FRANKFURT -- Volkswagen Group aims to build a new warehouse to store high-voltage traction batteries as part of a plan to "significantly expand" its aftersales business amid a projected rise in electric-vehicle demand in the next decade.
The sale of original equipment replacement parts for repair and maintenance, a major part of overall aftersales, may not be a glamorous side of the industry, but experts say it is extremely lucrative business whose margins are a closely guarded secret.
VW said EVs will have a negative effect on the business all things being equal, as repair costs are forecast to be 20-30 percent lower due to the reduced mechanical complexity and less wear and tear.
"For a long time now, aftersales has been an important source of support for Volkswagen Group profits. In view of the transformation towards electric mobility and digitalization, we are hard at work to ensure that remains the case in the future as well," said Christian Dahlheim, head of group sales.
VW forecast its fleet of cars on global roads will grow by half to 150 million vehicles by 2030, of which 10-15 percent are expected to be electrified.
Dahlheim says this surge in its onroad vehicle fleet will help more than compensate for the lost repair work from EVs and help original equipment aftersales to considerably increase both its top-line and bottom-line results.
Revenue generated from this business rose 1.9 percent last year to 15.9 billion euros, faster than the pace seen by the delivery of passenger cars. It accounts for nearly 7 percent of the company's overall 236 billion euro turnover.
In order to better service EV customers, the group will create new warehousing space for high-voltage traction batteries and key battery subcomponents like modules at its German site in Kassel, where it currently has over 1.2 million square meters of space.
Volkswagen will offer a guarantee for its ID family that ensures at least 70 percent of its battery capacity will remain operable after eight years or 160,000 kilometers (100,000 miles).
Nonetheless, VW expects a rising number will be needed, for example in the event of a crash that could compromise the structural integrity of the battery pack.
By 2025, the group expects to sell as many as 3 million electrified vehicles annually and a quarter of its European volumes will come from this side of the powertrain portfolio.