Automotive News - January 23, 2023 - 20

20 * JANUARY 23, 2023
Dealers face EV hurdle
Getting enough
inventory a 'slow
burn' process
C.J. Moore
cj.moore@crain.com
Introducing:
The
Quantum5
Performance
Suite
an omni-channel
approach to
transformative
training in the
automotive
industry
s dealers get ready for a surge
of older electric vehicles arriving
in the used-vehicle market
in coming years, one
challenge many of them face now is
simply that there isn't enough supply
to meet current consumer demand.
" We can't keep them, " said Danny Papakalos,
director of pre-owned operations
at dealership group #1 Cochran,
based in Pittsburgh. " When they're on
our lot, we sell them quite quickly. "
With more automakers charting
electric paths, dealers are readying
their sales and service operations to
handle the infl ux of used EVs that will
eventually arrive when all those new
models age and permeate auction
lanes or return to dealerships as tradeins.
Th ey also are fi elding increased
interest from shoppers in buying used
vehicles with alternative powertrains
even as they try to understand the potential
impact of federal tax credits
made available for the purchase of
used EVs as part of the Infl ation Reduction
Act. With the pool of used EVs
qualifying for that tax credit likely to be
slim in the near term, experts expect it
will take time for the use of the provision
to gain traction.
For the time being, getting enough
EV inventory onto dealership lots
could be more of a " slow burn " process,
said Brett Morgan, CEO of Morgan
Automotive Group in Tampa, Fla.
" We still live in a universe where
a disproportionate amount of EV consumption
is still in
a handful of models, "
Morgan said.
About 29 of MorOne
size
doesn't fit all.
Training has to
adapt to people,
markets, and
cultures.
Stop by:
Modern objection
handling and
long-term
Booth #6845
@ NADA'23
and we'll show
you how!
handling and
long-term
relationships
relationships
that buy... without
the scripts.
that buy... without
the scripts.
For scheduling and
details:
quantum5.ai/nada-23
gan Automotive's
61 stores have new
EVs to sell, and half
of the 25 brands
the group represents
have EVs in
the marketplace,
he said. Still, Morgan
sold just 700 used EVs in 2022,
about 1 percent of all used vehicles it
retailed. Th e majority - 500 - were
used Teslas, he said.
But that tilt could soon change, he
Morgan: " People
want choice. "
said, because consumer preferences
are changing rapidly.
" As you see the further proliferation
of popular EV models by the traditional
manufacturers, then things tend to
get really exciting for the consumer, for
the dealer and for the used-car marketplace
because I think people want
choice, " Morgan said.
Other dealers have a positive outlook,
too.
" Th ere's no buildup of EV inventory, "
Papakalos said late last year. " I look at
that as a signal that there's a future of
used-vehicle sales with EVs. "
Indeed, the used-vehicle market
stands to become rife with EV options
through 2030 as one automaker after
another races to push their new battery-electric
or plug-in hybrid vehicles
into their lineups.
Dealers should " strap in " for that explosion
of options, David Greene,
principal of industry and marketplace
analytics at Cars.com, said. " Incredible
fragmentation " will occur when
AUTOMOTIVE NEWS ILLUSTRATION
those vehicles age and fl ow back into
the market, Greene said.
Buyer 'litmus' test
Just as consumers interested in buying
their fi rst luxury vehicles often seek
used cars as an entry point, many who
are interested in trying EVs also are likely
to buy used fi rst, said Ben Bartosch,
manager of CPO solutions at J.D. Power.
Used EVs can give consumers " the
ability to test out the water without
feeling like they've invested a signifi -
cant amount of money into purchasing
an EV, just knowing that the price
of EVs has risen signifi cantly, " Bartosch
told Automotive
News.
Used-EV sales by
Law: Used EV
selection helpful
franchised dealerships
participating
in J.D. Power's Power
Information Network+
soared 43
percent over the
last 13 months, far
outpacing sales of
used vehicles with
other kinds of powertrains. Th e average
transaction price for a used EV during
that period was $50,700, compared with
$30,200 for a vehicle with an internal
combustion engine, Bartosch said.
