VW Launches Reorganized Parts Unit

Volkswagen AG says its restructured parts operations will free up funds for the company’s electrification plans while helping to phase out products with a dim future.

VW purchasing leader Stefan Sommer says the company expects the part unit will eventually deliver an operating return of about 6%. There are no plans to spin off all or part of the business.

VW began plans to merge its division-level component operations into a single unit more than two years ago. One objective was to identify components to phase out—heat exchangers, for example—to free up funds for mobile electric-car charging units, Sommer says.

The new unit represents 61 plants worldwide, employs 80,000 people and generates annual sales of €22 billion ($25 billion). VW predicts the unified parts operation will help the group save as much as €2 billion by 2025.

The carmaker has said it will spend €3.8 billion ($TK billion) on parts, including batteries, for electrified vehicles.