The automotive world can learn a lot from how other industries consistently deliver amazing guest experiences.

Six years into my career, I made a significant pivot—from Xerox and the world of office printers to automotive when I joined the Infiniti division of Nissan Canada.

Although I loved my time at Xerox and the incredible sales mentors I learned from, I didn’t have a passion for the sector. What that pivot ultimately taught me was how transferable skills and experiences are across industries.

So, despite my three decades immersed in automotive, and Dr. Gordon Shields’ experience across a host of industries, we both jumped at the opportunity to learn about the world of luxury hospitality and how it applies to our industry.

One of our clients, a rapidly growing luxury automotive brand, challenged us to help them create and consistently deliver a best-in-class luxury experience, not simply a great luxury automotive experience.

We got to work studying the characteristics of luxury.

We conducted a large-scale social listening research study¹ examining the voices of nearly 400,000 global luxury consumers and were invited to present the results at the 2023 Forbes Travel Guide Summit in Las Vegas (the NADA of the hotel industry).

Our research found six emerging trends in the luxury hospitality sector—from the receptivity of affluent travellers for local and sustainable cuisine to the desire for authentic, immersive local experiences.

Luxury hotels are adept at providing highlypersonalized experiences for each guest using their knowledge of guest preferences to anticipate and proactively deliver unique experiences. They treat each guest as a “segment of one”.

While sustainable cuisine may not have carry-over potential for dealers, one of the luxury trends we found certainly does: the accelerating importance of hyper-personalization—the idea that each customer is unique with distinct tastes and preferences.

Luxury hotels are adept at providing highly-personalized experiences for each guest using their knowledge of guest preferences to anticipate and proactively deliver unique experiences. They treat each guest as a “segment of one”.

In a mature automotive market like Canada, brand growth requires taking share from competitors. It’s the size of each slice, not the size of the pie, that matters most.

And how do we take share in a market where most OEMs design and build high quality vehicles? A differentiated customer experience. And this is where auto dealers, premium and volume brands alike, can take a page from luxury hospitality brands.

All dealers strive to provide good service, but how embedded is the idea of personalized service in the culture and processes of each store?

Do our team members strive to deliver the highest level of service at all times? Demands of a busy dealership can impede execution, so we looked at leading practices from luxury hospitality to guide us on how to establish new processes and change behaviours to enhance the customer experience.

It starts with understanding how customer expectations are formed — from being directed to a dedicated parking space at a retailer, being recognised and offered a preferred table, aperitif or dessert at your favourite restaurant, to enjoying (and expecting) the comfort, priority service and lounge experience of a business class flight.

Highly customer-focussed businesses use processes to deliver, and technology to track customer preferences, that not only anticipate their requirements but also deliver services even before the customer knows they need them (think of having large golf-style umbrellas near the service department and showrooms doors for example).

Examples from hospitality are plentiful including the “we’re looking forward to welcoming you” pre-check-in request letter or email message (The Lanesbourgh in London excels at this), asking guests for their room preferences—everything from the preferred pillow type, fruits, drinks and flowers they enjoy most, allergies to be aware of, to the name and needs of their travelling pet.

Hospitality processes like this are designed to identify customer needs in advance. In our auto retail world, this approach can be transferred directly to service appointments and new vehicle test drives. For example, asking prospective customers how long they wish to experience the vehicle on a test drive, which routes would they like to take (highways, city streets etc.), and their preference for sales consultant accompaniment or an unaccompanied experience.

Dealers can adopt a more personalized approach at new vehicle delivery by asking customers in advance what areas of the vehicle they most want to learn about and how much time they would like to spend during the handover. This level of personalization is especially important for new EV owners, many of whom are learning about the nuances of electrified vehicles for the first time.

