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Derrick Woolfson

Derrick Woolfson Business Development Manager

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Are You Plugged In? Top Reasons You Need to Join the EV Conversation!

OEM’s are continuing to develop Electric Vehicles, and while they are not dominating the market quite yet - it is important to take note on how they will - in time - affect the service department. Namely, dealer service centers will have to start taking notice of the EV trend and shift the services they offer to both accommodate the market and their new customer. Of course, while maintaining their profitability.

Electrek suggested that electric vehicle sales grew over 40% from 2012 - 2016 within the U.S. This is a staggering percentage - while it does not seem (on paper) large enough to shift both the conversation and services offered. It does suggest that dealers (especially those with OEM’s who are heavily pushing production) should start to entertain how they will provide services for their customers who have EV’s.

Here are the top items to entertain when discussing the servicing of Electric Vehicles within your service center:

Electric Vehicles Still need Service (but is there a catch?)

Just because the vehicle is electric does not mean that it is free of required services. And while it does not require oil changes or spark plugs - it will still need new brakes, ball joints, shocks, tires, cabin filters, and lastly it will, of course, have *more* electronic components. Components that will inevitably malfunction at one point or another requiring service.

That said, dealers will still be able to sell service agreements for these vehicles. Besides, when is the last time a dealer said: “oil changes are incredibly profitable.” With many dealers giving away oil changes to “retain” the customer.

Lastly, the OEM will still have required/suggested service intervals. Those intervals, though, will be focused on maintaining the vehicle.

Restructure Dealer Rewards Program

It is no secret that your dealer rewards program can be costing you thousands of dollars to run. Everything from the free oil changes to keep the customer in retention per the OEM’s guidelines - to the steep discounts you offer with coupons. All of which shaves money off your overall bottom line.

With the electric vehicle - you can restructure the rewards program to increase profits. The customer will still have to maintain their vehicle, but you do not have to give away free batteries, windshield wipers, brakes, etc. Instead, you can create service contracts that essentially become residual income. Offering the customer “rewards points” much like other brands do - such as “earn %” back on your purchase. In turn, allowing the customer to collect rewards points towards their service bill.

New Services that Dealers Can Make Money On

All things electric require knowledge and the ability to operate them. The customer - who will get a demo at the time of delivery - might require additional training on their vehicle. Dealers can (depending on location, etc.) offer in home services/tutorials for the vehicle. Charging the customer for the service. (No customer is going to pay for that, right?) Well, you’d be surprised. People do spend hundreds of dollars going to Apple’s Genius Bar to learn more about their ‘electronic’ devices, no?

Another component that the dealer will continue to make money on is the selling and maintaining of the vehicle's battery. Selling the customer an in-home charging station, which for those (even with extended mileage) will still most likely consider purchasing a charging system.

The takeaway from this is that while the electric vehicles do not own the market for now.  There will be incremental increases year over year. OEM’S will continue to promote and develop the electric vehicles. All of which is shifting the consumer's mindset as to what it has to offer - especially because anxieties are down regarding the range that the vehicle has to offer! 

It is better to join the conversation now than wait until it’s too late having developed an incremental plan that is both lucrative and adaptive to the current trend in the market. 

How do you handle EVs? Do you know how many you service daily? What are your thoughts on EV’s?

 

Tori Zinger

All great points for any fixed ops department. While, as you mentioned, EVs are not dominant in the market yet, they inevitably will be, so now is the time to start planning -- that way you're ahead of the curve (and ahead of your competition!) when they do come to dominate the market!

Scott Larrabee

Some great forward thinking here! 

Chris K Leslie

I've been asking for a Volt demo so I can start blogging about it. Hopefully i'll get one this year. 

R. J. James

Derrick... Thanks for this "Food for Thought"!  Dealerships are so "OEM Dictated" and "Consumer Reactive" that most have not started the conversation and planning for the 2020 retail auto business environment.  While I am sure the big auto groups are working on EV strategies, hopefully your article will kick-start conversation at the mid-size dealership level.

Tori Zinger

Agreed, R.J. James. It's the ones who start preparing now that will be ahead of the ballgame when everyone else starts joining the conversation.

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