CommentaryJun 9th, 2023

Harnessing the Power of the Parts Department in the New EV Era


As the automotive industry races towards an increasingly electric future, dealerships face the challenge of adapting to the rise of electric vehicles (EVs). Over the past few years, EV sales have grown exponentially and are expected to grow at a compound annual growth rate (CAGR) of 22.79% between 2023 and 2027, reaching 2.13 million vehicle sales. 

The interest in electric vehicles is nothing new and has faded in and out of production over the past century. With the latest push to reduce carbon emissions, more people are beginning to invest in EVs, as they are perceived to be more environmentally friendly, more reliable, and require less maintenance—all of which are attractive selling points to modern-day consumers. As EVs don't require the same maintenance services associated with internal combustion engine (ICE) vehicles and contain only 20 moving parts on average (compared to 2,000 in an ICE vehicle), the assumption is that this will mean less business for Fixed Ops. 

In recent years, about half of the average dealer's profit comes from Fixed Ops. This has led to many dealers fearing that this number will decrease as consumers rely less on Fixed Ops with the purchase of EVs.

However, dealerships can leverage one often overlooked profit center: the parts department. By harnessing the power of online sales, dealerships can tap into the expansive market of ICE vehicle owners while catering to EV owners' growing needs. This can help them prepare for a rise in EV sales and thrive in the changing market.

Capturing the Online Parts Market

The digital age has transformed the way consumers shop, and the automotive industry is no exception. To succeed in the era of EVs, dealerships must embrace online shopping habits by establishing a robust eCommerce strategy. 

There are millions of older ICE vehicles on the road today, most of which are not going anywhere. Additionally, the majority of people are still purchasing ICE vehicles, despite the rise in EV sales. Selling parts online enables dealerships to cater to the millions of ICE vehicle owners who require regular maintenance and repairs while providing access to a wider customer base. 

By optimizing their online presence, adopting user-friendly platforms, and implementing effective digital marketing strategies, dealerships can position themselves as the go-to destination for reliable and convenient parts purchasing. Furthermore, online sales open up the possibility of expanding the dealership's reach beyond its local market, maximizing revenue potential.

Tapping into the Needs of Aging Vehicle Owners

While EVs gain momentum, most vehicles on the road will remain ICE vehicles with an average age of 12.5 years. Although EVs are growing in popularity, high vehicle costs and increasing interest rates make purchasing a new or used vehicle challenging for the average car buyer. As a result, many people are choosing to hold onto their older vehicles, opting instead to invest in repairs and maintenance to keep these vehicles on the road.

This presents a significant opportunity for dealerships to capitalize on the needs of an expanding customer base. By catering to the maintenance and repair requirements of aging vehicles, dealerships can establish themselves as a trusted source of OEM-quality parts. 

Building strategic partnerships with reputable suppliers, such as Vintage Parts, can help dealers meet the demand for these repairs. By stocking a diverse range of parts for older vehicles and actively promoting their availability online, dealerships can capture the attention and loyalty of owners seeking reliable parts for their aging vehicles.

Focusing on EV Accessories and Specialized Parts

Although EVs have fewer mechanical parts, there is a high demand for accessories and specialized parts. This presents an opportunity for the dealership to capture this unique customer segment by offering a wide range of OEM accessories tailored explicitly for EVs. 

Highlighting the advantages of OEM accessories, such as superior quality, compatibility, and warranty coverage, instills confidence in EV owners that their investment is well-protected. Additionally, dealerships can focus on providing universal parts like tires, which still require regular maintenance and replacement. 

By positioning themselves as parts and accessories providers in the EV market, dealerships can become the preferred choice for EV owners looking for parts and accessories.

Becoming the Premier EV Servicer

Aside from the parts department, you can also leverage the service lane to draw in business from EV owners. To address the perception that EVs require minimal maintenance, dealerships should position themselves as experts in all EV services and repairs. This includes investing in comprehensive training programs and acquiring specialized equipment to ensure technicians are well-equipped to handle EV-related issues. This will give the dealership an advantage over independent repair shops that are not yet prepared for EVs. It will also secure the future business of consumers and continue to drive future revenue for Fixed Ops and Variable Ops. 

By developing a reputation for expertise in EVs, dealerships can attract a broader customer base in search of reliable and knowledgeable support. 

Bottom Line 

As the automotive industry undergoes this transition into more EVs on the road, dealerships must adapt to the changing landscape. By embracing parts eCommerce, dealerships can increase revenue in the parts department by selling more parts to the still remaining large segment of consumers with ICE vehicles shopping online. They can also transform their parts departments and service lanes to better cater to the rising needs of EV owners to help offset the impact that rising EV sales may have. 

Ibrahim Mesbah is the Co-Founder and CEO of RevolutionParts, which transforms the way parts buyers and sellers connect.

A technologist, founder, and CEO, Ibrahim is passionate about marketplaces, payments, and eCommerce. Having spent the last decade leading the RevolutionParts platform, which has powered more than $3 billion in parts and accessories sales. 

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