A Car Once Cherished, Reborn for a New Owner

Global efforts are underway to balance environmental stability with economic growth by transitioning to a circular economy. In particular, resource circulation in the automotive industry is attracting attention.
Cities harbor vast quantities of untapped resources known as urban mines, and their reuse offers considerable potential. Automobiles—comprising tens of thousands of components—represent one such resource. To mitigate dependence on imported resources and supply risks arising from changes in the international landscape, there is a pressing need to establish systems that reuse automotive waste materials generated domestically to manufacture new vehicles.

The European Union (EU) took early action by introducing the End-of-Life Vehicles (ELV) Directive in 2000, requiring automakers to bear part of the dismantling costs and to recycle a certain percentage of ELV components. In 2023, the EU went further by proposing that at least 25% of plastics used in new vehicles must come from recycled sources.

In line with these efforts, Germany launched the Car-to-Car (C2C) Consortium in January 2023, bringing together 16 companies and institutions. The consortium aims to increase the proportion of recycled materials used in new vehicles from 30% to 50%, and to promote the reuse of materials recovered from scrapped vehicles.

This trend illustrates how Europe, in particular, is rapidly advancing toward automotive resource circulation.

While these global efforts continue, Japan’s transition toward a circular economy in the automotive industry faces significant hurdles.

In Europe, major recycling operators handle most dismantling work. In Japan, however, vehicle dismantling is carried out by small businesses licensed individually by each prefecture. Experts have identified four challenges in realizing a comprehensive circular economy for automobiles in Japan.

The first challenge is the outflow of domestic resources. According to 2020 data from the Ministry of Economy, Trade and Industry’s report Strategy for a Growth-Oriented Resource Autonomous Economy, around 1.25 million of the 4.4 million deregistered vehicles in Japan are exported overseas each year. In addition, many dismantled materials are also shipped abroad, exacerbating the loss of domestic resources.

The second challenge is the labor shortage. Dismantling and shredding vehicles require manual disassembly, sorting of parts, and handling of hazardous materials. These physically demanding tasks—often involving heavy items such as engines—make the venous industries (dismantling and resource recovery) less attractive to younger generations, leading to serious labor shortages.

The third challenge involves materials being downcycled. Today, many components that make up a vehicle are recycled in ways that reduce their quality and value—a process known as downcycling. If this trend continues, the volume of materials that can be effectively recycled is expected to decline.

The fourth challenge concerns how to manage ASR (Automotive Shredder Residue). After a vehicle is shredded, the remaining mixture of resin, metal, glass, and other materials is known as ASR. Because recycling these remnants into new materials is costly, much of the ASR produced today is incinerated, with the resulting heat recovered and reused through thermal recovery processes.

To overcome these challenges and achieve a circular economy for Japan’s automotive industry, it is essential to establish a new Car-to-Car cycle—where materials from vehicles are recycled directly into new ones.

It was this vision that gave rise to the BlueRebirth Project, which seeks to build a new value chain that enables domestic automotive resource circulation.

The BlueRebirth Project aims to design a complete system—from the collection of ELVs, to the production of recycled materials, to the reuse of those materials in vehicle manufacturing—creating a new value chain that integrates arterial industries (production and sales) with venous industries (dismantling and resource recovery).

By bringing together material manufacturers, automakers, component manufacturers, and recycled-material manufacturers, BlueRebirth seeks to build an integrated value chain where resources are used efficiently—a fully circular, Car-to-Car ecosystem that enables vehicle manufacturing without excessive reliance on new raw materials.

The project has set clear goals: to recover more than 90% of an ELV’s total weight as reusable resources, to recycle one million ELVs annually within Japan, and achieve a cycle time of under 900 seconds per vehicle using automated precision dismantling systems.

In this new value chain, each player’s role is categorized into three types. The first is the BlueRebirth Enabler, such as DENSO, which provides automated precision dismantling systems. The second is the BlueRebirth Maker, representing recycled material manufacturers. The third is the BlueRebirth Partner, including automakers, component manufacturers, and material manufacturers, who define how materials are used and specify requirements.

In June 2025, the BlueRebirth Council was established in collaboration with Japan’s Ministry of the Environment and the Ministry of Economy, Trade and Industry to accelerate resource circulation in the automotive industry.

The council brings together all value-chain players, from recycled-material manufacturers in the BlueRebirth project to research institutes. Its working groups tackle issues across technology development, public relations, and branding to address the challenges ahead.

For Japan's automotive industry to achieve real-world implementation of a value chain that integrates arterial and venous sectors, ensuring quality, quantity, and economic rationality is a critical challenge for sustainably circulating recycled materials. The BlueRebirth Council has currently organized six working groups, each advancing discussions and practical initiatives to address these challenges within their respective topics.

For example, improving recycling technologies is an urgent agenda that must be tackled immediately. The key to reconstructing a circular resource flow lies in determining how to guarantee the purity and quality reliability of recycled materials—while accounting for impurities—and convert them into viable products.

Furthermore, challenges also exist regarding the facility network infrastructure. Even if dismantling technologies are developed, automated precision dismantling cannot be practically implemented without an established distribution network for collecting end-of-life vehicles and circulating post-dismantling resources. Another important consideration is examining the facility network across the entire value chain—from ELV collection and recycled material production to vehicle manufacturing—to prevent transportation costs from becoming a bottleneck.

