May 10, 2021
What goes around should come around
We want to be a circular business by 2040. And from 2025, we're already aiming for our adoption of circular economy principles to lead to a 2.5 million tonnes reduction in our carbon emissions every year, as well as savings of SEK 1 billion per year.
The component value retention operation (CVR) within our Volvo Car Service Business is an early adaptor of circular economy principles – ever since the good old days of Volvo PV60. Over the years, it has been a steady revenue stream and a key contributor to our carbon emission reductions. Moving forward, the team will continue to be one of the key drivers of our circular business ambitions.
So, what is component value retention? Rather than the classic recycling method of smashing things up and picking out the materials that can be reused again for other purposes, value retention focuses on extending the life of existing components. In other words, we aim to refresh and sometimes directly reuse old parts and put them back in use again in the same way they were originally intended for. For example, after restoring, an old engine will still be used as an engine in its second life.
Our CVR team uses a so-called ‘Four Rs method’ to extend the lives of the old components. By remanufacturing, refurbishing, repairing, or arranging for direct reuse, the process puts the old components back in use again in our global workshops.
"We offer the reclaimed old parts as alternatives to new parts to our customers," says Håkan Malmros, leading the CVR team. "For older models that are no longer in production, this is also sometimes the only way we secure spare parts availability. We believe that reusing parts on different levels can reduce environmental impact, enable new business opportunities, increase our profitability, and elevate our customer experience – a true embodiment of circular business in Volvo Cars style."
Remanufacturing, the method we use to retain the value of our components today, has been an established practice here at Volvo Cars since 1945. Back then, natural resources were scarce and costly since many of them were devoted to build planes, ships, and tanks during World War II. So instead of throwing old parts away and producing everything from scratch, we started taking care of worn or broken components by thoroughly restoring them to their original quality.
As our car line up expanded, the number and categories of components we remanufacture has also grown significantly. Today, we remanufacture components in 40 different categories, from engines and transmissions to electric components such as electronic control units. Last year, over 40,000 parts were remanufactured, saving nearly 3,000 tonnes of CO2 emissions.
We now have an effective logistic network that keeps the CVR process running smoothly. Old parts are actively collected from our workshops around the world and gathered in our warehouses in the Dutch city of Maastricht. The reclaimed components are then sent to our trusted suppliers for restoration. After a quality check, they are sent back to the workshops for use again.
Our value retention experts are now working to further expand our spare part offer by using the refurbishing, repairing, and reusing methods to meet the varying needs of our customers. More importantly, they work in close collaboration with our Product Creation teams to make sure circularity is taken into consideration already on the drawing table.
"Designing for circularity is key," says Matilda Green, product business manager of the CVR team. "Adopting circular economy thinking is also about starting right at the very beginning of the design process, to make sure our products are designed in a way that they can be used again. Instead of spending time investigating which method should be used to retain the value of a certain component, we need to have plans for its reuse already when drafting the first blueprint."
Designing for circularity requires close collaboration between our teams across the company. Recently the CVR team, together with Product Creation and the Sustainability Centre, developed the first-ever official Volvo Cars Component Value Retention Requirements. This requirement will now be valid for all upcoming vehicle platforms – meaning our components will be designed with circularity in mind from the start.