The influence of electrification on after-sales activities

What effects can we derive from the rising production and demand of Battery Electric Vehicles (BEV) on dealership after-sales activities?

In terms of new vehicle registrations, 2020 accounted for the largest increase in BEV and Plug-In Hybrid Electric Vehicles (PHEV). According to the German KBA institute were 3 out of 10 new vehicle registrations in Germany in September 2020 BEV or PHEV vehicles. In spring 2020, only 1 out of 10 newly registered vehicles was electric.

External motivators impact sales significantly. The German government awarded environmental subsidiaries when customers collected an electric vehicle. Besides subsidiaries, several other trends are present that validate this tremendous change in the automotive industry. German industry leader Volkswagen assumes that by 2025 the share of EVs will be 25%. Volvo declares focusing their operations only on EVs and PHEVs from now on.

The manufacturers’ strategy seems transparent–but its impact on dealership after-sales activities is maybe not so transparent and clear at all.

Panoff Consulting developed a framework that consists of five organizational components to analyze these consequences for dealerships.

Structure
The physical construction of a traditional dealership will face a radical renovation. Due to decreasing maintenance demands are far lesser lifting platforms and repair stations required.  According to the 2018 edition of the Deutsche Automobil Treuhand (DAT) report are after-sales activities dived into repair & body repair (45%) and maintenance (55%). More than half of existing business activities are facing pressure since electrically powered vehicles demand maintenance to a far lesser extent. Dealerships must gain charging facilities that come with a high cost. How does the charging infrastructure create revenue for the dealership?

Staff
The skills of employees in dealerships will have to be significantly different in 10 years than they are today. For the reasons mentioned above, we can deduce that classical mechanics and mechatronics technicians are no longer needed in large numbers. Rather, digital skills become inevitable within the workshop since challenges of vehicle users will migrate to the area of connectivity between its user and the vehicle itself. New functions like software over-the-air, app vehicle connectivity, and drivetrain and battery knowledge must be a part of the skill set of a future service employee.

Processes
Workshop processes have been in a state of upheaval for a long time in the age of digitization. Switching to electrically powered vehicles is only a drop in the ocean. On a more specific level, it could mean that it is no longer necessary to differentiate between service advisors and vehicle technicians.

According to our foresight, a vehicle technician could transform into a digitally savvy service advisor who demonstrates and sells solutions to customers. This revolutionizes the process for the customer remarkably so that customer requests can finish much quicker and even remotely compared to classical maintenance.

Developing new business models to generate additional revenue streams are becoming vital for dealerships to remain profitable. So-called app enrollments, i.e., activation of the connection between vehicle and user, are now free.

Systems (IT)
The central component of the strategic transformation from combustion engines towards electric vehicles is the vehicles’ artificial intelligence and connectivity capacity. Vehicle issues are after customer approval automatically forwarded to the dealer. Resulting in urgency on dealer systems and forcing dealers to innovate their systems to communicate with their customers. Dealers are advised to accept in-car appointment scheduling for customer services. A prerequisite to doing so is the standardization of workshop services planning to facilitate this solution to customers. It also requires a uniform customer master database between OEM and dealer to guarantee a 360-degree customer perspective. All requirements have to be met to provide the best customer support possible.

Leadership
Guiding the transformation of the four building blocks for a successful after-sales business model requires proactive management skills. At an early stage, dealership management should act as a leader instead of a classical manager. However, a highly skilled management team that is relying on an as-is situation is insufficient. Successful implementation of an after-sales business model requires putting customer demand as priority number one.

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Panoff Consulting is committing to digitalize car sales strategies and processes at the core level for manufacturers, Sales Companies, and Retailers.

Our industry expertise in redefining or optimizing your strategy and operations is our core value. Our goal is to serve your clients a digital, efficient, and transparent sales and after-sales experience where the focus lies on product excitement and a high conversion percentage.