is regarded as refurbishing.
The purpose of refurbishing is to increase the quality of the returned products and parts or components by repairing
or replacing part of them. Nevertheless, they may not be as good as new parts and components.

4.1.3 Remanufacturing
Similar to refurbishing, the purpose of remanufacturing is to increase the quality of the returned products and parts
or components. The major difference is the degree of improvement. Remanufacturing aims to recover the quality
and technology of parts and components so that they are as good as that of new parts and components. This
requires extensive testing and repairing.
 International Journal of Production Research 1325
Table 2. Framework of form of reuse of parts and components.

Form of
Reuse
Remanufacture by Refurbish by
Part or manufacturers recover Recycle
component (Group 1) (Group 2) (Group 3)

1 Hood 7
2 Engine 7 7
3 Wire harness 7
4 Engine oil 7
5 Gear oil 7
6 Coolant 7
7 Radiator 7 7
8 Bumper 7 7
9 Battery 7 7
10 Transmission 7 7
11 Suspension 7 7
12 Wheel 7 7
13 Catalytic converter 7 7
14 Door 7
15 Tyre 7 7
16 Trunk 7
17 Vehicle body 7
18 Seat 7
19 Window 7

4.2 Results
In this section, a more comprehensive analysis on the form of reuse of parts and components is provided and a
framework is proposed to illustrate the analysis. A vehicle can be mainly divided into four sections. These are
engine, vehicle frame (main structure of a vehicle), covering body (in which interiors like steering are included) and a
section of suspension, brakes and wheels. For disassembling and recapturing the value of used vehicle parts and
components, it is torturous to specify thousands of items for RL and in fact it is unnecessary to dismantle the vehicle
in such detail. In fact, those tiny components could be classified into different groups for recycling, reuse or
remanufacturing. The method of categorising components is based on the current practice of end-of-life vehicle
disposal. The components are listed in Table 2 and are further discussed below.

4.2.1 Hoods
Vehicle hoods usually are made up of steel, which can be recycled as vehicle parts or to general steel products. Steel
is one of the most popular recycled materials in the world as steel is an alloy of iron, which is a limited resource
(Spengler et al. 1998). Thus, recycling steel or reusing steel as vehicle parts could be economical as production cost
for purchasing steel would be lowered. More importantly, it is not practical to refurbish or remanufacture vehicle
hoods. Usually, vehicle hoods from returned vehicles have been scratched or damaged to a certain extent. In
addition, each vehicle has its own size and characteristics, which also makes reusing the steel difficult. In this
connection, vehicle hoods are regarded as best for recycling their metal.

4.2.2 Engines
A vehicle engine is a sophisticated component. It consists of different small parts and engine coolant. Engine parts
are usually made of lead as an alloy of aluminium. If the engine is not reusable, then it can be recycled for
aluminium. Recycling aluminium is an economical activity, especially for the beverage and construction industries
(Shinzato and Hypolito 2005). However, the handling of engines requires special procedures and techniques. This
should be done by auto recyclers, licensed recycling facilities or authorised treatment facilities.
1326 F.T.S. Chan et al.

In fact, an engine is a critical component of a vehicle. If it is still in fairly good condition, it contains a profitable
resale value. The refurbished vehicle engine will be transported back to the manufacturer for remanufacturing. The
remanufactured vehicle engine can be reused in manufacturing new cars or reconditioned for car engine
replacement. A study has found that remanufactured engines could be produced with 83% less energy and 26–90%
fewer raw materials than manufacturing a new engine (Smith and Keoleian 2004).

4.2.3 Wire harnesses

The materials for wire harnesses are mainly copper and PVC. Due to their low, if not no, resale value, it is suggested
that wire harnesses be recycled. Also, manufacturing new wire harnesses is more economical then collecting wire
harnesses, refurbishing or remanufacturing them. Thus, wire harnesses should be recycled. The copper generated
can be used for raw materials. Copper recycling is driven by the fluctuation of copper prices. As the demand of
copper is high while the supply of copper is not clear, recycling of copper from wire harnesses is more feasible then
the other forms of recovery.