One of the easiest and most impactful hospitality best practices relates to how customers are greeted on arrival. In a hotel, it is not uncommon for multiple guests to arrive at the check-in counter simultaneously. Next time this happens to you, notice how the front desk staff manage the queue. In the best hotels, the agent makes a point of smiling and making eye contact with every waiting guest. No words are spoken, the visual connection is enough to make each guest feel acknowledged and valued, and serves to reset their ‘time in the queue clock’. Think of the impact that such a small but cost-free gesture will have in your busy service department on a weekday morning or in the showroom on a busy Saturday.

Leading hotels make a point of “beating the greet” with every guest, no matter where in the hotel (our friends at Forbes Travel Guide use this concept in their hotel training programs). Guests are acknowledged with a smile and a friendly “Good Morning” when any hotel staff member comes within 3 metres of a guest in a public area. Imagine how our customers will feel when they receive the same acknowledgement and hospitality from our staff—on the lot, in the showroom, and in the service department. Cost? Zero. Impact? Significant. Customers feel welcome and your dealership differentiates itself from others.

Adapting luxury hotel practices may initially feel uncomfortable for dealership staff. We’ve seen this first hand in our onsite coaching programs. The biggest barrier? Awareness. Dealers tend to train staff to deliver processes without fully considering how we want our customers to feel at each of the touchpoints in the vehicle purchase and servicing journey.

A big part of our training and coaching programs involves putting team members in the customer’s shoes. Once our teams realize the power of delivering a customer-centric rather than a dealer-centric experience, the returns in staff engagement and customer satisfaction metrics are impressive. We evolve from a transactional experience to cultivating a long-term relationship with each customer. The view shifts from ‘this deal’ to ‘lifetime value’.

Successful auto retailers are learning that most service enhancements offered by luxury hospitality brands don’t come at great cost, if at all. Changing staff behaviours is about learning new skills and embedding them into present activities, a mindset rather than an expenditure.

A big part of the fun in supporting an ever changing automotive industry is proving that older dogs are perfectly capable of learning new tricks.

REFERENCE :

¹ Emerging Trends in Luxury Hospitality Report, Clarify Group Inc., March 2023

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New streams of revenue are out there for those who are willing to adapt

The future is green, or at least moving closer to zero emission in the coming decades. The recent new vehicle registration market share figures from S&P Global Mobility for Q3 2022, showed zero-emission vehicles (ZEVs) represented 9.5 per cent of sales in Canada, up 70 per cent compared to the same period last year (5.6 per cent ZEV share in Q3 2021). ZEVs include battery electric, plug-in hybrid, and fuel cell electric vehicles—the common characteristic being they all have the capability to operate on electrons alone.

Indeed, in the major urban areas, ZEV sales accounted for a notable chunk of the market in Q3, with a 24 per cent share in Vancouver, 16 per cent share in Montreal, and even in the “no rebates for rich people” market of Toronto, one in 10 vehicles sold in the third quarter. All up from the same period in 2021.

Growing consumer interest in ZEVs and increased awareness of environmental issues, alongside an expanding range of attractive ZEV models on offer in Canada, have helped promote sales. Without supply constraints, ZEV share would be even higher—waiting lists for most ZEV models are now measured in months.

Good news for the sales department, but how encouraging is all of this for fixed operations?

This thinking is consistent with Clarify’s TEFF retail success model: Transparent, Efficient, Flexible and Facilitated—in particular the opportunity of providing customers with a more facilitated (“easy”) transition from ICE to EV ownership.

A recent study commissioned by CLEPA, the European Association of Automotive Suppliers, in partnership with Roland Berger, stated that “BEVs have around 30 percent lower aftermarket replacement part revenue potential than ICE vehicles”. Overall service and parts revenues will decline over time for workshops unless they adapt to changing market conditions.

The number of gasoline vehicles dwarfs the number of ZEVs on the roads today, and service revenues will remain strong for these models, however, not indefinitely. There is both need and opportunity for dealerships to look at the transition to electric and changing mobility needs of consumers as a real opportunity to grow revenues outside the standard business model.

