Why Dealer Networks Must Pivot to Vehicle Lifetime Value, Now!
Electric vehicles (EVs) and software-defined vehicles are challenging traditional aftersales economics. With fewer moving parts and less routine maintenance, profit streams built on ICE servicing will shrink. Add to this the impact of connected vehicles, where Over-The-Air (OTA) updates and remote diagnostics reduce workshop visits, and the urgency for change becomes clear.
The answer to future profitability is not simply better EV know-how. It’s a cultural shift: from focusing on the initial vehicle sale to maximising value across the entire customer and vehicle lifecycle, through ownership, service subscriptions, and software features.
EVs are disrupting traditional Aftersales economics:
Now is the time to focus on vehicle lifetime value!
Customer retention is the new battleground.
If the reduction of service and maintenance is affecting profits, then dealers must seek to develop their revenue streams by increasing vehicle volume or through developing new channels of profit.
To grow volume, dealers must look beyond the first ownership cycle. Competing with the independent aftermarket for second- and third-life vehicles is essential. This means becoming more competitive, through enhanced customer experience, perceived value, and, where necessary, cost alignment.
An entrepreneurial mindset also matters; empower teams to trial new business opportunities, or marketing strategies. Scale what works and stop what doesn’t but learn from your experiments. Engaging customers in service development not only identifies future revenue streams but also provides a reason to maintain contact when annual visits are no longer guaranteed.
Aftermarket technology suppliers are working hard to enable new profit opportunities, exploring these options will support customer convenience and loyalty. For example:
· ADAS reduces collision frequency but pushes up repair complexity and calibration need creating opportunities for accredited, ‘right first time’ processes.
· Smart repairs of bodywork, alloy wheels and interiors that can return vehicles to an as new feel.
· Service, maintenance and repair (SMR), and MOT bundles can lock customers into multi-year relationships with dealer networks.
· EV mass and torque can drive faster tyre wear, creating a repeatable retention lever if you can bundle tyres with service plans and home or mobile fitting.
Future aftersales success is cultural, not just technical. Suggested changes include:
· Shifting sales incentives from units sold to customer lifetime value.
· Making service advisors relationship managers.
· Making first time fix rates part of daily KPIs.
· Hardwiring retention into the daily rituals of the business.
· Developing an innovation led culture, where experimentation is encouraged.
Of course, to succeed all initiatives and new technologies must include clear internal comms, learning and coaching to embed a new culture, over time.
The Window to Act Is Now
Today, franchised networks hold an advantage: most EV-qualified technicians are within OEM-authorised workshops. But that lead won’t last. The EU’s Skills Agenda, the European Battery Academy, and national programs, alongside IMI TechSafe and similar schemes, are rapidly scaling vocational training across Europe.
At the same time, data access regimes will open connected vehicle data to the independent aftermarket. The EU Data Act mandates data portability for connected products, and the UK’s SERMI scheme gives vetted independents secure access to coding and software downloads. OEMs cannot rely on data lock-in to retain customers.
Independents are investing in upskilling and technology, supported by EU policy and industry partnerships. Once capability spreads, the competitive edge franchised dealers enjoy today will erode. This is the moment to lock in customer loyalty, before skills parity and open data access level the playing field.
How PHM helps OEMs and dealer groups transform their aftersales approach:
Designing the lifecycle‑centric model: developing and embedding customer journeys and digital/OTA touchpoints with retention at their heart.
Mobilise culture: change management programmes that make “retention is revenue” the north star; coaching leaders in driving the new culture and frontline teams to function as relationship managers.
Equip people and systems: L&D for customer‑first behaviours, entrepreneurial test‑and‑learn, and new‑system training (AI‑assisted diagnostics, capacity planning).
Prove and scale: supporting the implementation of rapid implementation, measurement and scaling of pilot programmes.
EVs won’t destroy aftersales, they’ll redistribute it to those who move first on culture, customer experience, and data‑led servicing and maintenance. If you are ready to protect revenue and loyalty, get in touch to find out how PHM can help you turn strategy into results today!
Sources
McKinsey; Deloitte; MotorTrend; Grand View Research; Applied Intuition; FORDLiive coverage; CNBC; J.D. Power; AAA; S&P Global; IMI TechSafe; AM‑Online; EU Data Act guidance; PHM Aftersales Manager