“The goal for every manufacturer must be to at least maintain the market share that they previously had with combustion engines.”
The rapidly growing e-mobility market presents manufacturers with major challenges and poses a great number of questions. In this two-part interview, we shed light on the topic from different perspectives with our consultant Tobias Grün. While we looked at the influences of increasing e-mobility shares on the sales sector in the first part, we now touch on the service perspective in the second part. Tobias also gives some recommendations for dealing with e-mobility in sales, service and network planning.
Tobias, you mentioned workshops briefly in the first part of the interview. So if, in your opinion, the influence of e-vehicles on the sales sector steadily decreases, what about the service perspective? What challenges or questions does e-mobility pose there?
Well, manufacturers and dealers are intertwined in a certain sense. This means that the manufacturer needs its dealers and their workshops because they service the vehicles and have customer contact. Of course, this is a challenge for the workshops with regard to e-mobility. Depending on how fast and how strongly the share of electric vehicles grows, the more the question arises for the manufacturer as to what this means for the workshops. It can have positive effects, for instance if, let’s take an extreme example, from tomorrow onwards only fully electric vehicles are to be sold by a manufacturer and with the same volume as before with internal combustion engines. In this case, it can initially have a positive effect because e-mobility is still relatively new and most independent workshops are not yet as well-prepared for it as the authorised workshops are in terms of trained personnel, equipment, etc. The retention rate then goes up. One negative effect, on the other hand, would be that parts sales decrease, for example the sale of oil filters, because oil changes in the transmission are no longer needed. Other services, for example regular inspections, are dependent on completely different things such as mileage and therefore have less to do with the shift to e-vehicles. So the key question is: What does an increasing share of electric vehicles in sales mean for our after-sales business? I can only sell the cars if I offer the customer a good workshop network. Of course, it has to be attractive enough to open a workshop. That means there must be enough potential in the type of vehicles that need servicing. But assuming that the number of vehicles does not increase significantly, I can only maintain such a workshop network and keep the brand attractive for customers if I offer good turnover there. And if there is a risk that these sales will go down due to a different type of drive, then I have to see how I can compensate for that. In fact, I wouldn’t be able to get rid of my electric cars if I suddenly found that I couldn’t keep half of my workshops in the long run because of the decline in workshop turnover and my potential customers would have to drive much further.
This means that the influence of the electric sales share within the network planning tends to affect the workshop network?
Exactly. The question does not arise in the same way for the sales networks. Here it is more a question of what an increasing online sales share does to the sales network. But for the service networks, electromobility plays a major role, for example: How many electric vehicles will be in the fleet? How big is the share and what does that bring in terms of sales prospects or do I reach more customers and do they come more often or less often (keyword retention rate)? Does the service take more or less time and what is the ratio of part turnover? Is the workshop turnover decreasing? Do I need more or less capacity? Will I end up with huge workshops everywhere that are only working at 60% capacity or similar? Or will I not have enough space to service the vehicles thereafter? Yes, these are actually the core questions we deal with in consulting on this topic.
In this context, the charging station infrastructure is often mentioned in public discourse. To what extent does this topic play a role in your work with the network studies?
In our collaboration on network studies, the topic doesn’t play quite as big a role. The charging infrastructure is definitely not optimal at the moment, because there aren’t enough charging stations everywhere, but I don’t think that’s such a dramatic problem. There are plenty of people with solutions for it, and it’s not the case that all vehicles will be replaced by electric vehicles from one moment to the next. This means that there is enough space and time for a gradual, needs-based evolution of the charging station network. Furthermore, there is also the possibility for e-vehicles to be charged in many places, for example at home, at work, in the supermarket car park, etc. This means that there are many people, particularly in cities, who may not be able to set up their own charging station, but can in actual fact make use of existing infrastructure. For an e-vehicle owner who only drives 10 km a day, for example, it may be sufficient to simply charge the vehicle in the car park while shopping. Thus it will also be possible to find customers in such areas, especially when the e-vehicle market has fully established itself as a mass market. The infrastructure for this will arrive bit by bit in line with demand. I am firmly convinced of that. Last but not least, we also have to consider other questions that concern our customers, namely how we can support them in their business strategy. This includes support for sales and service, advice on the strategic orientation of the networks, success measurement, performance measurement and control, etc. Charging station infrastructure can be part of this, depending on the analysis, but there are other things involved that are perhaps even more important. Brands that have 30–40 % electric vehicles in their new car portfolio in 3 years are then in a range where charging station data alone is not that meaningful to figure out the demand in network development. I assume that by taking a look back at the e-vehicle sales of the previous years, it would become evident that not all of them were sold merely around a charging station. Charging stations are not only used by local people, but are also frequented by people outside the area, so it is difficult to draw conclusions about sales opportunities in the immediate vicinity of the charging station. Other data prove more useful, for example on socio-demographic factors such as age and purchasing power, or on mobility factors such as the reduction of private transport in cities. The question of where many single-family homes are located and where people with their own charging facilities live could also be a much bigger lever in many suburban and rural areas. What I’m trying to say is that charging station locations are usually not the only data point to look at to analyse the potential for e-vehicles.
