KPMG has published a study positioning the circular economy as a strategic priority for two of Europe's most material-intensive sectors: manufacturing and automotive. The report's central claim is that circularity has moved from the sustainability margins of corporate strategy into decisions about sourcing, product design and asset value.

The study covers both industries together for a reason. They share the defining characteristics that make circular business models economically consequential: long-lived products, deep bills of materials, heavy dependence on metals and critical inputs, and reverse logistics chains — take-back, remanufacturing, component recovery — that already exist at industrial scale.

Why does the timing matter?

The automotive sector faces simultaneous pressure from electrification, tightening EU end-of-life vehicle rules and volatile raw material markets. For manufacturers, the study argues, circular design and material recovery are no longer reputational add-ons. They function as hedges against input price exposure and supply concentration.

KPMG frames the circular economy as a question of industrial competitiveness rather than environmental reporting. That framing matters for plant-level decision-makers: it shifts the conversation from communications departments to operations, procurement and capital allocation.

What does 'strategic importance' mean in practice?

According to the study's argument, circularity becomes strategic when it touches:

• Material supply security — recovered inputs substituting for primary materials exposed to price and geopolitical risk;
• Product and process design — durability, repairability and disassembly decided at the drawing-board stage, not at end of life;
• New revenue models — remanufacturing, refurbishment and servicification extending asset value beyond first sale;
• Regulatory positioning — compliance architecture built ahead of tightening extended-producer-responsibility and end-of-life regimes.

Built capacity versus pledges

For an industry audience, the study's argument lands on a familiar distinction: announced circularity pledges are commitments with deadlines, and only some are backed by operating capacity. Automotive and manufacturing firms have made a long run of recycled-content and recovery targets in recent years. The test KPMG implicitly sets is whether those pledges translate into qualified material streams, sorting and reprocessing capacity, and traceable accounting at the plant level.

That is where the material stream meets the balance sheet. A remanufacturing line needs guaranteed feedstock quality. A recycled-content target needs auditable supply. The study's strategic framing only pays off if the industrial infrastructure — collection networks, dismantling capacity, secondary-material markets — grows in step with the pledges.

Who is behind the analysis?

The study comes from KPMG, one of the Big Four professional services firms, which has built a practice line around circular-economy advisory for industrial clients. The audience is corporate: boards, strategy units and operations leadership deciding capital allocations under tightening resource and regulatory constraints.

What decides what happens next?

The milestone to watch is regulatory. In the EU, the end-of-life vehicles regulation and the broader circular economy legislative agenda set the compliance clock for the automotive value chain, while ecodesign requirements push manufacturers toward durability and recyclability criteria. Firms that treat circularity as strategy — as KPMG urges — will move ahead of those deadlines. Firms that treat it as reporting will meet them late, and pay for it in material costs.

The study itself contains no new tonnage figures or plant investment numbers. Its significance is directional: a major advisory firm has concluded that for manufacturing and automotive, the circular economy now belongs in the core strategy document — and its clients are presumably acting accordingly.