Author: Vincent St Claire, Fleet Assist managing director
The speed at which electric vehicles (EVs) are changing the motoring landscape continues to rise at a rapid level and no more so than in world of vehicle servicing, maintenance and repair (SMR).
The UK garage network faces significant changes ahead. While there is continuing mention of garages currently struggling for capacity with extended lead times, and delays for customers, the writing may already be on the wall in the mid to short term.
Margins could be reduced due to work content being lower in labour terms, and on fluids and with fewer parts required.
Add to this the spectre of longer service inspection intervals SMR work volumes will be lower leading to the possibility of excess capacity across the garage network.
Aftersales network reductions
OEMs are contemplating significantly reducing their garage networks which could lead to redundant garages taking on alternative SMR work.
Fleet Assist provides its network management services to the leasing and rental industry, and it believes there has never been a more important time to ensure they have a robust SMR network strategy in place to help address these challenges.
Garages also need to start preparing for the future, but simply looking at labour rates to mitigate the challenges is a blunt instrument. What is required is a paradigm shift in service delivery to ensure revenues and margins are protected, offering value and high levels of service to customers with reduced lead times and improved turnaround times to minimise vehicle downtime.
With more sales and supply restrictions being lifted from new zero emission cars the EV element of our customer fleets continues to grow.
EVs comprised 9% of all SMR work managed by our network of over 5,000-garage network in 2022 compared with 6% in 2021 which is a clear correlation with the ever-growing number of new EV sales.
As work volumes build across our customer fleets which consist of over a million vehicles, we are starting to see how EV SMR compares with petrol and diesel (ICE) cars across our garage network.
The early signs are that zero emission cars with fewer moving parts are cheaper to service, which will obviously have an impact on garages from both an overall volume of work and average cost per job perspective.
Average EV SMR costs
When considering all the work our garage network completed on one-, two- and three-year-old cars during 2022, annual average EV SMR costs totalled £171.
That compares with £243 for ICE cars, a difference of £72.
This is caused by average labour time being 33% less, using a 51% cheaper basket of parts, a 26% reduction in labour time and 39% cheaper fluids being used during their maintenance.
Vehicle mileage is another cause of the difference between EV and ICE SMR with electric cars currently covering fewer miles, but we feel this will eventually even up as vehicle range continues to rise.
Currently one year old EVs are doing 19% fewer miles, two-year old cars 21% fewer miles and three-year old cars covering 14% fewer miles than ICE cars.
When analysing the parts basket comparison between ICE cars and EVs there is one major difference, and that’s brake work.
EVs are kinder on the brakes due to regenerative braking helping prolong the life of both brake pads and discs and this is likely not to change across the life of an EV.
It is still early days and as time goes by the comparative SMR numbers are bound to change based on average mileages, replacement cycles and vehicle reliability patterns starting to shape up.
Furthermore, EV battery health may impact on the trade values of an EV. This will drive a demand to diagnose and record the “state of health” capacity of a vehicle battery throughout the life of the vehicle in fleet.
There is another fabled view that the propensity for EVs being off the road is less than ICE vehicles.
The reality is no one source of data can provide a global view relating to this as warranty repairs do not generate SMR invoice data in the same way.
Anecdotally we believe currently that some EVs are seeing higher degrees of warranty work around software updates than the ICE equivalent.
Against this backdrop garages require more investment in their workshops to support EV work, technician training, new tooling, ramps, and the installation of charging points are just a few that are paramount to ensure garages can work on EVs.
Many garages we talk to are already coming to terms with how the world of EVs will impact the SMR elements of their business.
They are expressing concerns that conducting an early life service on an EV inclusive of collection, delivery and a valet or courtesy car could mean these jobs are at best breaking even given the labour times and parts being greatly reduced.
To counter this, we have seen some early indicators that garages have launched their own mobile service business which visits the driver at home or at work and conducts basic servicing remotely which then frees up their workshops for larger more substantial work.
As mentioned earlier there is a strong possibility that EVs will potentially cause excess capacity within the UK garage network so more garages will be chasing less work.
Therefore, those garages that use labour rates to mitigate the challenge risk overpricing themselves and reducing the work going through their workshops.
Other options that could be considered are adopting menu pricing for value-added services offered to customers such as collection, delivery, courtesy vehicles and valeting.
The UK automotive marketplace has already seen in other areas intelligent pricing used to ensure customers pay for the services they require.
These are all potential remedies, but Fleet Assist maintains that both garages and OEMs should consider adopting a smart approach that focuses on customer service delivery to combat their concerns over the future.
Some OEMS have a view that fleet pricing is a solution to delivering improved service. Surely providing great levels of customer service should be the key to attracting and retaining customers?
What a strange world we live in where when a price increase is mentioned with no reference to the quality-of-service delivery – just inflation, global conflicts, post pandemic and Brexit reasons.
What is required is an attitudinal change, providing a meaningful service charter such as Fleet Assist network agreements that outline how garages will collaborate and serve their customers.
We know franchised dealers are very resilient which was shown very clearly during the recent pandemic but for so long much of that change has focussed on car sales, while service and parts remained a strong revenue pillar of their business.
Now the microscope is on SMR they will need to make that paradigm shift and reinvent their aftersales businesses as their customers transition towards a zero-emission environment.
Those garages that work with their customers and dare to be different in their attitudes and push the boundaries we believe could be the winners in the longer term.
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