Dismantlers’ dilemma in end-of-life vehicle recycling markets: a system dynamics model

Abstract

Stringent environmental regulations, improving technology, and growing incomes have shortened vehicle life-cycles that leads to increasing number of end-of life vehicles (ELVs). ELVs form a valuable source of materials when they are recycled in an efficient manner. Regulated ELV recycling markets for ELV recycling ensure an efficient material recovery, unlike unregulated markets which are present predominantly in emerging economies. We analyze ELV recycling in an unregulated market through a system dynamics model. These markets are close to perfectly competitive markets with low enter and exit barriers for dismantlers, and the scrap from dismantled vehicles is traded as a commodity. Dismantlers entry and exit decisions—dismantlers’ dilemma—are based on profitability. We conjecture that the dismantlers’ dilemma constrains the dismantling capacity and fluctuates the scrap supply in unregulated recycling markets. Using the Indian data, the simulation results show that the unregulated market will lead to lower dismantling capacity, which may further worsen by increase in dismantling costs. From our analysis, we suggest that lowering dismantling costs through coordination among the dismantlers and providing support for scrap prices through regulation can improve the dismantling situation in these markets.

This is a preview of subscription content, log in to check access.

Fig. 1
Fig. 2
Fig. 3
Fig. 4
Fig. 5
Fig. 6
Fig. 7
Fig. 8
Fig. 9
Fig. 10
Fig. 11
Fig. 12
Fig. 13
Fig. 14
Fig. 15
Fig. 16
Fig. 17
Fig. 18

References

  1. Akolkar, A. B., Sharma, M., Puri, M., Chaturvedi, B., Mehra, G., Bharadwaj, S., Mutz, G., Arora, R., & Saluja, M. S. (2015). Analysis of end of life vehicles (ELVs) sector in India. Tech. rep., Central Pollution Control Board and Chintan Environmental Research and Action Group and Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH, New Delhi

  2. Albertson, K., & Aylen, J. (1996). Modelling the great lakes freeze: Forecasting and seasonality in the market for ferrous scrap. International Journal of Forecasting, 12(3), 345–359.

    Article  Google Scholar 

  3. Amaral, J., Ferrão, P., & Rosas, C. (2006). Is recycling technology innovation a major driver for technology shift in the automobile industry under an EU context? International Journal of Technology, Policy and Management, 6(4), 385–398.

    Article  Google Scholar 

  4. Ashby, M. F. (2012). Materials and the environment: Eco-informed material choice. Amsterdam: Elsevier.

    Google Scholar 

  5. Azmi, M., & Tokai, A. (2017). Electric vehicle and end-of-life vehicle estimation in Malaysia 2040. Environment Systems and Decisions, 37(4), 451–464. https://doi.org/10.1007/s10669-017-9647-4.

    Article  Google Scholar 

  6. Bandivadekar, A. P., Kumar, V., Gunter, K. L., & Sutherland, J. W. (2004). A model for material flows and economic exchanges within the US automotive life cycle chain. Journal of Manufacturing Systems, 23(1), 22–29.

    Article  Google Scholar 

  7. Bellmann, K., & Khare, A. (2000). Economic issues in recycling end-of-life vehicles. Technovation, 20(12), 677–690. https://doi.org/10.1016/S0166-4972(99)00081-4.

    Article  Google Scholar 

  8. Brandenburg, M., & Rebs, T. (2015). Sustainable supply chain management: A modeling perspective. Annals of Operations Research, 229(1), 213–252. https://doi.org/10.1007/s10479-015-1853-1.

    Article  Google Scholar 

  9. Bureau of International Recycling. (2017). New metals made using recycled material. www.bir.org. Accessed November 10, 2017.

  10. Central Pollution Control Board, India. (2016). Guidelines for environmentally sound management of end-of-life vehicles (ELVs). Tech. rep., Central Pollution Control Board, India.

  11. Chen, Z., Chen, D., Wang, T., & Hu, S. (2015). Policies on end-of-life passenger cars in China: Dynamic modeling and cost-benefit analysis. Journal of Cleaner Production, 108, 1140–1148. https://doi.org/10.1016/j.jclepro.2015.07.093.

    Article  Google Scholar 

  12. Cossu, R., Fiore, S., Lai, T., Luciano, A., Mancini, G., Ruffino, B., et al. (2014). Review of Italian experience on automotive shredder residue characterization and management. Waste Management, 34(10), 1752–1762. https://doi.org/10.1016/j.wasman.2013.11.014. (industrial Waste).

