DETROIT — Ed Roberts, fixed ops director at Bozard Ford-Lincoln in St. Augustine, Fla., has been thinking a lot lately about how Ford's first three battery-electric vehicles — the Mustang Mach-E arriving this month, the E-Transit van coming late next year and the battery-powered F-150 planned for 2022 — will start to upend his store's fixed-operations business model.
Mr. Roberts said he expects visits to his service department by owners of those battery-electric vehicles and the ones that come after will drop by half versus those from customers who drive traditional gasoline- or diesel-engine vehicles.
In addition, the expected dollar-per-repair order for EVs also is going to plunge.
A recent study by consulting firm McKinsey & Co. estimates repair tickets for battery EVs will shrink between 40% and 50%. Some of the reasons for the lower revenue per ticket include: BEV brake pads could last 100,000 miles or more; BEVs don't require oil changes; and over-the-air software upgrades will keep customers out of the service lane.
Mr. Roberts figures his technicians might service the average BEV just once a year. Figuring out how to continue building revenue in this new reality has been top of mind for him.
"We do think about it. We have to prepare ourselves for it," he told Fixed Ops Journal, an Automotive News quarterly publication.
At LaFontaine Automotive Group, which operates nearly two dozen stores in Michigan, service directors say they are not worried — yet — about BEVs' impact on fixed ops revenues, but that doesn't mean LaFontaine is sitting idly by.
Company spokesman Max Muncey said LaFontaine recently inked several fleet maintenance deals with rental car companies. Also, one of its body shops is an official Tesla-certified repair center, and the company will sell and service Bollinger's line of off-road electric vehicles in the Midwest region.
At Bozard Ford-Lincoln, Mr. Roberts estimates he needs an 80% retention rate just to hold the line on service department revenue in the BEV era. Currently, about 70% of Bozard's customers return to the store for service after their vehicle's warranty expires, he said.
"We are going to have tire rotations. We are going to have some level of brake work, which is going to be less than it is today," Mr. Roberts said. "We'll have cabin air filters. That kind of stuff is not going to change. And not everything is going to be able to be updated over the air."
Mr. Roberts and others in fixed operations are certainly justified in gearing up for what could be one of the biggest service department disruptions since World War II.
According to consulting firm AutoPacific Inc., the 15 BEV nameplates on sale in the U.S. in 2018 will grow to 86 by 2024. By the following year, BEV sales are projected to reach 800,000, or about 4.9% of the U.S. new-vehicle market. Looking out to the end of the decade, that share could grow to as much as 25% of new-vehicle sales in the U.S., according to a McKinsey study.
BEVs, with their infrequent and low-dollar repair tickets, are coming in high volumes at a time when purchase consideration is growing. If fixed ops directors don't adjust, their service and parts revenue is very likely going to shrink as sales of traditional vehicles fade. Just boosting retention is not a permanent fix as internal combustion engine vehicles are replaced with BEVs.
Here are seven strategies from fixed-ops experts for offsetting the revenue declines brought about by higher sales of low-maintenance BEVs. Service directors can start rolling them out now.