Electric vehicles and the future of fixed ops

And the time for dealers and fixed operations managers to start preparing for that basic change, industry executives warn, is now.

"With EVs, there will be less dollars available to the dealer," says Wally Burchfield, vice president of U.S. aftersales for Nissan North America.

Service revenue from regular maintenance of wear items on EVs would amount to "probably two-thirds to three-quarters of what an internal-combustion engine vehicle would be," Burchfield told Fixed Ops Journal.

Nissan isn't the only manufacturer to prepare for the changes that electric vehicles will bring. Volkswagen says it is talking to its dealers worldwide about how to keep them profitable as the automaker ramps up its production of EVs.

How will these changes affect operations in dealership service departments?

Required service will be greatly reduced for electric vehicles: no oil and filter to change, no fluids in the radiator to check or flush, no transmission to service, no drive belts to replace, no air or fuel filters or spark plugs to change, and regenerative braking systems indefinitely extending the life of brake pads and rotors.

This year, the consulting firm UBS Research tore down two similar-sized hatchbacks, a Chevrolet Bolt and a VW Golf. UBS counted 24 moving parts in the Bolt, compared with 149 in the Golf.

UBS analysts estimate that aftersales revenue for the Bolt, for such things as replacement parts, will be 60 percent less — about $400 a year — than such revenue for a traditional car.

"This should generate a major challenge for dealerships, which typically generate 40 percent of their gross profit in service and maintenance," UBS says. The UBS report is available at autonews.com/ubsreport.

Nissan's experience similarly foreshadows how EVs are likely to change service departments when electric vehicles sell in high volume.

Since 2010, Nissan has sold 300,000 Leafs worldwide, including more than 113,000 in the United States.

"You will certainly lose your oil and filter" work, Burchfield says. "You won't have the mechanical breakdowns of an internal-combustion engine. We don't know yet how much we will do in battery repair and module replacements."

The maintenance sections of the owner's manuals for the Nissan Altima and Leaf illustrate how service department revenue takes a hit from electric cars.

Nissan recommends at least two oil and filter changes each year for the 2017 Altima, regardless of miles driven. These two services cost about $80 at most Nissan dealerships.

The Leaf's service schedule calls for annual replacement of the cabin air filter at a cost of $31.67, and a tire rotation that costs about $20 — two items that drivers often ignore. So even if a Leaf owner followed the recommended maintenance schedule, dealerships would see 35 percent less service revenue per vehicle than from the Altima.

Ford has sold an electric version of the Focus since 2012. Its service schedule for the EV calls for a new cabin air filter, at a cost of $25.44, every 20,000 miles. No powertrain maintenance is required until the car reaches 150,000 miles.

Over the same 150,000 miles, the recommended service schedule for the gasoline-powered Focus calls for 15 oil changes, five new engine air filters, two new drive belts, four new spark plugs and probably three brake jobs — roughly $1,500 worth of work.

With fewer moving parts, the electric Focus also is more reliable. "The Focus Electric has required fewer overall repairs compared with its internal combustion counterpart," Ford says.

Nate Chenenko is head of the mobility practice at Carlisle & Co., a consulting firm in Concord, Mass., that focuses on transportation. If dealership service departments lose oil changes and tire and wheel services, he says, customer retention rates will decrease.

"That regularity of visits is not happening with electric vehicles," Chenenko says. "Dealers will have to rethink retention metrics."

But even as electric vehicles mean longer maintenance intervals and fewer regular wear items to replace, Chenenko says, dealers still can persuade EV owners that the dealership is the best place for service after the factory warranty expires.

"We estimate a two- to four-year time horizon where dealers can capitalize on their expertise with these vehicles," Chenenko says. "Customers are not as trusting of the aftermarket with new technology for full electric vehicles."

Nissan's Burchfield predicts EV owners will buy service the way today's consumers maintain high-tech electronics.

"Much like an Apple product, you are going to take it to an Apple store," he says. "You are not going to go to the local guy who's good with a computer."

Dealership service departments still will perform tire and wheel replacements and sell suspension parts for EVs, Burchfield notes. They also can make collision repairs and sell repair parts to independent body shops, he adds.

But that window of opportunity won't stay open long, says Chenenko, who cites his experience with a gasoline-electric 2005 Toyota Prius he has owned for a dozen years.

"In 2006-07, I couldn't walk into an independent repair facility and get the same level of care because the technology was so new," he says. "Now, the entire aftermarket can fix a Prius."