What is the Cost of Ignoring?

Dec. 27, 2018

Ignoring the hybrid and electric markets opens doors for your competitors

If you were to ask a random sampling of tire and auto repair shop owners if they serviced hybrids, many would likely answer “yes.” That, however, would be misleading. Most dealers only provide the traditional tires, alignments, brakes, oil changes, suspensions, etc. What these shops are missing is the additional revenue stream derived from having their technicians trained and capable of servicing the entire hybrid drive system (hybrid battery packs, power inverters, DC-to DC-converters, hybrid controllers, and electric components).

Hybrid and electric vehicles can be a profitable segment of the business. The average repair order is higher with hybrids, meaning higher sales and profits. There are added costs and complexities when dealing with hybrid drive systems and that increases the cost of service and maintenance. That’s a market-driven reality created by hybrid car manufacturers.

Fully servicing hybrid vehicles creates a brand-new revenue stream for your shop. Every dollar you generate from being able to service the full hybrid drive system is purely incremental;. it simply did not exist before. There are few avenues within your business that provide this type of opportunity for new revenue. Providing full service for hybrids also opens the door to servicing the customer’s other vehicles, as well.

Conversely, you provide your competitor the opportunity to augment existing business if they position themselves as the (HEV/PHEV/EV) experts and take that second vehicle from you. There’s an old saying: “The first in wins.” What that means in the mechanical repair industry is that the first dealer in the market that embraces new technology, trains its people to work on the vehicles, and promotes its services will position itself as the expert and win loyal customers. Dealers today need to differentiate themselves from the competition, and, if they don’t, then they settle into the commodity arena and can be forced to deal on price to gain customers. If you efficiently and effectively service the (HEV/PHEV/EV) segment, it can mean incremental service revenue from other household vehicles and referrals.

As tire dealers, your employees need to be aware that low-rolling resistance tires are essential on an HEV/PHEV/EV to maintain gas mileage. HEV/PHEV/EV owners purchase the vehicle for better gas mileage and to help protect the environment. This means that they watch the MPG, and installing the wrong tire could raise red flags very quickly. That positions your store in a negative light and is a lost opportunity to sell a higher gross profit tire. Tires also provide an opportunity for nitrogen sales, a chance to bring the customer back for rotations; air pressure checks and alignment; synthetic oil changes; flushes; and more.

How can the THS’ model help my business?

The Hybrid Shop provides training, tech support, marketing, and exclusive products for its shops to allow them to successfully repair hybrid and electric vehicles. THS is under new ownership, with a new direction, a simplified business plan, and supported by a global entity founded in 1949. The focus is on building the dealer’s business and teaching technicians how to diagnose and repair (HEV/PHEV/EV) vehicles—not just conditioning a battery pack.

THS provides remanufactured battery packs exclusively to its dealers with a written three-year warranty. The engineers at THS are currently working on replacement battery packs with higher capacities, plug-in conversion kits, and other cutting-edge products. The THS goal is to help the environment, achieve better mileage, and help dealers improve their profitability.

THS is looking to grow our dealer network significantly. There are over five million hybrid and electric vehicles on the road today that are out of warranty. We are targeting these customers to bring their vehicles to one of our dealers.

In this aftermarket industry, much of what we sell is purely commodity-priced services. Traditional services such as brakes, alignments, and oil changes need to be at or close to market pricing or you’ll lose business to competitors. If you are able to offer a unique service capability—such as servicing and maintaining the hybrid-drive system—you’re not selling on price. You’ve differentiated yourself from the competition and have the potential to increase revenue.

The changes in the HEV/PHEV/EV segment provide significant opportunities to the aftermarket. If dealers position themselves now, they will grow and reinvent their businesses as the vehicle technologies change. This sets your businesses apart as one of the few venues where vehicles are serviced by competent service personnel using the correct processes, procedures, and equipment.

Ask yourself: What is the COI (the cost of ignoring)? How many changes have we seen over the years and been slow to react to?  How much business was unrealized? Vehicles will continue to evolve, and HEV/PHEV/EV will continue to grow. If your shop is in the service business, can you afford to ignore what is projected to be at least 10 percent of the vehicles that pass by your store every day?  

HEV/PHEV/EV are the future, and those who step up and embrace it today will be the ones who will ultimately win. If this sounds like the opportunity you’ve been searching for, The Hybrid Shop would love to continue the discussion.

Learn More About The Hybrid Shop

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