The main elements of the vehicle recycling system in Russia are considered on the example of passenger cars. The main problems of decommissioned vehicles recycling in the context of a cyclical economy development are described. The article presents a critique of the current state recycling policy. The strategy for the development of recycling projects that can be implemented both by the state and by private companies entrusted by the state is suggests. The article presents a structural analysis of imported cars, foreign brands of Russian production and domestic cars from the total sales for 2017 and 2018. Data on sales volumes of the best-selling car models in Russia are presented. The main advantages of the production of foreign cars in Russia in terms of the impact on the emerging Russian recycling system for decommissioned vehicles are identified. Recommendations on implementation of projects related to recycling and calculation of recycling fees are offered. The study developed two ways to use recycled material from car recycling, which can recoup some of the costs of recycling, increase the percentage of import substitution of components for the automotive industry and create a closed-cycle economy.