One of the biggest question marks regarding the transition to electric vehicles centers on the service department. This integral profit center has been tailored over the years to service and repair vehicles with gas engines and now there will be vehicles with hundreds of fewer parts and less routine maintenance. How can service departments make a profit, and even grow, with this new technology heading their way?
CDK Global posed this question to service leaders in a new study, “EV Service: Today and Tomorrow,” and the responses were split cleanly between their hearts and their heads. Only 42% felt positive about the EV future. But when they were asked about future revenue, 79% said they expect total revenue to increase in the next two years with EVs added to the service bay.
There are two main reasons for this belief. One, the typical repair order for an EV today is higher than a traditional gas car. The high-tech machines are costly to fix and much of it is under warranty. The second reason is simply that dealers are the only game in town…for now.
Every dealer in our survey said they either were already servicing EVs or were actively preparing for it in the next two years. And 99% of the dealers we surveyed said they had at least a portion of their service technicians trained on EVs.
Independent service shops haven’t gone through the outfitting and training to handle EVs that franchised dealers have already done and will do. And unless I missed it, there is no chain of service centers ready to tackle fixing and updating EV software.
That’s likely why 37% in our survey predicted an increase in customer retention with another 40% confident it would remain the same.
Dealers need to look at this moment as one of great opportunity.
There may be disruption on the retail side of the business, but as of now we’re not seeing that in the service lane. These vehicles are simply too complex.
The fact that EVs don’t require oil changes is looked at as a negative because that’s a routine service bringing in consistent revenue that will disappear. But it is also a service that can be easily taught. Diagnosing a problem with an EV’s software and hardware cannot.
In a separate study earlier this year, CDK found that factory-trained technicians and certified parts ranked highest among service shoppers as “must-haves” among all offerings. There’s little doubt as the next wave of EV owners look for reliable service they’ll turn first to the franchised dealer because they are the ones owning this expertise.
These inherent advantages actually could lead to complacency, especially since only 2.5% of all repair orders are for EVs. But this is the moment when service departments need to showcase their EV know-how while delivering exceptional customer service at the same time.
David Thomas (pictured, left) is director of content marketing for CDK Global.