    Article  Google Scholar 

  13. crisilresearchcom. (2017). Data and statistics: Prices-scrap. www.crisilresearch.com. Downloaded November 2017.

  14. Cruz-Rivera, R., & Ertel, J. (2009). Reverse logistics network design for the collection of end-of-life vehicles in Mexico. European Journal of Operational Research, 196(3), 930–939. https://doi.org/10.1155/2010/649028.

    Article  Google Scholar 

  15. datagovin. (2017). Total number of registered motor vehicles in India from 1951 to 2015.

  16. Economic Times Auto. (2016). Mahindra Intertrade partners MSTC to set up India’s first auto shredding facility. http://auto.economictimes.indiatimes.com/news/industry/mahindra-intertrade- partners-mstc-to-set-up-indias-first-auto-shredding-facility/52025721. Accessed May 01, 2016.

  17. Farel, R., Yannou, B., Ghaffari, A., & Leroy, Y. (2013). A cost and benefit analysis of future end-of-life vehicle glazing recycling in France: A systematic approach. Resources, Conservation and Recycling, 74, 54–65. https://doi.org/10.1016/j.resconrec.2013.02.013.

    Article  Google Scholar 

  18. Ferrão, P., & Amaral, J. (2006a). Assessing the economics of auto recycling activities in relation to European Union Directive on end of life vehicles. Technological Forecasting and Social Change, 73(3), 277–289.

    Article  Google Scholar 

  19. Ferrão, P., & Amaral, J. (2006b). Design for recycling in the automobile industry: New approaches and new tools. Journal of Engineering Design, 17(5), 447–462. https://doi.org/10.1080/09544820600648039.

    Article  Google Scholar 

  20. Ferrão, P., Nazareth, P., & Amaral, J. (2006). Strategies for meeting EU End of Life Vehicle reuse/recovery targets. Journal of Industrial Ecology, 10(4), 77–93. https://doi.org/10.1162/jiec.2006.10.4.77.

    Article  Google Scholar 

  21. Field, F., Ehrenfeld, J., Roos, D., & Clark, J. (1994). Automobile recycling policy: Findings and recommendations. Tech. rep., Prepared for the Automotive Industry Board of Governers, World Economic Forum by International Motor Vehicle Program, Center for Technology, Policy and Industrial Development Massachussets Institute of Technology USA.

  22. Fiore, S., Ruffino, B., & Zanetti, M. (2012). Automobile shredder residues in Italy: Characterization and valorization opportunities. Waste Management, 32(8), 1548–1559. https://doi.org/10.1016/j.wasman.2012.03.026.

    Article  Google Scholar 

  23. Gui, L., Atasu, A., Ergun, Ö., & Beril Toktay, L. (2016). Efficient implementation of collective extended producer responsibility legislation. Management Science, 62(4), 1098–1123. https://doi.org/10.1287/mnsc.2015.2163.

    Article  Google Scholar 

  24. Hedayati, M. (2016). System model for sustainable end-of-life vehicle treatment in the Australian context. Ph.D. thesis, RMIT University.

  25. Hu, S., & Wen, Z. (2015). Why does the informal sector of end-of-life vehicle treatment thrive? A case study of China and lessons for developing countries in motorization process. Resources, Conservation and Recycling, 95, 91–99. https://doi.org/10.1016/j.resconrec.2014.12.003.

    Article  Google Scholar 

  26. Inghels, D., Dullaert, W., Raa, B., & Walther, G. (2016). Influence of composition, amount and life span of passenger cars on end-of-life vehicles waste in Belgium: A system dynamics approach. Transportation Research Part A: Policy and Practice, 91, 80–104.

    Google Scholar 

  27. Japan Automobile Recycling Promotion Center. (2015). http://www.jarc.or.jp/en/recycling/. Accessed February 15, 2015.

  28. Kirkwood, C. W. (1998). System dynamics methods. Arizona: College of Business Arizona State University USA.

    Google Scholar 

  29. Kumar, S., & Yamaoka, T. (2007). System dynamics study of the Japanese automotive industry closed loop supply chain. Journal of Manufacturing Technology Management, 18(2), 115–138.

    Article  Google Scholar 

  30. Metal Recycling Association of India. (2017). Ferrous metals. http://www.mrai.org.in/the-industry/ferrous-metals/. Accessed December 10, 2017.

