Automotive News Canada - May 2022 - 4

SPONSORED CONTENT
The Next Five Years Aren't Just About EVs
SALES LEADERSHIP
More disruption
is coming.
It's time to
embrace, adapt,
and innovate.
By JEFF WILLIAMS
President & CEO, Absolute Results
Insights & Selling
Strategies
ers in an EV world will prepare them
to win in the next decade.
To quote one EU dealer, " EVs aren't
the future, they're history. They're
already done. Sure, selling EVs comes
with its share of challenges, but
complaints or skepticism are futile.
Could you stop the pandemic or the
microchip shortage? Can you stop
Tesla, Lucid, or MG? Or stop your
customers from buying a car online?
No, no, and no. An inability to adapt
to this one change is a telltale sign
that you won't be ready to adapt to
all the other changes on the way. "
When North American dealers hear
about Absolute Results' work with
thousands of dealers in Europe, I'm
often asked questions about the differences
in the EU automotive market,
especially as they regard EVs.
The CEO of a mid-sized North
American dealer group recently asked
me, for example, what the top dealers
in Europe were doing to prepare for
EVs. I let him know that for dealers in
Europe, EV sales are business as usual.
In fact, in some countries, EV and
Hybrid sales make up 20 and 30 per
cent of new vehicle sales, respectively.
EU dealers have made physical modifications
to their facilities to accommodate
the new EV product. They've
invested in specialized training for
their staff and have encouraged
their entire sales teams to drive EVs.
They've leveraged OEM resources to
help educate their customers. Many
dealers have also adapted their sales
processes and team structure to provide
a more consultative approach to
selling.
But top European dealers, especially
top dealer groups realize that the shift
from ICE- to electric-powered vehicles
is just one of many disruptions
coming to the industry. Moreover,
they view these disruptions as opportunities
to evaluate and reinvent their
entire business model, just as OEMs
have done.
Many of these dealers believe that developing
a nimble culture and rallying
their teams to quickly embrace, adapt,
and innovate to become market leadIn
summary, top dealers worldwide
are Thinking Beyond EVs to the future
of automotive retail, and they are
using the new EV products to launch
the reinvention of their business.
So what does the future of automotive
retail look like? And how can embracing,
adapting, and innovating to be
an EV market leader prepare a North
American dealer for the
future?
To get a better understanding
of the future,
let's start by looking at
just a few of the changes
driving OEMs towards
completely re-inventing
their business model.
THE SALES MODEL
IS CHANGING. The
days of the OEM producing
mass quantities of
vehicles and then relying
on dealers to sell excess
production to consumers
are over. It's also not just
about filling their dealers'
order banks, and it's no
longer just a battle for
volume.
Now, many OEMs are
taking order reservations
with deposits directly
from consumers. Doing
so requires a seamless
digital retailing experience that starts
with the online configuration and
ordering process. It then demands
tracking each vehicle's production
cycle and communicating with
customers while they wait, as well as
ultimately working with dealers or
local agents to arrange financing and
delivery to the dealership or a customer's
home.
THE PRODUCTION MODEL IS
CHANGING. Disruptors like Tesla
have set new industry production
benchmarks. Whereas traditional
OEM production and assembly lines
still take up
to 25 hours
per vehicle,
Tesla's
factories can
produce a
single vehicle
in just nine
hours. This
is largely due
to the relatively
small
number of components in EVs, which
have 20 components in a typical
powertrain while the average ICE
vehicle's powertrain has over 20,000
components.
transition period where they are making
both. On top of this, optimizing
production requires reducing models
down to a handful of trim and option
packages. Making this straightforward
also benefits the new sales model,
because it also makes it easier for
customers to build and order a new
vehicle online in minutes.
THE REVENUE MODEL IS
CHANGING. Traditional ICEpowered
vehicles are machines with
computers, whereas EVs are computers
wrapped in machines. These
" computers on wheels " need massive
computing capacity, the ability to process
tremendous amounts of data in
TOP DEALERS
WORLDWIDE
ARE THINKING
ELECTRIC BEYOND VEHICLES
Transactional Business Model
HOW MANY
CAN I SELL
TODAY?
HOW MUCH
PROFIT CAN I
MAKE TODAY?
Value determined by a multiple of EBITDA
SaaS Business Model
CAC
CUSTOMER
ACQUISITION COST
LCV
LIFESTYLE
CUSTOMER VALUE
MRR
MONTHLY
RECURRING REVENUE
Value determined by a multiple of Recurring Revenue
Even as all OEMs move to producing
EVs, streamlining production is no
easy feat, considering the complexities
of legacy factories, supply chain relationships,
and logistics. The biggest
challenge for legacy OEMs will be the
Subscription add-on services will
create additional streams of revenue
for OEMs, as will the ability for
consumers to unlock additional paid
upgrades such as suspension and
performance tuning, new levels of
real time
over 5G
networks,
and as autonomous
driving
software
develops,
the
ability
to transfer
overthe-air
updates
to
a vehicle's operating systems. As
a result, automotive OEMs are fast
becoming computer and data companies.
Automotive News Canada - May 2022

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