In addition, numerous challenges remain to be addressed, including how to facilitate smooth information sharing within the value chain and how to ensure traceability. To overcome all of these challenges and build a circular value chain that embodies quality, quantity, and economic rationality, the BlueRebirth Council is conducting active discussions that transcend corporate boundaries and involve collaboration with government agencies.

The council is chaired by Hirotsugu Takeuchi, DENSO’s Chief Technology Officer, who has been leading the BlueRebirth initiative and driving the development of its core technology—the automated precision dismantling system.

This system leverages robotics and AI-driven recognition and decision-making technologies to precisely dismantle and sort vehicle components before shredding, enabling extraction of high-quality recyclable materials. Through this system, the goal is to complete the ELV recycling process in under 900 seconds per vehicle, with a recovery rate exceeding 90% of total vehicle weight.

In building these automated precision dismantling systems, DENSO draws on three strengths cultivated through our past business experience.

The first is our extensive knowledge of automotive components—expertise gained through years of supplying parts to a wide range of automakers, which has greatly contributed to advancing the reuse and recycling of automotive parts.

The second is our broad and advanced production engineering capabilities. Built over decades of automotive manufacturing, these include the ability to design and internally build production equipment, operate entire production lines, develop materials, utilize those materials effectively, and even design and operate the industrial robots used on the shop floor. All of these diverse technical capabilities are now being applied to the development of this resource circulation system.

The third is our experience in taking on challenges in new business domains. In particular, expertise cultivated in surgical robotics is being applied to precision vehicle dismantling. Robotics technologies developed through the iArmS surgical assist robot—which supports a surgeon’s arm to reduce physiological tremors and fatigue—and the OPeLiNK operating-room integration platform contribute directly to accurate robotic control during dismantling.

Hideki Okuda, who leads the BlueRebirth Project as General Manager of DENSO’s Circular Economy Development Department and serves as Executive Secretary of the Council, explains the motivation behind these efforts:

“For nearly 70 years, DENSO has pursued product value through miniaturization, weight reduction, and high reliability. But looking back, I feel there are things we may have sacrificed along the way. For example, to enhance reliability—such as improving insulation for copper coils—we have often embedded components in resin to create a single integrated structure. This approach was entirely reasonable and contributed to making products smaller, lighter, and more robust. However, once a coil is embedded in resin, separating the materials becomes extremely difficult, making recycling far more challenging.

Although these choices were essential for delivering higher value and better products to our customers, the reality is that they were not always compatible with a circular economy. At some point, we need to address the consequences of those decisions. BlueRebirth is our way of taking responsibility for the past while creating new value for the future—an important challenge as we work toward realizing a Well-being Cycle Society that respects not only resource sustainability but also human well-being.”—Okuda

How might the BlueRebirth initiative shape society in the years ahead? Okuda highlights two key themes: delivering value beyond the automotive sector and building a domestic resource circulation system.

“Automobiles are among the most difficult machines to dismantle. If we can build a system that can precisely dismantle a car, automated dismantling for virtually any other type of machinery becomes feasible—and that, in turn, enables resource-circulation systems across a wide range of industries.”—Okuda

“Domestic resource circulation is another crucial issue. The economic security environment has become increasingly unstable, and there’s no guarantee that import and export conditions will remain the same. By establishing a circular value chain that allows Japan to procure materials domestically, we can help stabilize the very foundation of our industrial base.

“Resources are in short supply worldwide, and many of Japan’s used cars are exported overseas. If we can build a domestic value chain that supports a robust recycling framework, we can curb this outflow of resources while also reducing environmental impact.”—Okuda

BlueRebirth has the potential to make a positive impact not only on the automotive sector but on Japanese industry as a whole.

“Manufacturing, at its core, is a creative and enjoyable pursuit,” says Okuda. “But we also recognize that we can’t afford to be naive by creating new products without considering the environment. To ensure that creativity and sustainability coexist, we must keep both in mind and work to make manufacturing a positive force for society.

Ideally, we want all BlueRebirth stakeholders—especially the recycling companies at the heart of the venous industry—to become the kind of ‘cool companies that make the world better’ that children admire. If our efforts can help change the way children view this work, then I believe DENSO will have taken a real step toward becoming a company that society truly needs.

We’re now looking for new members to join us in BlueRebirth—people with experience in production engineering for large-scale systems, such as OEMs, home builders, or heavy equipment manufacturers. We’re looking for people who take initiative, who enjoy testing hypotheses, and who are excited to pioneer the emerging field of the venous business.”—Okuda

By integrating Japan’s core automotive industry with the world’s first structured venous-industry system, DENSO aims to create a globally recognized model of arterial–venous industrial fusion.

This will strengthen economic security while helping make recycling and resource-recovery work a profession that children can admire. By bringing creativity and sustainability together in manufacturing and leveraging our strengths in robotics, AI, and sensing technologies, DENSO will continue collaborating with a wide range of partners as it works toward building a truly sustainable society.

As of October 14, 2025, according to DENSO research.

• Visit the BlueRebirth Council website