  31. Ministry of Road Transport and Highways, Government of India. (2016). Concept note: Voluntary vehicle fleet modernization programme.

  32. Ministry of Steel, Government of India. (2017). Annual reports (from 2003-04 to 2016-17). http://steel.gov.in/annual-reports. Accessed June 15, 2017.

  33. Mohan Ram, N. S., Adhikari, B., & Sugmar, S. (2015). Development of scientific recycling of end of life automobiles in India and the role of research and development. Tech. rep., Indian National Academy of Engineering.

  34. Organisation Internationale des Constructeurs dAutomobiles (OICA). (2017). Sales of new vehicles 2005–2016 (all vehicles). http://www.oica.net/category/sales-statistics/. Accessed December 12, 2017.

  35. Prithiani, R. (2017). Evolving role of scrap in India. https://www.mrai.org.in/site/assets/files/9066/mr_rahul_prithiani-_crisil.pdf. Accessed December 11, 2017.

  36. Qu, X., & Williams, J. A. S. (2008). An analytical model for reverse automotive production planning and pricing. European Journal of Operational Research, 190(3), 756–767. https://doi.org/10.1016/j.ejor.2007.06.041.

    Article  Google Scholar 

  37. Reck, B. K., & Graedel, T. E. (2012). Challenges in metal recycling. Science, 337(6095), 690–695. https://doi.org/10.1126/science.1217501.

    Article  Google Scholar 

  38. Reuter, M., van Schaik, A., Ignatenko, O., & de Haan, G. (2006). Fundamental limits for the recycling of end-of-life vehicles. Minerals Engineering, 19(5), 433–449. https://doi.org/10.1016/j.mineng.2005.08.014. (selected papers from Processing and Disposal of Minerals Industry Wastes 05).

    Article  Google Scholar 

  39. Rosa, P., & Terzi, S. (2018). Improving end of life vehicles management practices: An economic assessment through system dynamics. Journal of Cleaner Production, 184, 520–536. https://doi.org/10.1016/j.jclepro.2018.02.264.

    Article  Google Scholar 

  40. Ruffino, B., Fiore, S., & Zanetti, M. C. (2014). Strategies for the enhancement of automobile shredder residues (ASRs) recycling: Results and cost assessment. Waste Management, 34(1), 148–155. https://doi.org/10.1016/j.wasman.2013.09.025.

    Article  Google Scholar 

  41. Sakai, S., Yoshida, H., Hiratsuka, J., Vandecasteele, C., Kohlmeyer, R., Rotter, V. S., et al. (2014). An international comparative study of end-of-life vehicle (ELV) recycling systems. Journal of Material Cycles and Waste Management, 16(1), 1–20. https://doi.org/10.1007/s10163-013-0173-2.

    Article  Google Scholar 

  42. Simic, V. (2013). End-of-life vehicle recycling—A review of the state-of-the-art [recikliranje vozila na kraju ivotnog ciklusa—Pregled najsuvremnijih znanstvenih radova]. Tehnicki Vjesnik, 20(2), 371–380.

    Google Scholar 

  43. Simic, V. (2015). Fuzzy risk explicit interval linear programming model for end-of-life vehicle recycling planning in the EU. Waste Management, 35, 265–282. https://doi.org/10.1016/j.wasman.2014.09.013.

    Article  Google Scholar 

  44. Simic, V. (2016a). End-of-life vehicles allocation management under multiple uncertainties: An interval-parameter two-stage stochastic full-infinite programming approach. Resources, Conservation and Recycling, 114, 1–17. https://doi.org/10.1016/j.resconrec.2016.06.019.

    Article  Google Scholar 

  45. Simic, V. (2016b). A multi-stage interval-stochastic programming model for planning end-of-life vehicles allocation. Journal of Cleaner Production, 115, 366–381. https://doi.org/10.1016/j.jclepro.2015.11.102.

    Article  Google Scholar 

  46. Simic, V., & Dimitrijevic, B. (2012). Production planning for vehicle recycling factories in the EU legislative and global business environments. Resources, Conservation and Recycling, 60, 78–88. https://doi.org/10.1016/j.resconrec.2011.11.012.

    Article  Google Scholar 

  47. Simic, V., & Dimitrijevic, B. (2013). Risk explicit interval linear programming model for long-term planning of vehicle recycling in the EU legislative context under uncertainty. Resources, Conservation and Recycling, 73, 197–210. https://doi.org/10.1016/j.resconrec.2013.02.012.

