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Procedia CIRP 61 (2017) 800 – 803

The 24th CIRP Conference on Life Cycle Engineering

Remanufacturing of automotive parts in Japanese market

Akira Ikeda
Shin-Etsu Denso Co., Ltd., 2656-210 Taira Omachi, Nagano, 398-0001, Japan

* Corresponding author. Tel.: +81-261-85-2616; fax: +81-261-23-3906. E-mail address: aikeda@shine-reman.com

Abstract

It may sound that remanufacturing is a new category of industries in Japan but actually it has a long history already. We would
like to start with a brief overview of remanufacturing industry and move to some of key topics about remanufacturing.
Remanufacturing might sound good for the environment but in order to operate it as business it is not so simple to promote
remanufacturing products in the business market. We would like to mention what we have done and issues to overcome.
©©2017
2017TheThe Authors.
Authors. Published
Published by Elsevier
by Elsevier B.V.
B.V. This is an open access article under the CC BY-NC-ND license
Peer-review under responsibility of the scientific committee of the 24th CIRP Conference on Life Cycle Engineering.
(http://creativecommons.org/licenses/by-nc-nd/4.0/).
Peer-review under responsibility of the scientific committee of the 24th CIRP Conference on Life Cycle Engineering
Keywords: Remanufacturing; Automotive parts; Aftermarket

1. Introduction
Many people call non-brand-new aftermarket parts made
with cores (used parts of original equipment manufacturer) in
many ways e.g. remanufactured, rebuilt, refurbished,
overhauled, etc. Though such terms are not important very
much in daily business transactions, it will be good to use one
term to share the same idea. A “remanufactured” part is
probably the most commonly used one all over the world to
identify the part made from a core through certain
manufacturing process. “Remanufacturing is a standardized
industrial process by which cores are returned to same-as-
new, or better, condition and performance. The process is in
line with specific technical specifications, including
engineering, quality and testing standards. The process yields
fully warranted products. An industrial process is an
established process, which is fully documented, and capable of
fulfill the requirements established by the remanufacturer.”
[1] This definition was just created as a common thought
among world well-known associations related to
remanufacturing - APRA, CLEPA, FIRM, MERA, ANRAP
and CPRA - to brand “Remanufactured”. Since some of
countries still consider and treat remanufactured parts as used
ones, this will help separate “remanufactured” out of just
“used”.
2. History of remanufacturing in Japan
APRA established in 1941 is one of the largest
remanufacturers associations with over 300 remanufacturer
members all over the word. Among them over 70 % is from
North America, 24% from Europe and just 4% from Asian
countries including Japan. It is the American based
association so members are mostly from the US. Nevertheless
no one doubts that North American and European companies
have longer history and more experienced than Asian ones in
general. [2]
It does not seem that there are written documents about
history of remanufacturing in Japan but as long as we know,
many small shops started repairing business in 1960’s. Most
of them did not have large scale manufacturing facility but
just provided repairing service for defective products.
Japanese aftermarket was mostly repair market during this
period. First, labor cost was not high like today. Repair
engineers could spend a whole day to find a tiny problem and
fix a single component. Second, car owners did not know that
they had a choice. Remanufactured parts were not well-known
at all. In case when the defective parts could not be repaired,
their choices were to purchase either brand new genuine parts
or used parts - reliable quality at high cost or attractive price

