Automotive

CONCEPT NOTE "AUTOMOTIVE RE-FACTORY":

THE INTERNATIONAL CONTEXT TODAY

The automotive world is undergoing a transformation of a magnitude never seen since its appearance at the end of the 19th century. The planned end of combustion engines by the world's leading manufacturers will have profound economic and social consequences in the next decade in all countries dependent on the automotive industry. The Renault group has announced its intention to go all-electric in 2030 and all the major car manufacturers have similar, if slightly less ambitious, timetables. In addition, the city of Paris wants to ban the use of diesel vehicles in the city center soon and other capitals are developing similar policies. Finally, the European Parliament voted on June 8, 2022 to ban the sale of new combustion engine cars from 2035 within the EU.

THE EVOLUTION OF NORTH-SOUTH FLOWS BY 2030

The situation described above will undoubtedly have a significant impact on the flow of used cars which Western countries use to dump the oldest and most polluting models. t is feared that obsolete and banned vehicles from city centers will swell the flow of vehicles to emerging countries.

THE AUTOMOTIVE SECTOR IN GHANA TODAY

Major players in the global automotive industry are now developing their presence on the African continent, which is the last virgin sector on the planet. As part of this dynamic, Volkswagen, Toyota, Nissan and China Truck have recently deployed new vehicle assembly plants for SDK (Semi Knock Down) in Ghana. In addition, Ghana has seen one of the first local car manufacturing initiatives with the Kantanka company, which demonstrates Ghana's wealth of knowledge in this area. However, the manufacturing of new vehicles in Ghana will remain marginal in terms of the number of vehicles produced compared to the importation of used vehicles by a ratio of 1 to 10. The main reason for the narrowness of the new car market is the average purchasing power of Ghanaians. The used car market is therefore the heart of the automotive sector in Ghana today and therefore deserves to be the fruit of a coordinated and industrial reflection to bring innovative and profit generating solutions.

JOINING THE ECONOMY OF THE FUTURE

The degradation of our environment and global warming exerts, through a world population increasingly concerned with the preservation of nature, an increasing pressure on car manufacturers, forcing them today to guarantee 100% recyclable vehicles soon. This compels all players in the sector to develop circular economy strategies to achieve this goal and to rethink the successive cycle or cycles of a vehicle's life.

BE INSPIRED BY THE MOST INNOVATIVE

It is in this spirit of circular economic development that the Renault group has been developing its Re-Factory concept for several years. In its emblematic factory of Flins in the Paris region, which was condemned to close, Renault and Indra develops industrial and integrated recycling methods specific to the automobile and organizes at the same time the refurbishment of used vehicles coming from commercial subsidiaries of the group to put them back on the market with more added value and a real manufacturer's guarantee. The new awareness of the importance of the second-hand market, unique in Europe, corresponds to consumer expectation, as is being witnessed for more than 2 years, an erosion of the European market of new vehicles in favor of the secondhand market. It is at the same time a nursery of innovation to conceptualize the right methods of recycling and refurbishment at an industrial integration level. Following the example of the Renault group and in order not to be left behind on this used car market which today accounts for 6 times more the new car market, the PSA group (Peugeot Citroen) created its ad hoc subsidiary Spoticar in May 2019 to merge the used car offer of the Peugeot, Citroen and Opel brands. Since then, it has been integrated into the Stellantis Group and now also deals with the Fiat, Abarth and Jeep brands. With a network of 1,200 sales outlets in Europe, Spoticar has 40,000 reconditioned used vehicles with a warranty of up to 24 months and unlimited mileage. Spoticar also has a reconditioning center in Hordain, in the north of France. With more than 15,000 storage spaces and 6,000 m² of workshop space, it processes more than 100 used vehicles per day in one shift.

