- The garage SMR eco cycle is coming under pressure from growing BEV volumes and lower average invoice values.
- Garages are also being challenged with higher wages, property rents and workshop equipment investment.
- Fleet and leasing companies have their part to play in helping garages maintain a healthy business model.
Delivering exceptional service, adopting innovative smart charging structures and adopting the right new ‘technology led’ initiatives will be key for garages to guarantee their future survival according to Fleet Assist.
This advice comes after Fleet Assist released its recent ICE v BEV service costs analysis which saw a representative basket of minor BEV service parts work out -18% lower than an equivalent ICE car and -70% lower on fluids respectively.
When analysing a basket of major services, the figures were even more alarming with parts and fluids working out -58% and -63% respectively less than ICE cars. As the market pivots due to increased BEV service volumes the entire garage SMR eco cycle is coming under pressures caused by lower average invoice values.
These reduced revenues come at a challenging time for garages when the minimum wage has increased, property rents continue to rise, and additional workshop investment is required to cope with servicing the latest BEVs. Data presented to the Vehicle Remarketing Association (VRA) also indicates dealership aftersales gross profits will decline by 74% under a fully electric scenario.
“With a background of profit warnings from franchised garages, the fleet industry’s aftersales SMR fulfilment will continue the paradigm shift that is underway,” explained Nikos Kotrozos, Fleet Assist’s supply chain director.
“The possibility of introducing smart pricing for services such as delivery and collection in exchange for a reduction in other fees could be one way of maintaining revenue and margins whilst not diluting customer service.
“The trends and future SMR forecasts highlight the requirements for garages to embrace and invest in new technology-led solutions ranging from vehicle diagnostic upgrades to parts ordering systems.
“Deciding where to make the right investment for the long term is key, the promise of AI solutions will not replace the technician, neither will short term pricing advantages from new solutions solve the challenges. Informed strategic decisions such as introducing mobile service units which are gaining popularity is a good example of how the market is transitioning.
“The goal to optimise the experience for customers whilst delivering the highest compliance levels remain key to managing drivers’ expectations and costs,” he added.
Fleet Assist believes fleet and leasing companies have their part to play in helping its garage network of 5,200 sites and over 500 mobile service units maintain a healthy business model.
“The winners will be contract hire, leasing and rental customers that optimise their garage network management driven by quality business data and intelligence. Operational excellence and supply chain integration are both must haves and when combined will achieve quantifiable long-term opportunities to manage costs, reduce lead times and improve job completion turnaround times,” said Kotrozos.