4.2.4 Engine oil, gear oil and coolant

Engine oil, gear oil and coolant can be reused as alternative fuels for boilers and incinerators. The extraction and
handling of engine oil, gear oil and coolant requires special techniques, and specific storage methods are required for
such fluids due to safety reasons. For example, engine oil, gear oil and coolant require specialist drilling and suction
systems. This should be done by authorised auto recyclers or licensed recycling facilities. If manufacturers want to
reuse the fluids, they can purchase these from recyclers rather than recapturing these themselves. Since the cost for
collecting those fluids and transporting them to manufacturers is not economical and energy conservative, recycling
engine oil, gear oil and coolant is recommend.

4.2.5 Radiators
Almost all the radiator material for commercial vehicles has been changed from metallic material to resinoid
material and aluminium material for the tank and core respectively. Since vehicle radiators consist of aluminium
and copper, which it is suggested be recycled as mentioned before (please refer to Sections 4.2.2 and 4.2.3).
Nevertheless, if a radiator is refurbished or remanufactured, effort should be put on cleaning hazardous chemicals
from radiators as well as their storage, transportation, inspection, etc. Although radiators have a low resale value,
companies can still profit from selling radiators in secondary markets. There is not a great profit for
remanufacturing a radiator as the value captured is low. Therefore, companies are not recommended to
remanufacturing radiators by themselves.

4.2.6 Bumpers
Bumpers are made of Polypropylene (PP). Customers may need replacement of bumpers since bumpers can be easily
broken. If the condition of a bumper is not acceptable for reuse, the bumper will then be recycled and used as the
raw materials for car interior parts. Bumpers can be recycled, although recycling of such parts requires rather large
scale effort in dismantling and sorting. Thus, refurbishing and remanufacturing bumpers can be considered. If
companies want to remanufacture a bumper from a used or disassembled one, transportation will be a problem.
Bumpers are relatively large components. Transportation and handling bumpers is thus costly. As a result,
compared with remanufacturing, refurbishing seems more feasible due to lower transportation and handling costs.
If a bumper is, however, reusable, refurbishing and repainting would be done to produce reusable bumpers for new
vehicles or vehicle maintenance.

4.2.7 Batteries
From the ELV Directive (depollution and removal), recovery of batteries requires pre-treatment since batteries
contain hazardous materials which will pollute the environment and cause health and safety problems. Hazardous
materials like lead in lead acid batteries and cadmium in electrical vehicle batteries should require special handling
and extensive care. When a battery is considered for recycling as shredded materials, the removal of hazard
chemicals needs considerable effort. Consequently, companies can consider refurbishing or remanufacturing car
 International Journal of Production Research 1327

batteries. Since batteries will not be obsolesced so fast and every vehicle should have a battery, the demand of
batteries is rather clear. With acceptable transportation and handling investment, refurbishment and
remanufacturing of car batteries are suggested.

4.2.8 Transmissions
Although transmissions are made of steel and aluminium, it is recommended not to recycling them as raw materials
because of their resale value. The resale value outweighs the recycling benefit. Transmissions can be refurbished and
reconditioned by auto recyclers in order to supply ‘used transmission’. Manufacturers can also remanufacture
transmissions for new cars.

4.2.9 Suspension parts

Suspension parts are a system of springs, shock absorbers and linkages connecting a vehicle to its wheels.
Suspension parts are made of steel and aluminium. The suspension is an important component of vehicles since it
ensures the car’s handling and braking for good safety and driving pleasure, and keeps passengers comfortable and
reasonably well isolated from bumps, vibrations and noise. For poor quality suspension parts, it is suggested that
the suspension should be recycled since the testing effort for remanufactured suspension parts is considerable. For
fairly good quality suspension parts, they can be refurbished and reconditioned by auto recyclers. For economical
reason, suspension parts should not flow back to manufacturing plants for remanufacturing since the cost of
collecting and transportation would be a disadvantage.

4.2.10 Wheels
The materials for wheels are steel and aluminium. It is suggested wheels be recycled as recycling steel and
aluminium, which is more economical than bringing it back to the manufacturer’s side for remanufacturing.
Remanufacturing of wheels is possible. However, it incurs a high transportation cost since wheels are rather heavy
and large in volume. Besides, the refurbishing cost of wheels is acceptable because of their high resale value. It is
recommended that if the condition of a wheel is good, auto recyclers refurbish it for selling or replacement of wheels.

4.2.11 Catalytic converters

Schultmann et al. (2006) has mentioned that it is feasible to extract platinum form catalytic converters. The steel
from the exhaust and the precious metals from the catalytic converters can be recovered. Platinum, rhodium and
palladium can be recovered for reuse, either in new vehicle catalytic converters or for some other purpose. However,
refurbishment of catalytic converters is not suggested since there is a strict regulation on the toxicity of emissions
from cars. If one wants to reuse catalytic converters, the converters should pass several quality tests in order to
provide de-toxicity function.

