Proper management of mutual interference plays an important role in the successful simultaneous operation of automotive frequency-modulated continuous-wave (FMCW) radar sensors at different vehicles. Compared to traditional interference handling concepts such as detect-and-mitigate or detect-and-avoid, the detect-and-exploit paradigm turns the originally interfering signals into signals of interest and uses them to obtain information about the environment. Following this idea, a method that implements such an interference exploitation strategy in terms of joint passive spectral sensing and localization of surrounding objects is elaborated and presented in this work. In summary, the method consists of a dedicated radar operational mode and a corresponding signal processing chain including pre-processing, beam steering-based signal component separation, maximum likelihood (ML)–inspired signal parameter estimation, and joint direction of arrival (DoA)-time difference of arrival (TDoA) based object localization. The unique advantage of the presented concept compared to over-the-air synchronization (OTAS)-based solutions is that it can also deal with interferers that change their ramp parameters over time. The applicability of the concept is both theoretically analyzed as well as practically demonstrated by means of measurements in an anechoic chamber, where the position of the interferer and an additional object in the surrounding can be determined with an accuracy of a few centimeters.