These opportunities are varied and require bold thinking. Indeed, change doesn’t come as easy to an industry used to managing its business successfully the same way for decades. In our view, however, the skills already contained within most Canadian dealership service operations can be adapted to capitalize on these new revenue streams.

Some examples worthy of consideration include:

Charging Installation

EV customers, most of whom are new to electric cars, need advice regarding the charging solution that works best for them. A significant number of them need a home or work-based charger. This growing cohort provides notable revenue opportunities, not only with offering customers an installation service, but the charging box too.

This thinking is consistent with Clarify’s TEFF retail success model: Transparent, Efficient, Flexible and Facilitated—in particular they have the opportunity of providing customers with a more facilitated (“easy”) transition from ICE to EV ownership.

Letting your new EV customers fend for themselves when it comes to home charger selection and installation, is not only a huge missed opportunity to enhance the customer experience—and their advocacy of your dealership to family and friends—but also a missed revenue opportunity.

Why would dealers allow Amazon and the local electrician to earn these EV transition dollars? With average Level 2 wallbox chargers selling for $1,000 and charger installation costs ranging from $1,500 to $3,500 (depending on the customer’s electrical panel) including both materials and labour, the gross profit potential is meaningful.

One of the co-authors recently spent over $3,450 (before tax) on his EV transition and would have been more than willing to include the equivalent amount on the dealership’s bill of sale had it been offered as a facilitated service.   

Do dealerships have experience in the sale of specialized automotive parts and accessories, installed by highly skilled technicians (rhetorically asked)? The main difference is that we’re now talking about installation at the customer’s home or office, not on the vehicle itself.

Can these logistics and liability risks be managed with the skills we already have? Yes.

And for those dealers who don’t want to establish an in-house EV charger installation team (or not yet), there are good options available like RocketEV.ca, a third-party service that dealers can offer directly to their customers, generating a commission revenue stream in the process—and with a better, TEFF-aligned customer experience.

When you consider that less than two per cent of Canada’s nearly 23 million light vehicles are ZEVs today, demand for charging solutions will be robust over the next three decade ICE to EV transition.

As Frank Schlehuber from CLEPA comments “The ability [of traditional automotive service providers] to collaborate and be open for new business models will be key success factors”.

New Finance Models

Subscription models are growing, especially in Europe including OEM-sponsored programs from Volvo and Porsche (both in Canada too), Jaguar Land Rover, Hyundai, Mercedes-Benz, and new challenger brands like NIO from China.

Subscription services are offering customers the flexibility of short term subscription terms, often including insurance and the ability to swap models.

Importantly, this arrangement offers dealers the ability to market used vehicles on a subscription basis, and thus secure service work for the duration of the vehicle’s subscription lifecycle.

The move towards offering a vehicle-as-a-service (VaaS) provides a guaranteed revenue stream for retailers.

However, this option is not merely open to the OEM, with providers like Australian based LoopIt providing a “subscription in a box” solution as a white label.

Importantly, this arrangement offers dealers the ability to market used vehicles on a subscription basis, and thus secure service work for the duration of the vehicle’s subscription lifecycle.

E-bikes and New Mobility

The sales growth of e-bikes, e-scooters and premium bicycles has been phenomenal, with the global e-bike market alone anticipated by Vision Research Report to grow from USD $41 billion in 2020 to USD $120 billion in 2030.

So why can’t new car dealers—especially those in urban markets—participate in this growth by providing customers with sales and service options for a wide range of mobility solutions beyond the core passenger vehicle business?

As Christoph Seyerlein from the German business magazine, Manager Magazin at the Mobile.de Mo:re Conference recently commented “I know a dealer who recently told me, ’I have the same margin on a good e-bike as I do from a Volkswagen Polo’.”

Underlining not only the sales potential for e-bikes, but also considering that a number of bikes share similar parts to EVs, could open the service bays to extra business.

