Circular auto economy eyes formalisation

From the newsletter

Global automotive provider Stellantis has opened its first vehicle dismantling centre in Casablanca, marking its entry into Africa’s end-of-life vehicle economy. The move signals a gradual shift toward original-equipment manufacturer-led circular systems on a continent where vehicle reuse, parts recovery and materials extraction remain largely dominated by informal networks. 

• Industry estimates suggest approximately 4.8 million vehicles reach end-of-life annually across Africa, most of which are processed through systems with limited regulation, environmental oversight or formal recovery infrastructure. 

• Africa’s recovery system – informal and fragmented – offers significant investment opportunities in the transformation to more sophisticated infrastructure and higher-value circular economy capture.

More details

• The $1.6 million Casablanca facility is Stellantis’ third dismantling centre globally, following Italy and Brazil. Developed as an industrial-scale site, it is designed to structure end-of-life vehicle (ELV) flows in Morocco while expanding the availability of reusable original parts across the company’s aftersales network and digital platforms via its SUSTAINera circular economy unit. Recovered components are reintroduced into Stellantis’ circular economy system as certified used or remanufactured original parts, while selected materials such as traction batteries are directed into dedicated recycling streams. The facility is expected to process up to 10,000 vehicles annually, sourced from insurance companies, auctions and ELV channels.

• Africa’s end-of-life vehicle market is dominated by informal recovery systems built around scrapyards, repair clusters and spare parts traders. Vehicles are typically dismantled for high-value components such as engines, gearboxes, electrical systems, while remaining materials are disposed of through informal waste channels. While highly effective at extending vehicle lifespans and recovering usable parts across localised markets, these systems remain structurally disconnected from formal industrial frameworks, with limited traceability, inconsistent environmental standards and minimal system-wide coordination. As a result, value capture is concentrated at the point of dismantling and resale, rather than optimised across an integrated recovery system.

• OEM-led models are now entering this landscape as a response to structural fragmentation rather than as a replacement for existing systems. They do not introduce circularity itself, but instead bring industrial coordination to existing flows. Informal systems already deliver circular functions at scale; the change lies in how value is structured, certified and aggregated across the recovery chain. Rather than replacing informal networks, OEM systems redirect activity toward controlled sourcing of end-of-life vehicles, certified remanufacturing and regulated recycling pathways, enabling system-level coordination and more compliance-driven value capture.

• Acceleration of this model is being driven by two converging structural pressures.  As vehicles become more software-intensive and electrified, end-of-life streams increasingly contain higher-value recoverable assets, including batteries, electronic systems and critical minerals, requiring specialised handling that informal systems are not designed to manage at scale. At the same time, European sustainability and traceability rules are increasingly being embedded into automotive supply chains, particularly for export-oriented manufacturing hubs such as Morocco. 

• As a result, a gradual stratification of Africa’s automotive circular economy is emerging, rather than a linear shift from informal to formal systems. Informal networks are likely to remain central due to their role in affordability-driven mobility, repair ecosystems and employment generation. However, OEM-led systems are expected to expand within higher-value segments such as certified parts, battery recovery and regulated materials processing, creating parallel value chains operating at different levels of industrial integration and value capture.

• Industrial geography is reinforcing this stratification, particularly in Morocco where automotive clustering is increasingly pronounced. Unlike markets where value chains remain dispersed, Morocco is consolidating manufacturing, supplier ecosystems, logistics and end-of-life recovery infrastructure within a single coordinated platform. This is underpinned by Stellantis’ manufacturing base in the country, its largest in Africa, enabling integration across production, aftersales and circular recovery. For OEMs such as Stellantis, this allows end-to-end alignment of manufacturing, dismantling and remanufacturing, embedding circular economy requirements directly into the production system rather than retrofitting fragmented networks. 

Our take

• Stellantis’ entry into OEM-led circular systems suggests that competition in the automotive sector is gradually extending beyond manufacturing efficiency into control over secondary markets,  particularly certified parts, battery lifecycles and regulated material flows. The key test will be whether these emerging systems can evolve into scalable regional templates, or remain isolated industrial nodes within fragmented markets. 

• Over time, the determining factor will be whether OEMs can convert this control into structural market advantage, where access to recovery streams begins to influence pricing power, supply security and long-term positioning in increasingly resource-constrained automotive value chains.