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Volkswagen to expand after sales business

Electric cars require less maintenance and service than conventional vehicles. Nevertheless, in an era of e-mobility, Volkswagen Group intends to expand its after sales business further.

Blue steel containers as far as the eye can see: 60-meter-long aisles and shelves stacked high to the ceiling. Hubcaps, mud flaps, headlamp brackets, next to them insulating panels for the engine compartment. Spare parts are stored on three levels in Volkswagen’s central depot in Baunatal near Kassel. From here, the Group primarily supplies European dealers with spare parts. Increasing deliveries are also being made to North and South America and China, Volkswagen Group’s largest sales market.

Some 480,000 original spare parts of all kinds are stored here in Baunatal. They come from more than 6,000 suppliers. Every day an average of 220 trucks, 111 railcars and 68 containers leave the logistics halls. The 2,400 employees employed here, supply a total of 1.2 million storage spaces from Group vehicles in 86 countries. Every year, 17 million customer orders are processed.

After sales segment sales and earnings strong

The after sales segment is very strong in terms of sales and earnings. With sales of 15.9 billion euros in 2018, the Genuine Parts division of the Volkswagen Group is in the Dax league of companies alone. Baunatal supplies 25,000 service stations worldwide with original parts, which currently service around 100 million customer vehicles. By 2030, the worldwide vehicle population will continue to grow significantly, to around 150 million vehicles according to current forecasts.

Christian Dahlheim, Head of Volkswagen Group Sales

The significant growth in the vehicle population is an important driver of the after sales business. Against the background of the current transformation, this is of particular importance, as e-mobility will have an impact on the after sales business. Because electric cars have fewer parts than internal combustion engines – only 3,000 instead of 4,000. Because electric cars require less service than internal combustion engines, because the replacement of some fluids, such as transmission oil, is completely eliminated. And because e-cars incur fewer maintenance costs overall.

“In terms of maintenance and wear, experience with our current electric vehicles shows that sales are between 20 and 30 percent lower than for a comparable conventional vehicle,” says Christian Dahlheim, Head of Group Sales, in Baunatal. “Against the background of the transformation towards e-mobility and digitalization, we are working intensively to ensure that after sales remains an important source of earnings for the Group in the future. We will continue to significantly expand this very important business for our service partners and ourselves in the future.”

“Fewer parts per car? More customers!”

Imelda Labbé is also working on this issue. She is responsible for the worldwide after sales business from Baunatal. Her answer is brief, but strikingly simple: “If there is less turnover per car, then we need more customers.” To achieve this, the Volkswagen Group must be able to increase the loyalty of its after sales customers, especially with older vehicles. There is currently a tendency for customers to frequently drive their vehicles to the brand workshop in the first few years. After that, or at the latest after a change of owner, however, loyalty declines significantly. Owners of older vehicles often leave it to independent workshops “because they think they can get away cheaper”, as Dahlheim says. “We will increasingly fight harder to retain these customers in the future.”

Imelda Labbé is responsible for the Group’s worldwide after sales business from Baunatal

Digitalization offers the opportunity to do this. Dahlheim and Labbé are certain that the after sales sector will benefit from it. This will make the processes much simpler for everyone involved. This gives the account manager more time for their customers. In figures: With an average workshop stay today, around 80 minutes are required for administrative activities in up to 15 different systems. With the digitalization of after sales, it should be only 15 minutes.

The fully networked car offers further opportunities in the future. It will become a “smartphone on wheels”. “With the customer’s consent, we will then be able to network their data with that of the vehicle and that of their dealer,” explains Imelda Labbé. This is a good way to address customers more individually and to proactively win them over to the dealership. This will significantly change the customer experience, which today is almost exclusively reactive, i.e. only begins when a service event has already occurred.

The logistics halls in Baunatal are monitored from one single control center

By 2028, the Volkswagen Group will be launching around 70 all-electric models onto the market. By 2025 alone, around a quarter of the Group’s vehicles sold in Europe will be purely electric. By 2030 their share is to rise to 40 percent. However, it will take longer for e-cars to reach a significant proportion of the vehicle population. Given the ambitious number of e-vehicles currently planned – up to three million throughout the Group in 2025 – the proportion of e-vehicles in the total vehicle population in 2030 is expected to be between 10 and 15 percent. Conventional vehicles with a higher maintenance potential will therefore still account for a considerable share of the vehicle population in the coming decades.

But new car buyers of combustion vehicles are also expected to become more loyal customers as a result of digitalization. If they register in the Volkswagen “We” digital platform and agree to the transfer of their data, they can also benefit from all future digital after-sales services.

Pilot project for battery storage

The Baunatal site is fully geared to the challenges of e-mobility. A pilot project for the storage of high-voltage batteries is currently underway there. The Volkswagen Group guarantees its customers that the battery will function faultlessly for eight years and for at least 160,000 kilometers. During this time, it must still be in the range of at least 70 percent of the usable capacity. The pilot plant is currently testing the optimal storage of batteries. Among other things, this involves ideal storage temperatures and the best adapted maintenance current. At the same time, battery applications for the so-called “second life” are being tested. A battery that can still be charged up to 60 percent can also perform well, for example in the mobile charging stations of the Component Group, resulting in a high value.

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