    Article  Google Scholar 

  48. Smink, C. K. (2007). Vehicle recycling regulations: Lessons from Denmark. Journal of Cleaner Production, 15(11–12), 1135–1146. https://doi.org/10.1016/j.jclepro.2006.05.028.

    Article  Google Scholar 

  49. Society of Indian Automobile Manufacturers. (2017). Automobile domestic sales trends. http://www.siamindia.com/statistics.aspx?mpgid=8&pgidtrail=14. Accessed November 29, 2017.

  50. Sterman, J. D. (2010). Business dynamics: Systems thinking and modeling for a complex world. Bengaluru: McGraw Hill Education (India) Private Limited.

    Google Scholar 

  51. Thierry, M., Salomon, M., Van Nunen, J., & Van Wassenhove, L. N. (1995). Strategic issues in product recovery management. California Management Review, 37(2), 114–135. https://doi.org/10.2307/41165792.

    Article  Google Scholar 

  52. Tian, F., Soi, G., & Debo, L. (2013). Green recycling networks. Chicago Booth Working Paper (13–59). https://doi.org/10.2139/ssrn.

  53. Tian, F., Soi, G., & Debo, L. (2014). Manufacturers’ competition and cooperation in sustainability: Stable recycling alliances. Available at SSRN 2459656. https://doi.org/10.2139/ssrn.

  54. Tripathi, S. K. (2016). Automotive shredding in India—The plan and policies. Presented at the Scrap Recycling Conference: Emerging Markets, New Delhi, India.

  55. van Schaik, A., & Reuter, M. A. (2004). The optimization of end-of-life vehicle recycling in the European Union. JOM, 56(8), 39–43. https://doi.org/10.1007/s11837-004-0180-9.

    Article  Google Scholar 

  56. van Schaik, A., Reuter, M., Boin, U., & Dalmijn, W. (2002). Dynamic modelling and optimisation of the resource cycle of passenger vehicles. Minerals Engineering, 15(11, Supplement 1), 1001–1016. https://doi.org/10.1016/S0892-6875(02)00080-8.

    Article  Google Scholar 

  57. Vidovic, M., Dimitrijevic, B., Ratkovic, B., & Simic, V. (2011). A novel covering approach to positioning ELV collection points. Resources, Conservation and Recycling, 57, 1–9. https://doi.org/10.1016/j.resconrec.2011.09.013.

    Article  Google Scholar 

  58. Wang, G., & Gunasekaran, A. (2017). Modeling and analysis of sustainable supply chain dynamics. Annals of Operations Research, 250(2), 521–536. https://doi.org/10.1007/s10479-015-1860-2.

    Article  Google Scholar 

  59. Wang, Y., Chang, X., Chen, Z., Zhong, Y., & Fan, T. (2014). Impact of subsidy policies on recycling and remanufacturing using system dynamics methodology: A case of auto parts in China. Journal of Cleaner Production, 74, 161–171. https://doi.org/10.1016/j.jclepro.2014.03.023.

    Article  Google Scholar 

  60. Williams, J. A. S., Wongweragiat, S., Qu, X., McGlinch, J. B., Bonawi-tan, W., Choi, J. K., et al. (2006). An automotive bulk recycling planning model. European Journal of Operational Research, 177(2), 969–981. https://doi.org/10.1016/j.ejor.2006.01.031.

    Article  Google Scholar 

  61. Zamudio-Ramirez, P. (1996). Economics of automobile recycling. Master’s thesis, Massachusetts Institute of Technology.

Download references

Acknowledgements

We thank the participants of the Workshop on Status and Future of End-of-Life Vehicle (ELV) Recycling in India for their valuable comments. The workshop was jointly organized by Department of Management Studies, IIT Madras and Renault Nissan Technology and Business Centre India Private Limited (RNTBCI) on November 25, 2016 at IIT Madras, Chennai, India.

Author information

Affiliations

Authors

Corresponding author

Correspondence to R. K. Amit.

Rights and permissions

Reprints and Permissions

About this article

Verify currency and authenticity via CrossMark

Cite this article

Mohan, T.V.K., Amit, R.K. Dismantlers’ dilemma in end-of-life vehicle recycling markets: a system dynamics model. Ann Oper Res 290, 591–619 (2020). https://doi.org/10.1007/s10479-018-2930-z

Download citation

Keywords

  • End-of-life vehicle (ELV)
  • Recycling
  • System dynamics