<p>The switch to Circular Economy (CE) is essential to sustainability in the manufacturing process, and the automobile industry is not an exception. This paper determines and discusses the main challenges that prevent this shift in the car industries of Rajasthan, India. The study, using a systematic review of literature and consulting with industry experts intensively, determined nine important barriers that were then grouped into four broad clusters, namely; technological, environmental, supply chain, and financial. In the study, a questionnaire survey in a structured format was created and sent to a strong sample in the industry, the reliability of the data obtained through Cronbach alpha. Quantitative method structural equation modeling (SEM) was used to quantitatively analyse the complex interrelationships between these clusters of barriers with SmartPLS 4 software. The results indicate that such four clusters are all meaningful barriers, but technological barriers are the top most barriers to the implementation of CE. This study makes a contribution both in theory and practice. It provides a proven, systematic knowledge of the obstacles peculiar to one of the major industrial areas in India. To managers and policymakers, the research can be viewed as a strategic roadmap, which implies that technological investment and development should take precedence to develop viable and actionable strategies to apply the principles of the circular economy and boost sustainable transformation in the car industry.</p>