4.2.12 Doors
It is obvious that doors should not be refurbished or remanufactured after disassembly from an unused vehicle as
doors are highly customised parts. The size and style of doors varies from car to car. Also, the transportation cost
for a door is large since the volume of doors is large. The cost for remanufacturing is high and not economical.
Remanufactured or refurbished doors have nearly no resale value from the disassembled door, so
remanufacturing doors is not suggested. Doors are, however, made up of steel, which can be recycled economically
(mentioned in Section 4.2.1).

4.2.13 Tyres
In the past, used tyres were usually disposed of in landfills out of convenience. With increasing environmental
awareness and the shortage of landfill sites, disposal of tyres was prohibited from July 2003 (Corti and Lombardi
2004). Thus, tyres should be recycled or recovered. If the tyres are in good condition, they can then be sold or
exported. Unfortunately, car tyres are usually worn out, which lowers their resale value. Thus, it is not
recommended for manufacturers to collect the tyres and do the remanufacturing jobs since this will require lots of
1328 F.T.S. Chan et al.

effort to transport such a low value item. On the other hand, manufacturers can choose to refurbish the tyres by
recovering and buying them back so as to lower the RL cost incurred.

4.2.14 Trunks and vehicle bodies

The trunk and vehicle body are made of steel which have great recycling value. Obviously, the reuse of disassembled
trunks and vehicle bodies is not feasible. The style and design of a trunk and vehicle body are different from car to
car as is the case for doors (Section 4.2.12). Refurbishing and remanufacturing a new trunk or vehicle body from a
returned one is not recommended. The most feasible case is that trunks and vehicle bodies be crushed and scrapped
for steel recycling.

4.2.15 Seats
Seats are made of different types of polymers such as polyurethane foam (PUR) and fibre. It is difficult to recycle
these types of materials because the decomposition requires complicated techniques. The cost would be rather high.
Thus, seats are usually crushed and shredded and sent to landfills. Normally, refurbishing and remanufacturing
seats from unused ones is not economical as the seat does not have a profitable market value. Therefore, it is
suggested to recycle the seats or send them to landfills. However, companies can consider recycling the plastics from
seats. Nowadays, most materials from a vehicle are recycled or recovered except plastics and glass. Thus, the ELV
Directive has helped to improve the problem by ensuring that reuse and recovery are increased to a minimum of
95% by weight per vehicle while the reuse and recycling shall be increased to a minimum of 85% per vehicle by 2015
(Coates and Rahimifard 2007). As a result, recycling seats is encouraged since companies need to fulfill the
requirement within a few years.

4.2.16 Windows
Similar to seats, windows are not worth refurbishing or remanufacturing. Windows in returned vehicles are usually
scratched or broken. It is not economical to reuse them. Thus, recycling glass is recommended. However,
recycling glass is still not very popular as the cost and time required for recycling glass is considerable. Tempered
and laminated glass is the type of glass usually used in vehicles. Tempered glass is easy to be removed from vehicles
after shattering. On the contrary, laminated glass does not shatter and will need to be removed manually, which is
costly and time consuming. Besides, glass has a relatively low market value, so the recycling of glass may not be as
attractive as disposal in a landfill from manufactures’ point of view. Nevertheless, the need for recycling glass in
the future cannot be underestimated as glass contributes about 2.9% of the weight of vehicles (Gerrard and
Kandlikar 2007).

5. Discussions
5.1 Implementation: process considerations and activities of returned vehicles
In order to capture the value of a returned vehicle, an assessment of the quality of the vehicle should be carried out.
The quality of those disassembled parts and components should be examined in order to find the best form of
treatment of the corresponding items. The quality may depend on the depreciation rate, physical appearance as well
as the life time of the vehicle. A framework is proposed to facilitate the processes in order to apply the framework
discussed in Section 4. Procedures of removing parts and components from a used vehicle are suggested in order to
demonstrate the work flow of dismantlement of an end-of-life vehicle corresponding to the suggested form of reuse.
This is illustrated in Figure 4.
After the end-of-life vehicle has been brought to the dismantlers, they will assess the potential value of the
returned vehicle by examining its conditions and quality level. The dismantling process starts from depollution of
the collected vehicle. This should be put as the top priority owing to the legislation of the treatment of the ELV
Directive. During the depollution phase, hazardous materials and fluids are removed, including engine oil, fuel, gear
oil and coolants. Toxic chemicals and substances like cadmium, lead, hexavalent chromium and mercury are taken
away. Those useful materials or substances are then recycled or disposed (after treatment) by authorised chemical
recyclers.
 International Journal of Production Research 1329

