Article
The Impact of BEVs on the Future of Automotive Aftersales
The impact of battery electric vehicle (BEV) trends on business and potential solutions
The transition to battery electric vehicles (BEVs) is well underway in the automotive industry, with production forecast to increase from 10% of total vehicles in 2022 to nearly 70% by 2040. Customer preference, pricing, regulations, and other market factors play a major role on this shift. We expect original equipment manufacturers (OEMs) to be hardest hit by the transition, especially in aftersales service, as BEVs do not require the same level of maintenance and service as vehicles with internal combustion engines. The Deloitte study urges OEMs to update their business models to minimize future aftersales losses. Possible solutions include focusing more on customer retention and loyalization, driving efficiency gains in the service network, going digital both within the vehicle and in aftersales operations, changing the steering mindset, and exploring new types of services.
Changing landscape in the automotive industry
The automotive industry is currently undergoing a significant shift from traditional fossil fuel-dependent vehicles to battery electric vehicles (BEVs). This monumental transition presents key challenges and opportunities for original equipment manufacturers (OEMs), importers as well as workshop owners and their automotive aftersales business. After all, BEVs require less maintenance and service than their internal combustion engine (ICE) counterparts, and the rapidly growing demand for BEVs has brought new players to the market, particularly from China. The resulting shift in the regional distribution of the global car parc means fewer serviceable vehicles for established OEMs, putting their market position and their profitability under serious pressure – unless they respond quickly.
Impact on OEMs and reimagining aftersales service
As the market moves towards electric mobility, we can expect dramatic changes in the dynamics of aftersales service and the revenue streams for OEMs and workshops. There are two key points to consider: First, BEVs require significantly less service and maintenance than traditional ICE vehicles, which has the potential to drastically reduce service and repair revenues. In terms of revenue per vehicle, we forecast a 30-45% decline for authorized workshops and a 20-30% decline for the parts trade. And secondly, the growth of the global car parc provides an opportunity for new players to enter and disrupt the market. We expect Chinese manufacturers to produce 50% of all BEVs sold globally by 2026, potentially reducing the established OEMs' share of the car parc and the total number of serviceable vehicles.
Given these threats, it is vital that OEMs evolve their customer retention strategies. Traditional customer loyalty strategies based on regular servicing and repairs won't be as effective in the future because BEVs require less maintenance. As a result, OEMs are under pressure to innovate their service models and make customer satisfaction a top priority in the future. Ultimately, the BEV transition will lead to a shift in five key aftersales segments:
Impact on customer relationships, service operations, the vehicle itself and business steering
OEMs could consider some of the following approaches:
- Offering upfront service bundles (USBs) that cover the majority of maintenance services for a fixed timeframe. This relatively simple solution will give customers more peace of mind.
- Implementing flexible network solutions such as service vans, “park-and-service points” as well as pick-up and delivery services. This will help OEMs prepare for future changes in capacity, handle a higher number of service tickets and enhance the overall customer experience.
- Incorporating predictive maintenance technology into vehicle systems to anticipate repair needs before they become an issue. This is an efficient, cost-saving measure that can also improve the customers’ experience of the service network.
- Relying on over-the-air updates to handle most software-related aftersales services. A key factor in minimizing service costs and maximizing customer convenience is making sure that vehicles are constantly updated without the need for on-site service visits.
- Creating a more integrated service network and assuming direct control of new service models and software-related updates. This will allow OEMs to promote more cost-driven aftersales solutions and redistribute profits through fixed prices and margins.
Circular economy in aftersales business
OEMs can also explore business models focused on circular economy principles. Batteries, as the key component of BEVs, have the potential to create new revenue streams through remanufacturing, reuse and recycling while also promoting sustainability. These are just some examples:
- Remanufacturing: Faulty or degraded batteries can be repaired and reused in other vehicles or applications to mitigate the high cost of battery production and the potential losses after accidents.
- Reuse: Remanufactured batteries can be used in the primary energy market to store renewable energy or as a flexible charging station in the secondary market.
- Recycling: Batteries can be recycled at the end of life to extract valuable materials like lithium, nickel and cobalt. This is likely to become more relevant under increasingly strict legislation, particularly toward the end of the decade in the EU.
In conclusion, while the shift to BEVs poses certain challenges for OEMs and their authorized workshops, it can also open exciting opportunities for innovative business models and sustainable practices. Adapting to these changes and finding a strategy that strikes the right balance between profitability and sustainability will be the key to continued success in the evolving automotive landscape.
Download the study here and learn more about the impact of BEVs on the future of automotive aftersales.
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