Introduction
As the automotive industry evolves, auto dealers are concerned about the impact electric vehicles will have on their service departments and fixed operations gross profits. There has been widespread concern that traditional service revenue will decline when EVs are more widely adopted.
However, EV demand hasn’t been nearly as high as projected, even to the point of causing OEMs to pull back on plans to change franchise service departments. We also know that while EVs have significantly less parts that will require service, the cost to repair is much higher, so the overall risk profile for service for an EV is about the same as an internal combustion engine vehicle.
Even though slower than anticipated, as more EVs will be drifting into service departments, requiring different infrastructure, trained technicians and different pricing structure. If dealers are looking to hedge and look for ways to stay competitive, warranty rate reimbursement services can significantly increase gross profit, ensuring your service department remains profitable and competitive even in the face of changes to the market.
The Current State of the EV Market
Despite the projections, EVs are simply not flying off the lots the way they were projected to. Recent reports from J.D. Power indicate a “low tide moment” for EVs, with purchase rates falling far short of expectations. Sales have not reached the predicted levels, and many consumers are still hesitant to switch to electric due to concerns about range, charging infrastructure, and cost.
In addition, major manufacturers are re-evaluating their strategies. Ford, for instance, has asked its dealers to pause further investments in EV infrastructure due to market uncertainties and anticipated changes. This pause highlights the ongoing volatility and unpredictability in the EV market, suggesting that the immediate impact on service departments may not be as severe as initially feared.
The Importance of Warranty Rate Reimbursement
Warranty rate reimbursement involves optimizing the rates at which manufacturers reimburse dealers for warranty repairs based on what each state legally requires of OEMs. Hiring an expert who specializes in optimizing these rates can significantly boost dealers’ fixed operations gross profits.
Effective warranty rate reimbursement strategies can turn what might seem like minimal gains into significant revenue streams. This additional income can then be reinvested into your service department, creating a virtuous cycle of growth and improvement
Read the full article at Metro Atlanta ADA On The Move.
For a no-cost analysis to determine what rate you qualify for, please reach out to [email protected].
Warranty Reimbursement Done Better