Unused
Vehicle

Removal
of fluids Recycle // Disposal
Depollution
after treatment

Dismantling

Shredded
fluff
Dismantling Group 3 Landfill

Group 1 Group 2

Remanufacturing Refurbishing Recycling

Refurbishing Recycling
Parts Materials
Remanufacturing
Parts
New vehicle

Figure 4. Framework of dismantlement of unused parts and components.

Following depollution is the dismantling of parts and components. Integrating sorting and storing processes
with dismantlement, disassembled items can be categorised into three different groups, i.e. Group 1, Group 2 and
Group 3. They are discussed below and are referenced in Table 2:
. Group 1 refers to the parts and components needed to be remanufactured. Items like catalytic converters,
transmissions and engines are extracted and stored for remanufacturing processes. The remanufactured
items are rigorously tested to ensure that they can operate as well as new items.
. Group 2 refers to the parts and components needing to be refurbished. Items like tyres, wheels, bumpers
and batteries are disassembled and stored for cleaning and reconditioning. The refurbished items are then
put up for resale or are bought from other automakers.
. Group 3 refers to the remaining items after disassembling the items for remanufacturing and refurbishing.
These items include materials for recycling and waste for disposal. Materials like steel, aluminium, iron
crust and plastics from vehicle bodies, trunks, doors, tyres, etc., are then recycled. The recycled materials
can be used as raw materials for the automobile industry or other industries. Those that cannot be recycled
are then shredded and crushed. Finally, they are disposed of in landfills.
1330 F.T.S. Chan et al.

5.2 Managerial implications

By utilising the framework proposed in this study, the barriers of implementing RL for the automobile industry
outlined in the beginning of this paper can be improved. First and foremost, the main reason for the management
barrier is a lack of supply chain coordination and integration due to its complexity. The framework clearly identifies
the role of different components of a vehicle. Therefore, the automobile supply chains will become more visible.
In addition to that, automobile companies can build a stronger partnership among the supply chain members
pinpointing to the nature of different parts from RL point of view. An option is the involvement of third party
logistics companies for different groups of components or parts.
Also because of the clarity of the role of different components, automobile companies may find it easier to
control the reverse flow of products by developing an information system dedicated to keeping track of the useful
components. The system may provide information about the coding of individual parts that are feasible to be
returned, the number of products to be returned, the states of recovered parts or materials and so on. In addition,
the system could enhance the communications between the parties involved in the reverse flow. As a result,
coordination and integration can be further improved. This also helps the design process for disassembly so that
important components can be retrieved from the end of life products more easily.
Finally, specific training pinpoint to the framework can be designed for staff so that the benefits of the RL
activities can be visualised. The same message can also be conveyed to customers so that which parts of a car are
made from recycled or remanufacturing components is known to them. Obviously this information is accompanied
by a guarantee of the reused items. This can certainly help the customers to understand more about the impact of the
RL initiative and would not restrain them from using returned materials.

6. Conclusion
The automobile industry is transforming towards green manufacturing and green supply chain. The importance of
handling disposed waste and reusing end-of-life vehicles has been increasing these years. To revise and provide a
more precious view on the feasibility of reusing vehicle materials, parts and components, a framework consisting of
the suggested form of reuse of vehicle parts and components was constructed. The results show that most of the
parts and components are feasible for reversing back into the supply chain.
The limitation of the proposed framework is that it only provides a comparison of feasibility among different
forms of reuse of different parts, rather than a comparison of feasibility of retrieving certain parts and components.
Since the quality of collected items varies from item to item, it is difficult to assess which ones are more feasible for
reuse. Future effort can be put into investigating the feasibility of recovery among vehicle parts and components.
Another extension of the framework can be focused on the cost incurred during RL activities. Since investment and
cost issues are of top priority from a company’s point of view, such an analysis could help companies to obtain a
clearer picture on the advantages of RL.

Note
1. Figures from the International Organization of Motor Vehicle Manufacturers (http://www.oica.net/).

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