In the first column, we discussed the topic of Electric/hybrid cars within the context of the potential impact on our quick service marketplace. In the second column, we talked about Telematics and “Shared Fleets” as emerging realities and trends. This month we will examine how Tesla poses a potential disruption to the traditional dealership model and what impacts that could have on our market segment.
A New Way to Purchase Cars
Tesla, as well as Carvana, has introduced a new way to purchase cars that do not require a visit to the traditional dealership showroom to view, negotiate and close the transaction. They are banking on the rising comfort more of us have in using and trusting the internet to serve up an easier, less time-consuming way to purchase a car. This includes the ease of delivery options. The COVID-19 pandemic has reinforced the opportunities for online purchases of vehicles as well. Will we ever fully return to the traditional method of car shopping and purchasing?
In all instances, the standard dealership model is being challenged.
Historically the relationship between dealer and customer most often begins and is cultivated through one or more visits to the dealer showroom. Test drives further enhance the relationship building. Discussions about vehicle options, feature options, and financing often take place in a face to face setting in the dealership. Additionally, most dealer representatives will show customers the Service Department and begin building the relationship on how service can be accommodated.
Studies have shown that roughly 6 out of every 10 customers do not have regular maintenance performed by the dealership. Trust is not the issue. Time and convenience are. Most dealership service departments are quite busy and also prefer the higher ticket, level 2 and level 3 work versus the low margin oil change and basic maintenance.
Because of Tesla’s non-dealership selling, OEM’s are beginning to question and evaluate to what extent they may need dealerships to sell their cars of the future. Maybe dealerships just become service centers and the sales model aligns in some way with Tesla’s methodology.
In our earlier column, we discussed the emergence of the “Shared Fleet” owner. That owner is far more likely to operate as a business purchaser than a typical consumer. Using the internet to purchase and take delivery of cars is equally, if not more likely to better serve that purchaser.
If so, does this have implications for the quick service industry? Might our segment see increased activity and loyalty, given the lack of relationship at the dealer level? It’s possible that it will present an opportunity for us to be viewed differently by dealers. After all, they still do not want to perform the regular fluid maintenance if they don’t have to. Maybe a limited “micro partnership” can be developed between you and your local dealer group. You get the business in your sweet spot and send them the work you don’t do anyway. Food for thought.
Real-Time Software Connections
We previously discussed software connections between, the lube shop, the software in the car, and the fleet owner’s fleet management software. Let’s extend that thinking to expanding those software connections to include limited real time communication between the lube shop and the dealership systems.
By agreement between your shop(s) and the local dealer group(s), you agree to refer them business services you are not performing. In return they agree to offload the basic maintenance services to you, which they generally prefer to not perform due to lower margins and tying up a bay.
This can all be accomplished by a limited view between software systems so you can see in real time if the dealership has an opening for service. If so, you could immediately refer your customer or otherwise set up a future time and the dealership system could confirm via a text or email.
Disruption is Coming
Just because the dealership service market and the fast lube quick service segment have historically viewed each other as competitors, does not mean future partnership opportunities won’t present themselves – at least in strategic slices of the basic maintenance segment.
In the next column we will delve into some of the Artificial Intelligence impacts that are possible in our industry segment.
STEVE BARRAM is CEO of Integrated Services, Inc.(ISI) – software makers of LubeSoft. He has been actively involved in the fast lube segment of the automotive aftermarket industry for over 30 years through leadership roles, speaking engagements, and serving on boards.