The Hybrid, Electric Vehicle (EV) Takeover

Business Insights

When a customer comes into your workshop and asks your advice about their hybrid or electric vehicle (HEV/PHEV/EV), can you answer their questions or solve their problem…or do you have to send them to the dealership?

Every day, more and more dealers are having to ask themselves these questions as the (HEV/PHEV/EV) market grows. In 2002, Honda and Toyota started selling hybrid vehicles. The Prius and the Insight were the only 2 models available. Today, there are over 120-models from almost every vehicle manufacturer, and that number will continue to grow.

Over the last 40-years, this business has seen ongoing changes. Some are categorized as “Evolutionary”, examples being the change from drum-to-disc to ABS brake systems…carburetion to fuel-injection to direct-injection. When these changes occur, we often resist at first, only to succumb, train our people and move forward.

Other changes are categorized as “Revolutionary”. These changes will affect our overall business model. Examples here are stainless-steel exhaust…all-season tires…onboard computers, etc. The (HEV/PHEV/EV) segment is a little of both. The technology is evolving which forces dealers to adapt, but at the same time will impact the way we do business as the segment continues to grow.

What are dealers missing?

If you were to ask a random sampling of tyre and auto-repair shop owners if they serviced hybrids, the majority would likely answer yes. That would be misleading. Most dealers only provide the traditional tyres, alignments, oil-changes etc. What these shops are missing is the additional revenue stream derived from having their technicians trained and capable of servicing the entire hybrid-drive system. The average repair order is higher with hybrids, meaning higher sales and profits. There’s added cost and complexity when dealing with hybrid drive systems and that increases the customer’s cost of service and maintenance. That’s a market driven reality created by (HEV/PHEV/EV) manufacturers.

Every pound you generate from being able to fully service the full hybrid-drive system is purely incremental. It simply did not exist before. There are few avenues within your business that provide this type of new revenue opportunity. Additionally, providing full service for hybrids opens the door to servicing the customer’s other vehicles as well.

Conversely, you provide your competitor the opportunity to take existing business if they position themselves as the (HEV/PHEV/EV) experts. There’s an old saying, “The first in wins”, meaning that the first dealer in the market that embraces new technology and promotes the services will position themselves as the expert and win loyal customers. Dealers today need to differentiate themselves from the competition. If not they settle into the commodity arena and are forced to deal on price to gain customers. If you can service the (HEV/PHEV/EV) segment, it can mean incremental service revenue from other household vehicles and referrals.

As tire dealers, your employees need to be aware that low-rolling-resistant tyres are essential on a (HEV/PHEV/EV) to maintain gas mileage. Drivers watch the MPG on a regular basis and installing the wrong tyre will probably raise a red flag very quickly. That positions your store in a negative light and is a lost opportunity to sell a higher gross-profit tire. Tyres also provide an opportunity to bring the customer back for rotations, air-pressure checks and alignments, synthetic oil-changes, flushes etc.

In the aftermarket segment much of what we sell is purely commodity-priced services. Traditional services such as brakes, alignments and oil changes need to be at or close to the market pricing or you’ll lose business to competitors. If you are offering a unique service capability, such as servicing and maintaining the hybrid-drive system, you’re not selling on price. You’ve differentiated yourself from the competition and has the potential to increase revenues.

The changes in the (HEV/PHEV/EV) segment provide significant opportunities to the aftermarket. If dealers position themselves now, they will grow with these evolutions/revolutions and reinvent their businesses as the vehicle technologies change. Ask yourself what is the ‘COI’ (the Cost of Ignoring). How many changes have we seen over the years and been slow to react to…and how much business was unrealized. Vehicles will continue to evolve, and (HEV/PHEV/EV) will continue to grow. If your shop is in the service business, can you afford to ignore what is projected to be a large percent of the vehicles that pass by your store every day?

(HEV/PHEV/EV) are the future, and those who step up and embrace it today will be the ones who will ultimately win.