Some cautious buyers view a used
EV as something of a " litmus test, " said
Mike Law, a multi-store general manager
for
LaFontaine Automotive
Group of Highland, Mich. He oversees
LaFontaine dealerships in Ypsilanti,
Livonia and Dearborn, Mich.
Since the late 2010s, Law's dealerships
have emphasized stocking more used
electric and hybrid vehicles - plug-in
Chevrolet Sparks and Kia Soul EVs, for
instance.
"
" There's no buildup
of EV inventory. I
look at that as a
signal that there's
a future of usedvehicle
sales with
EVs. "
Danny Papakalos, director
of pre-owned operations,
#1 Cochran
Having a used EV selection is helpful,
Law said, for two reasons: Some
new EVs are diffi cult to get in Michigan
and the Midwest, and an EV-interested
consumer who is not ready to commit
to paying $52,000 for a brand-new Kia
EV6 then has the option to buy a used
Kia Soul EV for about $20,000 less.
" Th ey get comfortable with that, and
then they then grow into that next step,
whatever that might be, " Law said.
Consumers' interest is also growing
as anxiety over EV battery ranges are
being eased by range gains, Law said.
" Being able to get vehicles that are
upward of 250, 300 miles per full
charge, you're starting to see more and
more people start to consider and
move toward going to an EV, " Law said.
Interest in CPO EVs
As the nameplate count and volume
of pure EVs expands, interest also is on
the rise for certifi ed pre-owned programs
for when those vehicles return to
the market, said Bartosch of J.D. Power.
Overall gross profi t and transaction
prices for EVs, plug-in hybrid, hybrid
and fuel cell vehicles in a CPO program
are " signifi cantly higher than
Dealers pursue used EV future
As dealers prepare for automakers to launch a larger array of electric
vehicles, they are fi nding:
 First-time EV buyers may pick a used EV before committing to a
pricier or scarcer new EV.
 Buyers want longer EV battery ranges and more vehicle size variety.
 More consumers research EV specs prior to interactions with sales
reps.
 Continual education on EVs must happen for both used-vehicle sales
reps and service department employees.
their non-certifi ed counterparts, " Bartosch
said .
He anticipates demand for certifi ed
EVs will grow - especially for that
" prime " CPO category of 2-, 3- and
4-year-old vehicles.
Th e issue, though, remains that meager
availability.
" We're fi nding there aren't as many
of them in the market as consumers
would hope, " Bartosch said.
More EV-savvy consumers
2022 saw the EV adoption curve get
steeper, according to Scott Case, CEO
of Recurrent, an electric vehicle battery
and range analytics company.
Consumers increasingly have done
their homework on used EVs, Case told
Automotive News. In some instances,
they might even know more about the
specs of an available used EV than the
dealership employee does, he said.
Franchised dealerships that sell an
automaker's new EVs will get more
training, including how to handle repair
and maintenance of the cars, Case
said. But for used-vehicle-only dealers
selling whichever used EVs a customer
trades in or is discovered at auction, it
can be " really hard " to know all the different
systems and batteries and how
to look after them, he said.
In addition to investing in EV training
for dealership sales and service employees,
dealers must pay careful attention
to unique components and not overlook
special care of their software-based
features, said Greene of Cars.com.
For Brett Morgan and Morgan Automotive
Group, it means continual education
as employees go through written
internal training programs on EV
maintenance and charging. And EV
education can't be limited to just the
service drive - it should also be conducted
for frontline workers selling the
vehicles in the fi rst place, he said.
" We're just not getting enough repetition, "
said Morgan, noting that EVs
make up about 2 percent of all new cars
the dealership group sells right now.
" At the end of the day, consumers
want to know that on the service side,
we're confi dent in our abilities to handle
any manner of repairs with an EV, "
Morgan said.
" But I really think it starts at the front
of the house. " a
?
SOCIAL STYLE
"
http://www.quantum5.ai/nada-23 http://www.Cars.com http://www.Cars.com
Automotive News - January 23, 2023

Table of Contents for the Digital Edition of Automotive News - January 23, 2023