ADAPTING INNOVATION TO GHANA

The idea is to deploy Renault's Re-Factory and Stellantis Spoticar concepts in Ghana by aiming to feed it with imported used cars. By controlling the import of used vehicles and organizing their industrial reconditioning in Ghana, we bring a real alternative solution to the existing secondhand market, which the government wants to see decrease. The project has the ambition to rejuvenate the car fleet by offering to Ghanaian customers better quality vehicles at a price corresponding to market expectations. With a tax system adapted to this retrofitting activity it will be possible to compete with the secondhand market with younger, safer and controlled cars. It is also conceivable that the parts or components of vehicles replaced during retrofitting are covered by a warranty. In addition, by organizing a spare parts reconditioning industry linked to the reconditioning of imported second-hand vehicles, opportunities will be developed for this entire sector of activity to move from the informal world to the formal market economy. Finally, by also developing raw material recycling lines, the products can be exported by linking the flow of virgin raw materials that feed the western industry, because the demand for recycled material will increase. In light of possible synergies mentioned above, we can envisage a recycling chain for the plastic contained in vehicles with the recycling of plastic waste abandoned in nature which ends up in the oceans. Michelin is developing a chemical recycling of polystyrene, as the recycled styrene from it is used in the manufacture of tires. This technology, which is currently being developed, points to the prospect of future opportunities in the depolymerization of polyethylene and polypropylene. The concept of the automotive cluster can also help to federate all initiatives related to plastic waste recycling to serve as a model for recycling in general.

SUPPLY OF USED CARS

It is necessary to organize a systematic inspection of used vehicles that will be acquired internationally for reconditioning in Ghana. This can be done internally by deploying inspection centers in the ports that ship vehicles to Ghana (Antwerp, London, Marseille, New York, Dubai and Tokyo). These centers would make each vehicle undergo a thorough technical inspection in order to determine the spare parts needed for retrofitting. The head office in Ghana would then determine on the basis of this list of spare parts which ones can be reconditioned secondhand in Ghana and which ones should be replaced as new and therefore purchased internationally. The fully inspected cars as well as the new spare parts would then be sent jointly to Ghana via logistics comparable to flows for assembly in SKD.

USED CARS RECONDITIONING AND RETROFIT

Reconditioning of used vehicles in Ghana and later the retrofitting of vehicles with internal combustion engines to less carbon-intensive solutions will have to be based on an in-depth study of the market so that the positioning of the Re- Factory's products represents real competition to the current second-hand market, with the ambitious objective of making it marginal. It is also necessary to plan to be able to reexport the vehicles reconditioned by the Re-Factory throughout sub- Saharan Africa, and we can imagine that used vehicles acquired in England or Japan will be destined for markets where driving is on the left side of the road as in South Africa. We can also develop a high-end service where the African customer would order his vehicle by stipulating the brand, the type and the age of the desired vehicle and that the vehicle is then sought on the second- hand market in Europe to be reconditioned in Ghana in the Re-Factory.

PARTS, RAW MATERIAL RECYCLING AND RE-START

As mentioned above, the Re-Factory will also organize collection, dismantling, reuse, remanufacturing, and recycling of automotive spare parts to feed the reconditioning of vehicles at the best cost. Finally, in partnership with the Kwame Nkrumah University of Science and Technology (KNUST), the Re-Factory could develop an innovation pole and a start-up incubator to accelerate research and training for the mobility of tomorrow.

