Scrapped cars, a gold mine for the Indo-Japanese recycling company
NEW DELHI – A joint venture between an Indian company and a Japanese company has uncovered a treasure trove in India in the form of auto parts salvaged from some of the estimated 10 million cars scrapped in the country as the government puts in place stricter emission standards.
Abhishek Group, an Indian manufacturer of airbags and other auto parts, has started scrapping used cars and recycling parts, such as headlights, taillights and hoods, to resell them in its joint- venture with Kaiho Industry, a Japanese auto recycling company based in Kanazawa, Ishikawa Prefecture.
The company, Abhishek K Kaiho Recyclers, was founded in 2019 and began operating a factory in the northern Indian state of Haryana in June, with the aim of building a total of seven factories across the country within three years.
The car recycling business has strong growth prospects in India, with the government aiming to set up two to three recycling plants in each region to create jobs, Road Transport and Highways Minister Nitin Gadkari said during a meeting. of the opening ceremony of the Abhishek-Kaiho factory in May. . The plant began operating with a staff of 20 earlier this month after the planned launch was delayed by the COVID-19 pandemic.
In 2021, the Indian government announced guidelines for vehicle disposal with the aim of regulating the industry and replacing older and dirtier vehicles with newer ones. Commercial vehicles that have been in service for 15 years or more and private cars over 20 years old are inspected and scrapped if they do not meet emissions standards.
US consultancy AT Kearney estimates that there are around 10 million so-called retired cars in India. The country’s Supreme Court announced a ruling in 2018 banning cars from driving on public roads in the capital, New Delhi, unless they comply with air quality regulations, prompting state governments to draw up detailed rules themselves. The car disposal market is expected to grow as electric vehicles and other environmentally friendly vehicles become more widespread.
Abhishek K Kaiho Recyclers dismantles used vehicles, buys them from local dealerships and sells usable parts to auto repair shops. It also sells steel, aluminum and other materials obtained from scrapped vehicles, which can then be used to create building materials. At the moment, the joint venture plans to dismantle 100 to 350 vehicles per month and is aiming for 100 million rupees ($1.28 million) in sales in the first year.
The company traces its roots to an internet search conducted by Abhishek in 2016. The Indian company emailed Kaiho, expressing a desire to solve India’s environmental problems by working with the Japanese auto recycler, which operates in the whole world.
Kaiho brings to the company more than 50 years of experience in the dismantling of used vehicles. Thirty years ago, it was his main activity. Since then, Kaiho has expanded into auto parts exports, after a Kuwaiti businessman visited Japan and bought a large number of used auto parts from Japan at high prices.
Kaiho then introduced its own standards for assessing the condition of used parts and established an integrated system covering everything from buying and dismantling used cars to selling the parts. It has expanded to 90 countries including Thailand, Kenya, Nigeria and Ghana.
“With a population 10 or more times that of Japan, India is brimming with energy and potential for growth,” said Takayuki Kondo, Chairman of Kaiho. “I believe we can contribute to the world at large by addressing environmental issues in the populous nation of India.”
Kaiho will negotiate with Indian state governments and build factories where car scrapping policies will be adopted, Kondo said.
Maruti Suzuki India, the country’s largest automaker, and others also recycle auto parts. Last year, Swedish air quality research specialist IQAir ranked New Delhi as the most polluted capital in the world. It is therefore essential to reduce air pollution in the city, which comes mainly from vehicle exhaust.
In fiscal 2021, 3.65 million passenger cars were produced in India, up 19% from the previous year, according to the Society of Indian Automobile Manufacturers. Middle-class Indians are increasingly car-hungry as their incomes rise.
Although automotive production has slowed in India due to the global shortage of semiconductors, demand remains strong. As the government aims to increase the share of electric vehicles to 30% of total sales by 2030, the pile of used cars to be disposed of – and the pile of treasure – will only grow.