Towards a Circular Use Phase. The Circular Economy Applied to Automotive Market Offerings

Abstract

The automotive industry faces challenges transitioning from a linear economy, based on the concept of take-make-waste, to a circular economy. This thesis examines how automotive market offerings can be designed to enable a circular use phase. It has been accomplished by first identifying the building blocks of circular use and which key characteristics within a market offering could help reach these building blocks.Second, some market offerings that would incorporate the key characteristics of a circular market offering have been suggested. Finally, the building blocks of circular use have been employed to evaluate existing market offerings and recommend areas that could be altered to reach higher levels of circular use. This work has been based on qualitative data collected through interviews with employees from the car manufacturer Volvo Car Group and circular economy experts. Secondary data from previous research then complemented the interviews. The first major finding was the identification of the three building blocks of circular use. These building blocks are 1) extend product lifespan, 2) increase the efficiency of use, and 3) close the loop. The building blocks then helped identify the key characteristics of a circular market offering. The key characteristics were identified as i) incentivize manufacturers to design for longevity, ii) incentivize careful use, iii) incentivize more extended use of the cars, iv) reduce unnecessary use v) minimize the inactivity of the cars, vi) maximize the filling rate of the cars during use, vii) incentivize manufacturers to design for closed loops, and viii) incentivize customers to return the cars after use. Then, four market offerings that would more or less incorporate these key characteristics were defined as; 1) car sharing, 2) car subscription, 3) car leasing, and 4) private ownership combined with a return system. These findings add to the existing research by bringing clarity to the definition of circular use and how it can be reached. It concludes that the transition to a more circular use phase in the automotive industry is achievable. However, more research must be conducted to evaluate the profitability of the circular market offerings.