EVs could Improve Dealer Customer Retention: Hero MotoCorp CBOThe growing adoption of electric vehicles could help automobile dealers improve customer retention, creating new business opportunities even as EVs change the traditional service and revenue model, a senior Hero MotoCorp executive said.
Electric Two-Wheelers Complement ICE Sales
Ashutosh Varma, Chief Business Officer for Hero MotoCorp's India Business Unit, said electric vehicles were complementing rather than replacing sales of conventional internal combustion engine (ICE) vehicles in India's two-wheeler market.
“I mean the way it is in the two wheeler industry at this stage and the way the ICE business seems to be growing It doesn't seem like that EVs are substituting ICE sales,” Varma said while speaking at a conclave organised by the Federation of Automobile Dealers Associations (FADA).
“It's just like complementing ICE sales,” he said.
Economics of Service Retention
Varma said concerns over lower service revenue from EVs needed to be viewed alongside the opportunities they could create for dealerships.
While the economics of paid service jobs and parts could differ between ICE vehicles and EVs, electric vehicles could encourage more customers to return to authorised dealerships for service, he said.
“Because let's say these average retention rates in ICE business and services let's say 60% In EVs it nudges us to move even further I mean possibly 85-90% And that would translate into benefits across the spectrum,” Varma said.
He said the nature of dealership revenue could also change as vehicle technology evolves.
“And then there is this whole tech piece where companies are increasingly coming with modular services where you can pay for, there is software as a service that people can set up,” he said.
Evolving Dealer Revenues
Varma said EVs and other emerging technologies could create new revenue opportunities for dealers, rather than simply reducing their income from traditional servicing.
“So the nature of revenues as you go forward will continue to evolve and hence it's not a like to like apple comparison between what you used to get in an ICE environment versus what you would get in an EV environment,” he said.
“There are new avenues that will continue to emerge and EVs is an excellent example,” Varma added.