It wasn’t very long ago that weird little vehicles, powered by electricity, started popping up. No fumes, no gas or diesel— just plug them in and you’re ready to go. In the beginning, electric vehicles (EVs) were more novelty than practical. They had limited range and gave birth to the very real issue of “Range Anxiety.” Today however, we live in a different reality. Automakers are no longer seeing EVs as trendy, novelty cars, but as a true industry disruptor.
In an interview with Auto Motor und Sport, Markus Schaefer, the head of research and development for the Mercedes-Benz division of Daimler, says his company currently has no plans to develop next-generation internal combustion engines (ICE). Instead, it is shifting its focus to the development of electric powertrains and batteries.
Håkan Samuelsson, Volvo President and CEO, states on their website, “We are determined to be the first premium car maker to move our entire portfolio of vehicles into electrification.”
Today, there are more and more electrics being introduced and many of them seem more advanced than their comparative ICE counterparts. Some EVs no longer use keys; some get automatic updates by Wi-Fi; some have no buttons, dials, or switches on the dash; and some are run completely by a computer screen. There is clearly emphasis being placed on innovation when it comes to EVs compared to the traditional ICE vehicles.
Why Is This Important?
Why am I bringing it up here in the hallowed halls of dealer world? Look at the chart below.
Have you noticed over the last year, regardless of your opinion of their CEO, that Tesla has quietly slipped into the overall rankings ahead of Cadillac, Acura, Lincoln, Volvo, Land Rover, and a slew of other well-vetted brands? They don’t have dealers and they don’t advertise, and yet they are the only manufacturer that has a double-digit increase over last year’s sales. Yes, they have yet to make a profit (and that may come to bite them in the rear), but they are an interesting peek into what might be coming.
Be Forward Thinking. Be Ready.
While the focus on EV vs ICE talk in recent years has been around vehicle sales, I want to change the conversation topic to your service department. Forward thinkers, and those that want to get ahead of market trends, will be prepared to take advantage of more EVs on the road.
For service departments, EVs are a different animal. Basically, an electric vehicle is a battery bank, a motor or two, and a panel to control both. That’s it! There are no rear ends, transmissions, water pumps, fuel pumps, power steering pumps, fuel filters, oil filters, air filters, fuel injection pumps, injectors, EGR valves, ignitors, etc. The only thing these vehicles have in common with ICE vehicles are tires, suspension, body, brakes, and washer fluid.
As forward-thinkers, let’s think over the following questions:
- What is needed in the future to ensure the long-term success of your service department?
- How much should you be investing right now to expand your service operation?
It will take years for electric vehicles to replace ICE vehicles. As of 2018, there were 276.1 million vehicles registered in the United States. They will not just up and disappear, but electric vehicles will start to erode our current base, and they will require far less maintenance.
What Can Dealers Do?
1. Change Hours and Maximize Capacity Before Adding Lifts
My first suggestion would be to go to 2-3 shifts, 13-hour days, or whatever you can reasonably do to use the facility you have to maximize its capacity. Plan for all internal work and pre-delivery inspections (PDIs) to be done at night along with valet customer cars while customers sleep. Remember, most service departments sit idle for 3/4 of the day. Maximize your efficiency!
2. Become Very Good at Selling Used Vehicles
After you make sure you have fully utilized your current facility before adding to it, I would place a big focus on mastering the art of selling used vehicles. The more you sell and retain for future repairs, the more opportunities you will have coming into your shop down the line.
The market will change, and we must be ready for it. It’s not whether you will be at risk, but how prepared you are for that risk.
Want Additional Support?
We at NCM realize that this is an ever-changing landscape, and we are always here to help in any way we can. From 20 Groups and in-classroom training to in-dealership consultations and software and business intelligence, we provide our clients with the most up-to-date information to help them make educated decisions as it relates to their businesses. If you are interested in learning more, feel free to give us a call at 866-661-8288.
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