Encory – A joint venture with a future
In the automotive industry, the topic of ‘remanufacturing’, i.e. the reconditioning of used manufactured parts, is still in its infancy. To date, most old vehicle parts have been disposed of, with only a fraction being reconditioned. “As a result, BMW decided to develop the topic of remanufacturing and resource collection with the aim of reconditioning and remarketing suitable kinds of parts,” explains Gregor Eggl, who works for the Munich-based vehicle maker and is now one of Encory’s two executive directors.
With BMW needing a competent partner for the new joint venture, Interzero seemed the logical choice.Interzero not only initiated the investment, but also manages it within the ALBA Group. Long experience with recycling and reverse logistics, and in establishing new business models, plus extensive expertise in raw materials matched by a presence in international markets – an impressive resume. Both Interzero and the new joint venture can also draw on an extensive network of service providers.
Encory closes the loop for replacement vehicle parts
The joint venture, in which each company holds a 50% interest, was formed in autumn 2016. Operations started in southern Europe in January 2017. With a workforce of 50, Encory now handles the entire process from logistics to the reconditioning of automotive parts and disposal. When a part is removed in the vehicle workshop, this is reported to the company via the Dealer Frontend that Encory has developed. Encory then takes care of the work involved in efficient return logistics, sorting and identification. If the used part cannot be reconditioned, it is then sent for professional disposal or recycling.
[Translate to English - Englisch:] In all other cases, the remanufacturing process produces a ‘reman’ part that is of the same quality as a new part. “Above all, this benefits customers because they receive a professionally reconditioned and quality-tested used part that is typically less expensive than a new part.”
From a strategic perspective, the new company therefore also helps to improve customer loyalty for the BMW Group since it enables certified dealerships to attract customers who are looking to repair older BMW and MINI vehicles at a price reflecting the vehicle’s age. “Particularly for vehicles more than six years old, this is an appealing alternative."
Underlining the ecological benefit of the remanufacturing process, Encory co-director Großeschmidt points out that “every used part reconditioned and resold saves on the production of a new part.” Compared to the manufacturing of new parts, potential savings worldwide add up to around 85 percent of raw materials and 55 percent of the energy used. Several million tonnes of CO2 emissions can also be saved every year. “We save around 150 kg of CO2 by reconditioning just a single engine.”
Rollouts planned until 2020
The next steps in Encory’s expansion include technical interfacing with platforms for handling orders and returns. “Dealers already have extensive IT infrastructure available – our applications need to integrate well with their systems while also being easy to use,” Eggl comments. Encory’s German launch is already planned for the third quarter of 2017, and rollouts in BMW’s top twelve markets in Europe, Asia and the USA are scheduled to be complete by 2020.