Traditional automotive recycling has long been a clunky and inefficient process. In this age-old system, used vehicles find their way to workshops and chop shops where vehicular parts are dismantled for recycling. However, inadequate dismantling capacity of such facilities typically result in a limited supply of derivable components.
This is exacerbated by middle-tier resellers and dealers who frequently inflate prices by over 30%, further affecting the accessibility of recycled vehicular parts.
Yuan Planet, a Chinese automotive recycling company, is aiming to improve this process by establishing a comprehensive supply chain platform for recycled automotive parts. This platform is equipped with features including a vehicular component database and a cloud-based management system. These features enable Yuan Planet to make significant changes across the board:
- Enhanced upstream operations: By leveraging an intelligent pricing system, the company can acquire vehicles more efficiently, alleviating the chronic shortage of quality parts in the market.
- Empowered middle-tier: Yuan Planet’s self-built plants expand its dismantling capacity and by extension, ensure a steady supply of high-quality components.
- Streamlined distribution: By setting up its own sales channels, the company bridges the gap between repair shops and local dealerships, effectively addressing longstanding issues associated with traditional distribution methods.
Recognizing the rise in demand for recycled automotive parts, Yuan Planet is eager to expand beyond the domestic market in China. Certain components of retired vehicle model are highly sought after in overseas markets, including engines, transmissions, steering mechanisms, front and rear axles, and suspension components. This surge in demand has led to significant price hikes in markets like Malaysia.
To capitalize on this opportunity, the company is targeting the Malaysian market and plans to utilize Malaysia-based dismantling plants as a hub. This hub will facilitate the connection of sources from the US, Australia, Japan, China, and other regions, leveraging differences in vehicle generations to export products to Southeast Asia, South Asia, the Middle East, Africa, and beyond. Approximately 10% of Yuan Planet’s products are expected to be exported to overseas markets.
“Malaysia is the world’s second-largest hub for recycled automotive parts, with the largest one located in Dubai. Due to geographical proximity and favorable national policies, both countries are ideal for international trade in recycled parts. Since China is closer to Malaysia, we have chosen this location as a transit station,” said Li Yang, founder and CEO of Yuan Planet, explaining the rationale behind selecting Malaysia as its hub.
With demand for electric vehicles growing and in consideration of their shorter lifespans (compared to traditional fuel-based vehicles), recycled EV parts have also become a burgeoning industry. To meet this demand, the company has equipped each of its dismantling plants with EV dismantling lines, enabling the disassembly of electric vehicle battery packs down to individual battery cells.
Yuan Planet recently completed Series B1 and B2 financing rounds, raising eight-figure USD sums of investment. Its investors to date include Gobi Partners, NIO Capital, and Sequoia China.
KrASIA Connection features translated and adapted content that was originally published by 36Kr Chuhai. This article was written by Chang Weiqian for 36Kr Chuhai.