Certainly, OEMs are entering the market with their own e-bike offerings, including Audi, BMW and Mercedes-Benz. Cynics may see these products as merely PR exercises, but for some dealers this is a growing source of revenue.

Mobility Advisory

The traditional role of the automotive retailer and service centre was to focus on the product. Electric vehicles, however, come with a new ecosystem for customers to manage. Most notably how to best look after their vehicle’s battery life, how to manage charging and determine the total cost of ownership.

As dealers are the mobility experts in their local markets, they have the opportunity to advise not only single vehicle purchasers on their transition to an EV, but also expand to advise on how small businesses, say local tradespeople, logistic companies or organisations wanting to change their fleets to electric can move effectively.

Providing advisory services not only allows dealers to gain additional revenue from sales and installation but opens up a wider customer base than perhaps was previously untapped.

In essence, retailers and workshops can expand the services they provide their community by embracing new mobility solutions and electric vehicles, in order to grow their businesses toward the new greener future. New streams of revenue are out there for those who are willing to adapt.

The post The green dividend: cashing-in on EVs? appeared first on Canadian Auto Dealer.

We are old enough to remember when economists, sociologists, and futurologists alike, predicted the end of the long hours culture in favour of a new utopia called the “leisure society.”

The argument ran in the 1960s and 1970s that technology would take away routine and time wasting activities to allow us to enjoy the free time we all deserved. In some ways that happened, but as we freed up time from one domestic chore or another time-wasting office activity, other tasks arose to fill the vacuum. Unfortunately, we were misled.

Similar forecasts have emerged around the end of oil and the decline of automotive vehicle sales—and specifically whether we have reached “Peak Car.”

After the financial crisis of 2007-2009, global automotive sales grew rapidly for over a decade, peaking in 2017 and 2018. The biggest driver of sales growth was from consumers in emerging markets like China, India, South-East Asia and Latin America. 

As economies grew, so did people’s requirements for personal transport. For many, a vehicle remains not only a necessary form of individual transport but also a sign of personal achievement, an aspiration, and a major step up for a family compared to a small scooter in a city like Mumbai or São Paulo.

Global auto sales understandably dipped through the pandemic but are on the upswing again as of 2021, albeit constrained by various supply chain challenges and lingering pandemic restrictions in countries like China.

Source: LMC Automotive, May 2022

This growth in demand, however, will be tempered by external pressures, most notably related to climate change. Governments, particularly across developed markets, are calling for the end of internal combustion engine (ICE) vehicle sales, with Ottawa setting targets to stop in 2035, and the United Kingdom, France, Spain, Taiwan, Singapore and California amongst others, announcing similar bans on gas and diesel-powered vehicles. 

Moreover, growing focus on reducing congestion and emission levels, especially in urban centres, is promoting the wider use of public transport, and adoption of micro-mobility and vehicle sharing and hailing alternatives. 

This growth in demand, however, will be tempered by external pressures, most notably related to climate change. 

Indeed, many younger cohorts in major urban centres are less likely to own or lease a car, or even apply for a driving licence, than their counterparts even a decade ago.

But does this mean we have reached Peak Car?  

According to a recent report from Bloomberg Green, while we may not have reached Peak Car, we have almost certainly reached Peak ICE—in fact, it is already in the rearview mirror, cresting in 2017. 

Source: BloombergNEF Long-Term Electric Vehicle Outlook 2022
Note: Electric vehicles include plug-in hybrid vehicles

As global sales of electric vehicles (BEVs and PHEVs) accelerate out of the pandemic, the mix of sales is shifting in favour of EVs. While it will take some time before EVs outsell ICE vehicles in most major markets (Norway is the notable outlier at 92 per cent of sales as of March 2022), the reality is that ICE will become an ever smaller percentage of total sales.    

