Unexpected Boost: Dealers Find EVs Increase Fixed Ops Revenue

As dealers gain more experience with electric vehicles, they grow more comfortable with how EVs will impact their fixed ops’ profits. In fact, public companies’ earnings reports show EV repairs generate more revenue per average repair order than vehicles with internal-combustion engines.

As a group, the six largest publicly traded new-vehicle retailers report $4.2 billion in Q3 parts and service revenue, an increase of 4.3% vs. the third quarter of 2023. Year to date, after nine months, fixed ops revenue for the group was $12.2 billion, up 2.7%. That’s on a same-store basis.

Penske Automotive, Bloomfield Hills, MI, reports the biggest percent increase in third-quarter parts and service revenues vs. the same quarter a year ago – up 7.2%, to $730.9 million. Asbury Automotive had the smallest percent increase, up 1.1% vs. the year-ago quarter, to $524.7 million.

The result: Electric vehicles have turned out to be a positive in fixed-operations revenues, dealers say.

“I think there’s going to be a few more years of higher dollars on BEVs,” says David Hult, CEO of Asbury Automotive Group, Duluth, GA, referring to BEVs.

Asbury’s third-quarter report shows its average repair order in Q3 for BEVs was $865, vs. $629 for plug-in hybrids or $517 for ICE vehicles and plug-in hybrid-electric vehicles.

“There’s just a lot of technology in these vehicles, and you add wind, weather and cold and it just creates a lot of disruption. So, I think in the near-term, it’s good,” Hult says.

In addition, EV repairs require more complex work than do ICE vehicles. That means post-warranty service retention is likely to improve as the EV mix increases, he says.

“As vehicle complexity continues to increase, it becomes more difficult for do-it-yourself and independent service shops to compete against franchised dealers who have the capital, tools, training and software access to make more complicated repairs,” Group 1 reports in its Q3 presentation.

Roger Penske, chair and CEO of Penske Automotive Group, says EVs generate more hours in the shop partly because of the time it takes to program the software.

“There’s no question BEV vehicles are taking more time, because of programming, than an ICE vehicle,” Penske says. The average repair order for a BEV is about $1,300, vs. about $700 for an ICE vehicle, he says, adding it's unclear when that situation might reverse itself, making BEVs cheaper to repair than ICE vehicles.