2212-8271 © 2017 The Authors. Published by Elsevier B.V. This is an open access article under the CC BY-NC-ND license
(http://creativecommons.org/licenses/by-nc-nd/4.0/).
Peer-review under responsibility of the scientific committee of the 24th CIRP Conference on Life Cycle Engineering
doi:10.1016/j.procir.2016.11.258
 Akira Ikeda / Procedia CIRP 61 (2017) 800 – 803
at some risk of break. Third, there were many of so-called
“service shops” providing repairing service all over Japan
which were mostly managed by original part manufacturers.
Their service was quick and precise. It seemed that there was
no room for remanufacturing. But some of repair shops
started collecting cores and prepared repaired parts as
inventory for their future customers. Repairing work
sometimes takes time depending on lead-time of inner
component supply and conditions of defective components.
Probably this was the very first stage of remanufacturing in
Japan.
Fig. 1. Exported cars and parts from Japan. [3]-[7]
As export of Japanese cars increased, demand of Japanese
automotive parts in overseas market increased accordingly.
(Figure 1) In the late 1970’s Japanese trading companies rush
into overseas market. There was no place to find Japanese
automotive parts other than purchasing from Japan and the
purchase cost was relatively low due to the exchange rate. So
demand was much stronger than supply. Unlike repairing -
fixing parts one by one, remanufacturing needs a bigger
production volume to run with batch process. They were
trying to find potential business in overseas to expand their
production. Compared to today’s business environment,
popular cores were flooded in the market. Remanufacturers
could purchase such cores whenever they needed and did not
need to hold a large stock. In addition, there were few
different types of cars, which meant types of cores were
limited. This could make production facility simple,
production efficiency high and component stock handling
easy. The most important thing for these companies was to
find more customers. Economy of scale worked quickly and
effectively.
After the Plaza Accord in 1985 companies heavily relied
on export business have had harder time. The amount of sales
in US dollars in 1985 decreased approximately by 47% in
1988. Some went out of business and others downsized
production to shift export business to domestic one. But those
who survived this period learned how to manage their
business under strong Japanese yen.
Around the year of 2000 business environment for
remanufacturing became favorable. The Japanese government
enacted and amended several regulations and laws related to
remanufacturing such as Basic Act on Establishing a Sound
Material-Cycle Society, Act on the Promotion of Effective
Utilization of Resources, Act on Recycling, etc. of End-of-
Life Vehicles, etc. Accordingly Japan Automobile
801
Manufacturers Association launched a special committee to
promote recycling and also established the Promotion Center
for Automobile Recycling on October in 2000. [8] Obviously
automotive industry took a step further to bring environmental
issues into their business. Treatment of CFC and shredder
dust was the crucial topic but as a part of 3R concept to utilize
parts from end-of-life vehicles, remanufactured parts were
brought on the table. Some car manufacturers added
remanufactured parts to their aftermarket service program to
extend their environmental activities.
Fig. 2. Average car life and age. [9]
Fig. 3. Estimated car age of our sales.
On the other hand car owner behavior has changed. When
an owner driving an aged car needs to look for automotive
spare parts, he might buy parts and repair it or give up having
the car when the total repairing cost goes over his budget line.
Those who were looking for spare parts used to have limited
choices – brand new or used – but realized that there seemed
to be another one – remanufactured parts. They are different
from used ones in terms of quality, warranty, product lines,
etc. and less expensive than brand new parts. Since 1995
when car inspection period was extended, car owners tended
to keep their car longer. The average car life has been
extended consequently and the average age of cars on the road
became older. (Figure 2) Figure 3 shows our domestic sales
by estimated car age. According to the data, car owners start
looking for remanufacturing parts after 6 years. Figure 2 and 3
may give some clues why remanufacturing market has grown
in the last decade. Car age between 7 years and 15 years may
be the main target for remanufacturers.
Our domestic sales turnover rarely grew in 1990’s but in
2010 it became ten times as much as the one of the year of
802 Akira Ikeda / Procedia CIRP 61 (2017) 800 – 803
2000. Our sales growth also tells that remanufacturing market
actually becomes bigger.
3. Uniqueness of remanufacturing
Mostly remanufacturing process will include the following
steps: disassembling, cleaning, painting, repairing, assembling
and testing. This process will be more or less the same for
remanufacturing of automotive parts. Among these steps
disassembling and cleaning will be the unique steps of
remanufacturing which manufacturing do not have usually in
the process. Disassembling methods are remanufacturer’s
know-how. – how components can be disassembled without
breaking, what components should be disassembled or
scrapped. It determines recovery ratio and remanufactured
part quality. Some manufacturing product needs cleaning
process such as taking out oil used in processing and burrs
after machining. But cleaning in remanufacturing is to take
out dust, grease, rust, old paint and aged surface after long
time use. Quality and conditions of cores are always different.
Some look just like new, others are close to scrap.
Remanufacturers need to start with components inconsistent