THE LIFE CYCLE OF A VEHICLE

Car manufacturers are increasingly subject to environmental policies in their home countries and soon they will have to ensure the 100% recycling capacity of the vehicles they want to put on the market. This works if in its life the vehicle is maintained on the market in which it was sold new and for instance a French manufacturer commits to guarantee 100% recycling of its vehicles on French soil, and eventually on European soil. When a vehicle moves to another continent, as for example Japanese cars sold in Europe and in the United States, the Japanese manufacturers also comply with the recycling legislation of the countries receiving these vehicles, as these manufacturers usually also have production plants in France, Germany, England, and the United States. On the other hand, when the vehicles are exported second-hand to countries where the original manufacturers have no production facilities or even a distribution network, the recycling chain is severely interrupted, and they end up in unauthorized landfills when no longer fit for purpose, mainly in the host countries. Sub-Saharan African countries suffer from this situation and Ghana, with more than 80% of its vehicle fleet made up of imported second-hand vehicles, bears a large share of the burden. The theory that for ecological reasons related to greenhouse gas emissions it is essential to replace fleets of old and polluting vehicles with more modern ones that are less polluting or even non-polluting has been disputed by the analysis of carbon footprint of a vehicle calculated from its creation to the end of its life. According to the European NGO federation Transport & Environment, the production of a new vehicle generates 6.7 tons of CO2 if it is equipped with a gasoline engine and with the manufacture of batteries, the balance sheet increases to 4.6 tons for an electric car. This balance sheet highlights two unsuspected realities; that an electric vehicle must travel 18,000 km to pay its ecological debt compared to a gasoline vehicle. That on one hand, the extension of the life of vehicles considered to contribute to pollution could, according to the same analysis, become virtuous and contribute to the reduction of CO2 emissions on the other hand. It is even conceivable that soon the pejorative view of emerging countries as receptacle of the automobile wrecks of the western world will be transformed into recognition of actual contribution to the ecological effort if the market of second-hand vehicles in these countries is structured as a real industrial chain. From this point of view, it would be possible to ask Western countries for financial aid to participate in the establishment and the perennialism of this sector in Africa.

CIRCULAR ECONOMY

The Re-Factory project as anticipated could be the solution to this problem; by importing, as described above, second-hand vehicles in a controlled way and refurbishing them in order to be marketed with a guarantee on the one hand, but above all by organizing this in an industrial way, the retrofit of second-hand parts and the recycling of raw materials coming from end-of-life vehicles on the other hand. It is a question of organizing the automotive Ghanaian circular economy of tomorrow, expecting that the demand for recycled raw materials (such as aluminium and steel for example) would increase all the more rapidly as production capacities on a world scale show their limits and as the resources of virgin raw materials dwindle, without even mentioning the gains in terms of potential energy savings compared to production of virgin products. The project, by relying on the existing network of skills in the automotive professions, essentially concentrated currently in the informal sector, as is the case in the Suame Magazine area, Ashanti Region of Ghana, can move skills and men towards a formal economy and thus improve the social situation of many families. This idea of Re-Factory, which is the result of a project conducted by the Renault group in France, would have to be the subject of in-depth socio-economic studies in order to adapt its substance to the Ghanaian reality.

SOCIO-ECONOMIC POLICY

Furthermore, an attractive incentive regime for this project would not only promote vehicles from the Re-Factory on the Ghanaian market but would also reduce the uncontrolled importation of second-hand vehicles that only enrich a small number of importers and subsequently end up on Ghana's landfills. The creation of permanent jobs in a formal environment and in sectors such as the recycling of metals, which already have a certain maturity, would give rise to synergies in emerging sectors such as the recycling of plastic materials which, beyond the automotive sector, could also be applied to plastic waste from the food industry.

REFERENCES

Automotive Cluster Kumasi Report – Meier zu Köcker, Bartschat VDI/VDE Re-Factory in Flins - The first European circular economy factory | Groupe Renault Nissan Green Program - Prof. Dr. Guy Fournier - Pforzheim University Comment Michelin va recycler le polystyrène - Les Echos 14/02/2022 Le «faux débat» du renouvellement du parc automobile – Le Monde 31/05/2022 Un «vote historique» acte la fin des voitures thermiques – Le Monde 10/06/2022

EXTERNAL LINKS

Ghana’s Transport Ghana’s Ghana Customs Ghana Electrical Sector Report** Manufacturing Valuation for Used Vehicle Prospects

Source: Dipl.-Ing. Francois Meysembourg (Aftercare Division GIPC)– September 2022

External Links (QR codes vers L3)

• Sector Report** Vehicles
• ** GIPC Public Relation Documents
• Automotive Re- Automotive Re-
• Factory in Flin Factory in Flin
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