Volkswagen Group said it would expand its after sales business, targeting the growing vehicle fleet and stronger customer loyalty for sustained growth despite the fall in maintenance costs for electric vehicles.
The group's after sales operation supports 100m vehicles worldwide with around 50m more expected to join the fleet by 2030. Parts are supplied by 154 depots globally and genuine spare parts sales reached EUR15.9bn in 2018.
How well do you really know your competitors?
Access the most comprehensive Company Profiles on the market, powered by GlobalData. Save hours of research. Gain competitive edge.
Thank you!
Your download email will arrive shortly
Not ready to buy yet? Download a free sample
We are confident about the unique quality of our Company Profiles. However, we want you to make the most beneficial decision for your business, so we offer a free sample that you can download by submitting the below form
By GlobalDataAmong coming changes: the master parts depot in Kassel will add a warehouse for high voltage electric vehicle batteries.
"The growing number of electric vehicles with maintenance costs that are about 20% to 30% lower than conventional vehicles will have an impact on after sales business in the future," VW said in a statement.
"Nevertheless, the group plans to considerably boost sales and profit from after sales over the next few years. The main drivers will be growing customer loyalty through digital services and the steady growth in the fleet of group vehicles.
"Currently, 100 million vehicles receive support from 25,000 service stations throughout the world. By 2030, there will already be about 150m vehicles."
Genuine parts sales of EUR15.9bn in 2018 were up about 2% year on year.
Christian Dahlheim, head of group sales, said: "After sales business has been a mainstay of the Volkswagen Group's profit for many years.
"Against the backdrop of the transformation towards e-mobility and digitalisation, we are working intensively to ensure that this remains the case in the future. We will continue to significantly expand this business area, which is important for us and our service partners."
VW said, depending on vehicle use, the difference in maintenance costs may be between 20% and 30% and would have an impact on future after sales business. With the numbers of electric vehicles already planned – up to 3m throughout the group by 2025 – the electric share in the total vehicle fleet will probably reach between 10% and 15% by 2030.
Conventional vehicles with higher maintenance potential will therefore still continue to account for a significant share of the vehicle fleet over the years to come, the automaker added.
The group also sees "considerable potential" for boosting customer loyalty in after sales through the consistent digitalisation of sales processes and the networking of vehicles.
Imelda Labbe, head of group after sales said: "Digital after sales is our answer to the transformation of the automotive industry and the resulting strategic challenges for the after sales business model. Together with our service partners, we will address our customers considerably more individually than is currently the case and will significantly strengthen their loyalty. Vehicle maintenance will become an all-in experience: more convenient, more efficient and more transparent."
The joint use of data by dealers and the manufacturer, subject to customer approval, will allow owners to be contacted in a more individual way than is currently the case. For example it will be possible to inform the customer proactively concerning upcoming service events via the customer's smart phone or the vehicle infotainment system. This will also include proposing specific dates for appointments at the owner's preferred service centre.
At the service centres, digitalisation will make many processes more efficient. Currently, an average workshop order gives rise to about 80 minutes of administrative work on up to 15 different systems. With the introduction of the future system generation of digital after sales, the aim is to limit administrative work to an average of only 15 minutes, a drastic reduction of 80%. Service advisers will no longer be burdened by work that does not add value and will be able to concentrate on advice for customers.
In addition, the growing group vehicle fleet will further boost after sales business. It has currently reached about 100 million and will probably grow by about 50% by 2030 on current estimates. This growth will offset the effect of the lower maintenance costs for electric cars, VW says.
The Kassel parts centre operates a pilot plant to determine the optimum storage conditions for high voltage batteries. These batteries are generally designed for the entire life cycle of an electric car; however, replacement batteries must be available, for example in the event of accidents. Following the completion of the project, it is planned to develop appropriate warehousing capacities.
About 2,400 employees work at Kassel. They ship parts to 86 countries around the clock from a storage area of 1.2m square metres. An average of 220 trucks, 111 railcars and 68 containers leave the depot daily.