So if the charging infrastructure is only a small component, how do you support customers with e-mobility? Can you go into this in more detail?
Well, the keywords are reporting, market data and performance measurement. Electromobility is not a new market in the sense of an “additional market”, but it is still a new market. It is a new technology that is becoming established and can therefore lead to shifts in market share among manufacturers. New technologies, new models and new marketing concepts can definitely lure customers away from competitors. So it will definitely be a competitive factor in the coming years and it will once again be of crucial importance to keep an eye on market developments: How and where are you successful with your electric range? And in which countries and micro-markets are you strong compared to the competition and where are you weak? How does this develop over time with the customer? This is already relevant because it is a question of securing or expanding one’s current market share. If, for example, the entire industry were to choose the path of relying only on electric vehicles in the future, and a brand were to lose technological ground in the process, then it could find itself on a completely different market share level in the long term. It is very important to take countermeasures, i.e. to keep an eye on one’s own trade organisation, to measure and control performance and to follow up in the electromobility sector.
The goal for every manufacturer must be to at least maintain the market share that they previously had with combustion engines. And that’s where we come in with reporting and market analysis, for example with current individualised reports that are tailored to the brands on the topic of e-mobility. And this is also a topic for network planning, which is becoming established with the growing sales share of fully electric vehicles. This influence on the dealer networks must also be fundamentally examined on a market-specific basis: What do the market-specific sales volume plans of the manufacturers in the electric vehicle sector mean for the workshops? And how should countermeasures be taken now, for example by considering the capacities of individual locations? For vehicle inspections, perhaps the current number of locations can be maintained, regardless of things like the number of lifts or specialised mechanics needed for e-vehicles. The whole thing has to be quantified and of course we can support them and show them how that will actually look for their first bastion service network as the coming years unfold.
So what is your advice to manufacturers and dealers? What can you recommend in conclusion?
Realistically, it has to be said that it is going into the mass market and only replacing rather than opening up new customers. This will happen almost to the same extent everywhere in the next few years, meaning that electric strongholds will no longer be confined to certain places as is the case now and e-mobility will no longer be a special factor. The best thing our clients have in this situation is the knowledge of the automotive market of the past, because this market is a relatively inert construct. A lot of money is being spent and there is a holding period of usually several years. This means that the distribution of the market won’t change so suddenly. Neither do all people move out of an area within 3 years, nor do all people in an area switch to a different trend within a very short time. Even if the trend is strong, it takes a long time for it to become fully established in the region, because many people have just bought a vehicle that they then keep for a while. Of course, there is always a bit of a fluctuation here and there, for example a rural or urban exodus. Yet this doesn’t happen overnight and the customers are where they were yesterday. There are the usual shifts, but they are not necessarily always directly related to e-mobility. There may also be minor influencing factors such as better/worse charging infrastructure, more/less single-family homes or higher/lower incomes. These are all factors that we still have today, but which will be levelled out more and more in the coming years. Then that will end and we will simply talk about the individual mobility market as we have it today. The key message is: Don’t worry too much about finding out where the electromobility market is, and base your market analysis and network planning on what you already know. The electromobility market is where the mobility market is today and has been in the past. It is not the case that completely different customers who follow a different distribution are being addressed, but the same customers who were previously addressed with combustion engines. Electromobility can be seen as normality.