- September 2026
Why now: The end of the linear road
For over a century, the global economy has followed one model: take, make, dispose. It generated immense growth. Today its limits are impossible to ignore.
Circularity is shifting from a solely sustainability ambition to a requirement for competitiveness, resilience and market access. Three developments make it a board-level question today.
Resource security is becoming a strategic capability. The EU remains fully dependent on imports for heavy rare earth elements, while recycling contributes only marginally to critical raw material supply.1 Products already in the field become a valuable source of future supply.
Circular models are becoming commercially relevant. Circularity opens new price points, aftermarket revenues and service offers, shifting the focus from waste management to value retention.
Regulation is moving from reporting to product intervention. Regulation (EU) 2026/17382 obliges vehicle manufacturers to develop a circularity strategy and sets requirements for design and end-of-life management, and the Circular Economy Act expected in late 2026 is framed by the Commission as a competitiveness instrument rather than environmental policy.
Figure 1: Multiple pressures on linear supply chains
Incremental improvements to linear business models will not answer these pressures. At BearingPoint, we call the shift from circular ambition to scalable value creation the Circular Transition.
Circular Transition: Turning ambition to value creation
Circular Economy describes the target system. Circular Transition describes the transformation a company must manage to reach it: the portfolio choices, commercial models, operations, data and ecosystems that turn ambition into a running business.
Most companies do not struggle to see the potential. They struggle to scale it. Initiatives stall because they run as isolated projects while the business model, operations, data and partner network stay linear. The decisions that unblock them are management choices spanning five dimensions that must move together.
The BearingPoint Circular Transition Framework
|
Dimension |
Decision |
Trade-off |
Typical barriers |
|
Strategy and portfolio |
Which products and markets justify a circular model? | Residual value potential versus complexity | Group targets are never translated into portfolio choices |
| Business model and commercial logic |
How is the offer positioned? |
New segments versus cannibalization | Sales organization blocks the circular offer |
| Closed-loop operations | Who controls the returns? | Core availability versus take-back cost | Reverse flows are run as logistics rather than as an industrial capability |
| Data and digital backbone | Which lifecycle data is required? | Transparency versus integration effort | Quality and residual value become visible too late |
| Ecosystem and governance | Own capability or partner? | Control versus speed | Each partner optimizes its own margin |
Where circular value comes from
Circular value is created by retaining more of a product's embedded economic value across multiple lifecycles:
- Revenue growth: new price points and customer segments, aftermarket expansion, and further monetization of components already produced.
- Margin and cost: less new material and production, reuse of high-value components, lower disposal and obsolescence cost.
- Capital and risk: less exposure to volatile raw material markets, better availability of critical parts, lower end-of-life risk.
- Strategic control: access to products after their first life, transparency over material flows, control over secondary markets.
The most common reason a circular business case collapses is core availability. A model can be technically excellent and still fail if returns are not secured, products cannot be identified reliably, or residual value only becomes visible after processing. The question is not whether to act, but where to start.
Why remanufacturing is a strong entry point
Among the circular economy’s R-strategies, remanufacturing stands out as a particularly powerful lever for preserving both material and economic value:
Unlike repair, which fixes specific defects, or recycling, which recovers materials, remanufacturing restores used products to like-new performance through a standardized industrial process, typically backed by an equivalent warranty.
Three characteristics make remanufacturing a strong entry point into the Circular Transition:
- Margin on products you already sell: selected remanufactured products can be offered at 60-80% of the price of comparable new ones, opening additional price points and customer segments without new product development.
- Supply that is not exposed to global markets: reusing parts and components cuts demand for virgin material and improves availability of critical parts where specialized suppliers and minerals are constrained.
- Capabilities the rest of the transition depends on: a company that can secure returns, grade them reliably, remanufacture to OEM quality and sell at a defensible price has already built the foundations every other circular strategy requires.
This is why remanufacturing is more than a compliance response to expectations such as ESRS E54. It is where circular ambition becomes a measurable margin per unit.
Encory: what scalable circularity looks like in practice
Automotive shows this at industrial scale. Encory, a joint venture between the BMW Group and Interzero, was founded to help OEMs and suppliers implement circular business models and manage reverse supply chains.
The problem it solves is the one most manufacturers face: dispersed returns, fluctuating quality and volume, non-negotiable OEM standards, and no commercial model that pays for itself. Encory's answer combines four elements:
- Circular strategy and implementation: advising OEMs and suppliers on product design, business cases and regulatory compliance.
- Reverse logistics: sorting, grading and routing returned components through its own facilities and a global network of logistics centers known as “Relife Points”.
- Remanufactured parts portfolio: certified remanufactured parts for BMW and MINI vehicles meeting OEM quality standards, showing that remanufacturing can carry a premium proposition.
- Market development: expansion into the independent aftermarket, positioning remanufactured parts as credible alternatives rather than “second-best”.
No single element makes the model scalable; the combination does: secured access to returns, defined quality standards, a physical network backed by data, clear ecosystem roles and professional marketing as a quality product.
Remanufacturing scales when return access, industrial operations, data, quality assurance and commercial demand are designed as one business system rather than individual projects.
Recommendations: five steps from ambition to scale
Based on our client work, each step is defined by the decision it closes and the deliverable it produces.
- Identify the circular value pools: Segment the portfolio by residual value, material value and technical suitability, and test demand against access to returns. Deliverable: circular opportunity heatmap.
- Validate the business and operating case: Size demand, return volumes and quality, yield, processing cost and cannibalization effects. Deliverable: integrated business case and scenario model.
- Design the closed-loop model: Reverse flow design, make-or-buy and partner model, target operating model and RACI, data architecture, quality and warranty model. Deliverable: circular operating model blueprint.
- Pilot with scale in mind: Bound the pilot to defined products and markets, fix baseline, targets and stop criteria, and test returns, yield, quality and demand. Deliverable: validated pilot and scale decision.
- Industrialize and scale: Standardize processes and data, extend partners and markets, install rollout governance and performance management. Deliverable: industrialization and market rollout roadmap.
Progress is tracked on a small, consistent set of measures: contribution margin per remanufactured unit, core recovery rate, remanufacturing yield and cannibalization-adjusted incremental revenue, calibrated per product family.
Circularity becomes a competitive advantage when companies translate it into scalable value creation across their product portfolios, operations, and ecosystems.
Manuel Schuler, Partner at BearingPoint
Circularity is not a trend. It’s a fundamental shift in how value is created and sustained. Our job at Encory is to show what that shift looks like in practice and make it scalable.
Alexander Maak, CEO of Encory
