It will be decades before electric vehicles displace internal-combustion-powered cars, so the loss of service-department revenue is “not as dire as those who wrongly suggest that EVs don’t need service,” says auto analyst Maryann Keller.
But ultimately, how will EVs affect dealership service revenue? Will it plunge, dip slightly or pretty much stay the same? Industry people wonder – and speculate.
But few suggest EV maintenance and repair work will boost dealership service department revenues to new heights.
“Some of the work lost from a profit standpoint isn’t meaningful,” Keller tells WardsAuto, citing, for example, oil changes. EVs don’t need them. Vehicles with internal-combustion engines do.
But few dealers make money on oil changes, particularly with modern vehicles now going 7,500 miles (12,000 km) between oil changes.
“Try to make money selling $30 oil changes that cost $40 in goods, labor and overhead,” said Wes Lutz (pictured below, left), a former chairman of the National Automobile Dealers Assn. and a Chrysler, Jeep, Dodge and Ram dealer in Jackson, MI.
Keller foresees dealerships improving service-customer retention rates in the impending EV age.
That’s in contrast to today when many dealership car buyers end up getting their vehicles serviced at an independent shop or national car-care center, not the dealership. But that will change as more and more EVs hit the road, she says.
“New technology will keep the car owner coming back to the dealer as long as they own the car for fear of going elsewhere,” she says, adding that dealers are investing in EV-related auto technician training and service-related repair and maintenance equipment.
“My guess is that (EVs) might not need as frequent routine service, but when it is needed it will cost more because of the investment dealers make and what they have to pay technicians,” Keller says.
Today, battery-electric vehicle owners are less satisfied with service and less frequently take their EVs to a service facility, according to the J.D. Power 2021 Electric Vehicle Experience Ownership Study.
Only 54% of BEV owners indicate they had taken their vehicle in for service in the past 12 months. However, the 2021 CSI Study finds that when they do visit a dealer for service, their overall service satisfaction is 69 points lower than that of the average customer and 76 points lower for service quality.
“BEV owners present a unique challenge for dealers,” says Chris Sutton, J.D. Power’s vice president-automotive retail.
He adds, “Not only are their vehicles more difficult to service than traditional internal-combustion-engine vehicles, but also the lower frequency of visits means dealers have fewer chances to make a positive impression on these customers.”
On average, nearly twice as much maintenance work is being done during dealer service visits than repair work, says J.D. Power. However, the maintenance-to-repair ratio for BEV owners is nearly an even split.
While more complex repair work usually results in lower customer satisfaction than does maintenance work, the opposite is true for BEV owners. A big reason for this is that technicians working on BEVs are 2.5 times more likely to not service the vehicles right the first time, according to the J.D. Power study.
“BEVs are in their early stages and dealers seem to be experiencing growing pains with servicing these vehicles,” Sutton says, suggesting automakers invest in more dealer service training. “Otherwise, they run the risk of losing return customers.”
Traditionally, dealership F&I managers pitched extended service agreements by telling customers about the unpleasant prospects of expensive powertrain repairs.
Now, F&I managers emphasize to prospective extended-service-agreement customers what could go wrong with non-powertrain systems. Those range from advanced driver-assist componentry to infotainment setups. Today’s cars, including EVs, are as much about computers as anything else.
Lutz says his service department’s bread-and-butter revenue comes mainly from work involving tires, brakes, suspensions, alignments and electrical systems.
And what’s on EVs? he says. “Tires, brakes, suspensions, steering systems and electrical systems.”
Moreover, because EVs tend to weigh more because of their substantial battery systems, their struts, ball joints and the like won’t last as long, Lutz tells WardsAuto.
For now, no one can definitively say how much EVs will change dealership service departments, particularly their revenues. “Maybe it will be a little less,” Lutz says. “But it won’t be crash-and-burn.”
After all, nothing lasts forever. Including EVs.
Steve Finlay is a retired WardsAuto senior editor. He can be reached at [email protected].