in quality. It is highly important to smoothly and effectively
control these particular two steps. But in order for
remanufacturing to be recognized in the market, it is also
important to specify where you are planning to sell to and
which target market you are focusing on.
4. What Shin-Etsu Denso has done
Most of people purchase automotive parts in the
aftermarket not because they want to but because they have to.
Their cars break down somewhere on the road and are waiting
to be fixed. They usually do not have time to think about
environment and do not buy remanufactured parts just
because they are environmentally good. Instead, they buy the
parts only when all conditions meet their needs such as
delivery time, price, quality, service, etc. In that sense
remanufactured parts are the same as other brand new or used
parts. Thus, independent remanufacturers, like us, need to
understand what is advantage and disadvantage of
remanufacturing and concentrate on the service that
remanufacturers can do better than others.
4.1 To make customers contact you again
When you make a phone call a shop to buy some product
but the shop answered the product out of stock three times,
what is your next move? Probably you will call other shops
and never call that shop again. Since remanufacturing needs
to start with cores, we cannot supply when we do not have the
cores. To avoid this we purchase such missing parts from
competitors to satisfy our customers. In addition, this may
turn competitors to friends.
4.2 To be close to customers when they need help
Companies or individuals using vehicles during weekdays
probably want to fix their vehicles in weekend unless they
really cannot move. When we opened on Saturday 20 years
ago, we just had a couple of phone calls but now it reached
about 60-70% of work of regular weekdays. From last year
we started business on Sundays and national holidays except a
couple of days at calendar year end and New Year holidays.
4.3 To deliver a product as fast as they expect
Delivery speed should be a key to satisfy any customers.
Car garages need to hold cars until they receive necessary
parts. As soon as the parts come in, they will fix the car and
can work on the next one. So timely part supply will help
increase customers turnover. Our goal is to deliver our parts
within next morning after we receive order. We have not
reached the goal yet but we created seven shipping locations
to cover all over Japan.
4.4 To analyze returned parts for ourselves and customers
Unfortunately we still have returned parts. Though over
half of the returned parts belong to customer’s fault, they are
not happy to hear and hardly admit that the fault is theirs.
Every time we receive a returned part, we investigate the
cause and collect information. Statistical data tells us that
which car or part number tends to cause a specific trouble and
which component often breaks down. Then we can put a
notice to let customers know in advance what may happen. At
the same time we update such information to instruction for
next production in case when we need to change procedure.
We learn from returned part analysis, from service campaign
on the web site and from voice from customers. This will
make both customers and us happy.
4.5 To make modification to increase product lines
Suppose that a customer asks us for part A but we do not
have core A to remanufacture the part A. It is impossible to
carry and find all the cores our customers might ask. But even
we do not have core A, we may be able to make the part A out
of components from core B and core C. There are many
common components among different numbers of cores. Once
we create bills of material and cross reference lists show
which part number needs which components, we have a
greater chance to fill customers order without original cores.
Modification is one of great advantages of remanufacturers.
5. Is the future bright?
Population decrease and less interest of younger generation
in driving have a big impact on future car population in Japan.
Cars are just one of transportation methods from one place to
another. There are negative environmental factors which
single company or a group of companies cannot change easily.
But at least remanufacturers must take the following two
issues into consideration in order to continue remanufacturing
business in Japan. 1) The first one is high labor cost.
Remanufacturing in Japan means operating labor intensive
industry at very high labor cost. Remanufacturers need to
maintain or even improve high production efficiency, have
stamina to compete with new copy parts from overseas and
continuously provide better service to attract customers. 2)
The second one is establishing core securing system. Cores
 Akira Ikeda / Procedia CIRP 61 (2017) 800 – 803
are raw material for remanufacturers. Today a number of
cores were spilled over the Japanese core market due to
decrease in the number of disassemblers and increase in the
number of buyers from overseas. Workers from overseas visit
disassemblers and disassemble parts by themselves and ship
the disassembled parts back to their or other countries both
legally and illegally. It is not possible to remanufacture 100%
of cores so remanufacturers need to source many of cores
from core suppliers. But building core return system is a must
for remanufacturers to secure cores and can protect cores
somewhat
Cars will break down before they reach the end of life as
long as people keep driving and then demand for automotive
parts will come up in the aftermarket. The market holding 80
million cars still has some room to expand remanufacturing
business though definitely it is not easy. However, the very
first step to start and stabilize remanufacturing business will
be handling the above two issues right at least.
803
References
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