Minority dealers facing EV service future

MIAMI — The future of the minority dealer body got a crash course this month on how the coming wave of electric vehicles could threaten service department profitability, one of the more pressing issues facing retailers.

It's an issue that will fall on the shoulders of the young dealer candidates and current retailers in the National Association of Minority Automobile Dealers NextGen group who will be in the business for decades to come.

And for the longtime owners? An EV-focused service department would be a drastic shift that will force them to recalibrate operations they've had for decades.

NAMAD Chairman Fernando Varela wonders if EVs will receive much of their routine care through over-the-air updates.

"What is the technician of the future? He's going to have to be more [of a] computer guy," Varela told Automotive News during the association's annual conference here.

Finding technicians already is challenging, Varela said, but the expected blitz of electric models could require future technicians to pick up a whole new skill set.

"We'll have to go into universities and say you need to train the technician of the future," Varela said. "It is a revenue issue for us as dealerships. How are we going to replace those technicians today?"

Mitch Mitchell, executive director of the Chrysler Minority Dealers Association, said the dealers he represents have to think about how the service bays of the future will look.

"They're concerned about what's the impact going to be on their dealerships relative to electric vehicles. So we've got these vehicles coming in. How do I service them?" Mitchell said. "Do you still want me to build the same type of facilities? Are there modifications that I need to make to prepare for electric vehicles?"

Analytics firm We Predict presented data to NAMAD NextGen showing that after 36 months on the road, EV service costs undercut gasoline vehicles by more than $200. The company said service costs for EVs were $514 after three years, which is 31 percent lower than the $749 for gasoline models.

The firm also reported that consumers spent an average of $77 on EV maintenance in the first three years, which are steep savings when looking at the $228 average for gas vehicles.

The study examined money spent by consumers and manufacturers on 2018 models during their first three years on the road.

The presentation was a dose of reality that will give the NextGen group a better idea of what to expect and arm them with facts to share with their teams, said Perry Watson IV, president of NextGen.

Watson is a former part-owner and general manager at Lexus of Mishawaka in northern Indiana, a store he ran with his father until they decided to sell when the pandemic began.

"Until today, I don't think we really had an idea of what service in electric vehicles would really look like," Watson told Automotive News. "But now we've got some information to take back to our stores [and] have a conversation with our management team. Start looking at the layouts of the facilities and talking to our technicians and our manufacturer reps about training for technicians. So we really try to make sure that we're very futuristic in our approach in terms of education."