Protecting After sales Profitability in the Connected EV future

Aftersales in the EV Era

The rise of Hybrid Electric Vehicles (HEVs) and Electric Vehicles (EVs), and the growth in the connectivity of vehicles, are reshaping traditional automotive dealer profitability. Under the conventional model, dealerships have relied on routine, predictable revenue from aftersales and part sales activities. But EVs don’t follow that model; there’s no oil to change and far fewer moving parts to maintain. With reduced wear and tear, fewer service requirements, and minimal warrantable repairs, the opportunities for aftersales revenue decline significantly.

So, what does this mean for the average motor dealer? They must identify alternative revenue streams - fast. However, with the right insights from automotive analytics and robust automotive data management strategies, dealerships can adapt. Improved customer retention, powered by data-driven decision-making, has been shown to positively impact both aftersales revenue and net profit.

A Change in Aftersales Strategy

The evolution of engine technology, changes to mileage service intervals, refinements to fuels and lubricants, and the advances in the connectivity of vehicles have already led automotive businesses to rethink how they optimise their aftersales business. Rising consumer demand for EVs and HEVs has only accelerated this shift, making service customer retention more important than ever.

Seasonal health checks, menu-priced servicing, and exclusive offers, once seen as innovative marketing strategies, are now being replaced by smarter, more targeted upselling of personalised products and services. This is fast becoming the new norm in aftersales activity.

Targeting products and services to a particular vehicle and owner increases the likelihood of success with upselling. In addition, personalisation of communications - such as emails and SMS - helps to reinforce this approach. It is both much easier and more cost-effective to sell more to existing customers than to increase the number of entirely new customers.

Ideally, dealerships should be doing both, but retaining customers through tailored offers is widely recognised as a highly effective way to encourage repeat sales and long-term loyalty. When done correctly, an increasing number of customers will return to the dealership to replace their cars and will return to ‘service’ them there too (and whatever that may look like!).

This core principle remains unchanged in the new product frontier of EVs, HEVs and connected vehicles. What has changed is the need for better tools to measure and understand customer retention. Without the support of automotive data analytics, this can be a complex task.

The RWA Service Retention dashboard illustrated in Figure 1.0 below is one of our key automotive business intelligence (BI) tools which provide vital customer retention information. These BI reports provide insights into vehicle throughput, vehicle fall-off and customer retention rates across all brands, and on new and used vehicle sales.

Figure 1.0 RWA Automotive Service Retention Module

Note: Fictitious data for illustrative purposes

The Importance of Upselling Opportunities 

Upselling is a crucial skill when dealing with vehicle service requirements, especially now, as the industry shifts toward EVs, connected vehicles, and a more personalised customer journey. Identifying each upsell opportunity and analysing the associated data is critical to success.

For dealerships struggling to offset reduced service activity, future-proofing the business means proactively creating new revenue windows. These upsell opportunities will include battery testing and recharging, high voltage electric cabling checks and works, tyre replacement, windscreen wiper replacement, suspension checks, brake checks, steering checks, wheels and lights and all associated works, as well as manufacturer-led campaigns; but the personalisation of offerings will be an important component of the success of this strategy.