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January 18, 2021

EVs Will Force Dealerships to Change Their Aftersales Service

The popularization of battery electric vehicles (BEVs) will change how dealers or casas, if you prefer the colloquial term, operate.

It’s no secret that a typical dealership derives most of its revenue through parts and aftersales service. However, a recent study estimates that BEVs will shrink that amount by 40 to 50 percent. Some of the reasons for the lower revenue? BEVs don’t require oil changes, BEVs could have brake pads that can last up to 100,000 kilometers, and OTA or Over-the-Air software updates that may keep customers out of service bays.

Some carmakers predict that as EVs become more and more mainstream, dealers will need to have a customer retention rate of around 80 percent just to breakeven in terms of revenue. Currently, that figure drops to as little as 50 percent by the third year. With that, dealers should re-think their operation or else they’ll see their service department upended.

Dealers that can demonstrate to BEV buyers that they are prepared to support their vehicles will be the ones that will win out.

As the average repair order decreases for EVs versus their internal combustion engine counterparts, dealers must offset that with higher retention and the number of repair orders. In addition, they can parlay that advantage into making them service customers beyond the warranty period.

As a start, the less frequent service visits will make it more critical for dealers to keep in contact with customers. Whether via text messages, social media, or dedicated apps, maintaining relationships with customers, even when they don’t visit the dealership regularly, becomes critical.

Hand-in-hand with keeping in touch with customers, dealers shouldn’t think twice in investing in the special tools and training required to service BEVs. Dealers must treat the electric motor and battery pack the same way they do a gasoline or diesel engine. As buyers remain skeptical of BEVs (as high as 83 percent in used ones), dealers could provide a perspective on how a battery is degrading. This could potentially keep residual values up, and demystify long-term BEV ownership.

At the end of the battery’s lifecycle, dealers can also explore ways to offer proper recycling or re-packing services.

That said, with internal combustion engines still making up a majority of new car sales in the short to medium-term, dealers could also pivot their business to fleet maintenance, targeting in particular the new generation of fleet vehicles that are in high daily use. These could include those used in ride-sharing services like Grab and parcel delivery companies such as Lalamove and Transportify.

Still stuck with excess service capacity in the BEV era? Another source of revenue would be to consider bringing in collision repair services in-house, rather than sub-contracting them to a third-party.

Ultimately, BEVs, with their infrequent and low-peso repairs will force dealerships to change. As they see their service and parts revenue likely to shrink as sales of traditional vehicles fade, they must look to other avenues to offset the revenue declines.

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