Electric car to bring hard times for garage workshops
Garage workshops are having more and more a hard time with the advent of low-maintenance electric cars. That combined with growing private leases, make that maintenance and repairs are becoming less profitable.
Entrepreneurs who do not adapt to the new situation risk to have their doors closed in the future. In the Netherlands the number of dealerships dropped from 4.500 in the nineties to a mere 2.000 today. The latter being owned by less than 100 entrepreneurs.
e-cars require less service
“With the rise of electric cars, garages are in danger of losing a large part of their income. There is now a relatively high margin for car dealers on oil changes. Maintenance accounts for a limited part of the turnover, but almost 40 percent of the profit”, says Sonny Duijn, sector economist Retail and Leisure at ABN Amro.
E-cars are less complex and need less service. Maintenance of the power train is even 75 percent lower. Only tyres wear faster because of the higher weight and torque of e-cars.
Diesel and petrol cars become better
Despite the emerging of electric cars on the Dutch market (47.000), their market share remains limited compared to the 8,5 million cars in Holland. In the next ten years a lot of combustion engine cars will still need ‘classic’ maintenance.
This is becoming less profitable, however, since ordinary diesel and petrol cars need to go to the garage less often. They are getting better from a technical point of view and service intervals are stretched.
Smaller multi-brand garages also find it more difficult because diagnosis of vehicles has been extensively digitized. Fault diagnosis is often the privilege of brand dealers because only they can invest in specific diagnostic computers, delivered by the car manufacturers.
Often there are exchanges between official dealers and small specialist garages, but even brand dealers have a hard time and are often swallowed by large dealer groups. As private motorists are more likely to opt for private lease formulas, maintenance rates will come under even more pressure.
Diagnostics as a solution
“The mechanic is becoming more and more an ICT specialist and it is unsure whether any company can afford such an expensive employee”, says Duijn. However, not every technical problem is detected by the software.
A computer proved not to be able to detect engine noise from a bearing that has run out, while a classic mechanic spotted the problem instantly. In such cases some brand dealers can no longer offer a solution.
That is why there is a market for specialized companies that, for example, only diagnose or overhaul engines. Precisely because of this tailor-made approach, smaller players can make a difference in the future and stay in business.