Although still lagging the EV penetration of other G7 nations like France (21 per cent), UK (23 per cent) and Germany (26 per cent), Canada’s EV share of new vehicles sold reached 8.3 per cent in the first quarter of 2022, led by BC and Quebec. In fact, EV sales in the major cities of Vancouver and Montreal are approaching one in every five new vehicles sold (Source: IHS-Markit). 

Despite government targets, however, the ultimate decision-maker is the Canadian consumer. 

While EV demand is growing, the sales trajectory remains unclear. A recent study by J.D. Power found that nearly half of Canadians (47 per cent) have no intention of considering an EV as their next vehicle. 

Analysis by Clarify Group finds at least four major constraints to EV adoption: 

Product: OEMs are increasing the supply of new EV models, both BEVs and PHEV variants, with increased range and quicker charging times. The total range of models on offer, however, remains limited in Canada. Aside from Tesla, most OEMs have only one or at most a few EVs available for purchase and with lengthy wait times. 

Affordability: The premium purchase prices of most EVs available for sale today eludes the majority of Canadians. For early adopters, price sensitivity is often secondary to the desire to own new technology, but for the majority, current EV price points are challenging. As BC and Quebec approach the transition from early adopters to early majority buyers, the price gap between an EV and a comparable ICE vehicle will be harder to overcome. Ontario will need to reconsider its “build them and hope consumers buy them” EV strategy. OEMs will need to introduce vehicles in lower priced segments that represent the majority of vehicle sales.

Source: Clarify State of Charge Canadian EV Monitor, April 2022 (blue line represents the level of digital engagement of Canadians on the topic of EV cost of ownership); Gasbuddy.com (red line represents Canadian average price per litre of regular unleaded gasoline)

Sources: NRCan.gc.ca, zap-map.com, IEA-EV Data 2021, OECD

Cost of Ownership: Many Canadians remain uncertain of the costs of EV ownership compared to the ICE vehicles they know. The good news is that recent inflationary pressures are causing Canadians to be more receptive: Clarify State of Charge data reveals that as gas prices increase, there is a corresponding increase in social media engagement on the topic of EV cost of ownership. But the math is not always fully understood—this represents both a need and a great opportunity for OEMs and dealers to educate interested prospects, especially given that gas prices are expected to remain elevated for the foreseeable future.

Charging Infrastructure: Range anxiety remains a challenge, but charging anxiety may be the real challenge for OEMs. Today, Canadians have access to over 16,000 public charging points, well below international comparisons, especially considering the huge geographic expanse of our country. As EV sales increase, pressure on the infrastructure will grow. Or, perhaps, EV growth will remain below its potential until the charging infrastructure grows. Chicken or egg? Indeed, many Canadians living in multi-family buildings have limited access to home charging. Avoiding charging anxiety will be an important barrier to overcome for many Canadians.

Implications for Canadian Dealers?

So what does all of this mean for Canadian dealers? The answer: it’s complicated. With Peak ICE behind us, dealers will need to operate with a foot in both camps—ICE and EV—for some time to come in both sales and after-sales. 

The answer: it’s complicated. With Peak ICE behind us, dealers will need to operate with a foot in both camps—ICE and EV—for some time to come in both sales and after-sales. 

Customer needs and expectations are different, not only between ICE and EV customers but across the EV adoption curve as dealers in BC and Quebec enter the “early majority” phase of the adoption curve.

Dealers will need to wear multiple hats, facing increased complexity—in staffing, training and infrastructure investments among other challenges.

So while the tide is indeed turning, dealers need to carefully measure the hype against the reality, especially with their brands—and perhaps most importantly for the customers in their markets. 

EV leadership, though, will have to come from the top. Your teams will watch your interest and curiosity with EVs, and will act accordingly. Make sure to talk with your customers and gauge their interest and hear their concerns. Only then can you know the issues they are facing and develop strategies for your sales and service teams to address them. 

An EV future is coming. It just won’t arrive all at the same time across Canada.

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