More worrisome for dealers is the threat lower-maintenance EVs pose to their profit engine — the service department. Parts and service work can generate 60 to 80 percent of a dealership’s gross profit.
But with fewer moving parts that can break, greater over-the-air software-based fixability, and less routine maintenance such as brake pads and oil replacements, EV visits to the service lane are less frequent.
McKinsey & Co. estimates EVs will generate up to 40 percent less aftermarket spending when compared with similarly aged ICE vehicles.
“How do we pick up the slack in lost fixed-ops business? What are the other channels to produce new revenue and reduce costs?” said Norcross, owner of Volvo Cars Memphis in Tennessee.
Volvo’s next generation of software-first battery-powered vehicles, such as the full-size EX90 crossover, will debut advanced driver-assist technology, lidar sensors and bidirectional charging capability. That will require expensive and time-consuming work force retraining of front and back operations.
“With a brand that is aggressively evolving technologically, you’re going to have to do the training and have staff capable of explaining the new technology,” Norcross said. “You’ll have to step it up at a premium level.”
