Love him or hate him, Tesla’s Elon Musk is brilliant. As both a businessman and a marketer, he has created a loyal following of brand advocates – some of whom don’t even own the products he sells. There are consumers literally willing to wait years just to purchase a Tesla vehicle. He recently launched a car into orbit, which is now on its way to Mars -- the man continues to find ways to impress, or confound, depending on your perspective. The second anyone starts analyzing his inefficiencies and slow delivery, he debuts new products which re-excite everyone: the roadster and electric semi-trucks come to mind.
In addition to his mission to take cars consumer-direct, the one intriguing and very clever technology he incorporated into Tesla vehicles is over-the-air updates. Just like your computer, Tesla can update and fix/alter/improve its vehicles without the customer ever setting foot in a car dealership. And OEMs are following suit, with Hyundai’s recent announcement of over-the-air service integration into its vehicles by late 2019.
Electric vehicles are certainly a hot topic. Governments around the world are beginning to set deadlines for the total elimination of traditional fossil fuel powered automobiles.
Why should this worry dealers? With sales declining and dealerships anticipating the increased need for service revenue, the mass adoption of electric vehicles is concerning. First, electric vehicles have much less parts that will need “fixing,” and second, with over-the-air updates, consumers will have less need to visit the dealership, creating a conundrum for dealers.
in a recent Automotive News opinion article, industry thought leader Dale Pollak shared his feelings about dealers who are stuck in this “same-same” attitude. According to Pollak, dealers are still seeing lines of cars waiting for service daily and, while he used to see that as a positive, he now recognizes the practice as a sign of inefficiencies. Pollak shared how there are lots of opportunities dealers can focus on to increase service revenue opportunities, including improved scheduling, increased productivity, and more transparency in service pricing.
As electric vehicles increase market share and are increasingly adopted by consumers, there will be a decrease in service revenue. Yet, for some years, there will still be plenty of traditional cars on the road that increasingly need more service as they get older and out of warranty which, of course, increases customer-pay and recall opportunities.
I’d love to see a recall-free society with 100 percent compliance and perhaps over-the-air service updates will help increase the compliance rate. At the same time, we all want to see dealers continue to thrive both in sales and service revenue. Perhaps adopting some of Dale Pollack’s suggestions can increase retention today and into the future.
It’s only a matter of time before our industry adapts to the new landscape. Sales may decline or grow but as sales of electric vehicles increase, dealers will have less opportunities for continued service revenue. Take the steps now to find every opportunity to increase your current market share with existing (and new) customers so that it’s less of a burden on your bottom line as time goes on.