Why Three PE Giants Are Chasing This Obscure VW Subsidiary

Three of the world's largest private equity firms are circling an obscure Volkswagen subsidiary you've probably never heard of. Blackstone, EQT, and CVC Capital Partners have all submitted bids for Everllence, according to the Financial Times. The question isn't who will win—it's why they're fighting over it at all.

The Hidden Gem in VW's Portfolio

Everllence operates in the automotive parts and services sector, hardly the sexiest corner of the market. But that's precisely the point. While everyone's obsessing over electric vehicles and autonomous driving, these PE giants are betting on something far more mundane—and profitable.

VW's motivation is straightforward: the German automaker needs cash for its €89 billion electric transition plan. Selling non-core assets like Everllence frees up capital for battery factories and software development. It's corporate finance 101.

But the real story is why three firms with a combined $1.2 trillion in assets under management are competing for what appears to be a mid-tier auto parts business.

The Aftermarket Goldmine

The automotive aftermarket—parts, repairs, and services for existing vehicles—generates $400 billion annually worldwide. Unlike the volatile new car market, this sector offers something private equity loves: predictable cash flows.

Think about it: your car needs maintenance whether it runs on gasoline or batteries. In fact, as vehicles become more complex with advanced electronics and software, the demand for specialized services is growing, not shrinking.

Tesla learned this the hard way. Despite controlling its direct sales channel, the company still struggles with service capacity and parts availability. Traditional automakers like VW have spent decades building these networks—assets that suddenly look very valuable.

The PE Playbook Unfolds

Private equity's interest in automotive suppliers follows a familiar pattern. First, identify a fragmented industry with stable demand. Second, buy a platform company. Third, bolt on acquisitions to create scale. Finally, optimize operations and exit at a premium.

The automotive parts sector checks every box. It's fragmented across thousands of suppliers, generates steady cash flows, and offers consolidation opportunities. Plus, there's the digitization angle—transform a traditional parts business into a data-driven service platform, and valuations multiply.

Blackstone has already proven this model works. The firm's portfolio includes several automotive service businesses that have delivered strong returns through operational improvements and strategic acquisitions.

VW's Strategic Dilemma

For Volkswagen, this sale represents a broader strategic question: should automakers own their entire value chain, or focus on core competencies?

The company faces pressure from multiple directions. Chinese competitors like BYD are gaining market share with vertically integrated models. Meanwhile, tech companies like Apple and Google are reimagining cars as software platforms. In this context, divesting non-core assets makes sense.

But there's a risk. If Everllence becomes more valuable under private equity ownership—through better management, digital transformation, or strategic acquisitions—VW might regret the sale.

The Bigger Picture

This bidding war reflects a fundamental shift in automotive industry structure. As electrification accelerates, the traditional integrated model pioneered by companies like Ford is breaking down. Specialized players are emerging in batteries, software, charging infrastructure, and yes, aftermarket services.

Private equity firms are betting that this disaggregation creates opportunities. They can buy undervalued assets from cash-strapped automakers, improve operations, and sell to strategic buyers or take them public at higher multiples.