The unstoppable electric car and used car dealers

[Note:*quotes are from a phone interview with the article author.]

A luxury used car dealer in Boise, Idaho advertises, “Check out our electric vehicle selection” on a billboard at the corner where the dealership is. A row of used EV’s and hybrids sits under a big sign at the back of the block, segmented from the other inventory. There’s a used Tesla, a couple of Toyota Prius, and a few Nissan Leafs and Chevy Volts. Behind them, a row of chargers is available, and there’s a free public charging area off the back alley.

“We’re just getting ready for the next surge,” Ralph Seaman, the used car manager says. “The more electric vehicles there are out there, the more of them that will show up at auctions and trade-ins. We’re one of the first to recognize that.”

The consumer segment for electric cars is steadily rising. The overall share of electric vehicles was just over 2% globally at the end of 2020 but was closer to 17% in Norway and 14% in the United Kingdom. This reflects the “early adopter” stage of electric vehicle interest, but the segment is expected to grow significantly by 2030.

This, along with legislation like the electric vehicle mandates in California and Washington, will change the used car landscape for good. Those mandates are likely to expand into other states as well. 

What do used car dealers need to do, and what could that look like?

Preparing to Prepare

Not every dealer can create an “electric section” like the luxury dealer in Boise did. At least not yet. But dealers need to prepare for electric vehicle customers sooner rather than later. This goes beyond just having electric vehicles available, or at the least having a partnership with a dealership that carries them under some kind of referral program.

Dealers must also prepare for “EV intenders”. These are buyers who will walk on the lot looking for an EV and are likely to leave if they can’t find one. To remain competitive, salespersons and managers must both have an answer of some sort. It’s not a matter of if, but of when having electric cars for sale will be essential to dealership success.

That means more than just talk. It means investment.

Investments Dealers Need to Make

There is more to selling electric vehicles than just buying a few at auction and putting them on the lot. But what should you invest in first?

“The first thing we did,” Mr. Seaman told us, “was invest in training. We had a sales manager who was truly interested in the EV market, and he took some training and then trained the rest of us.”

Electric vehicle buyers are well-educated and are often self-educated when it comes to the makes and models of each vehicle and things like battery life, range, and charging needs. Salesmen need to equal or surpass that knowledge to be able to carry on intelligent conversations with potential buyers.

Beyond training sales staff, dealers will also need to:

  • Invest in charging stations: It would be like having an internal combustion car on your lot with no gas in it and no way to refill it. Dealers will need their own charging stations, and they can be another source of revenue or a way to attract new EV customers.
  • Service and Technician Training: Most dealers make a lot of profit on both service and parts. To successfully enter the EV market, you need to have service personnel who are trained to work on electric vehicles and service and parts personnel who understand diagnostics, parts sourcing, and more.
  • Invest in tools: Working on an EV is much different than working on a typical engine, and your service staff will need new tools. As OEMs release new models those tools will likely change and you will need more of them. You don’t want a vehicle on your lot that you can’t at least do minimal service on without trouble.

To be prepared, your dealer needs to take a holistic approach to electric vehicle sales, from the moment the buyer walks onto the lot to stellar service after the sale. Electric vehicle buyers almost expect more than conventional buyers, and it will be up to you to provide them with it.

Whether we like it or not, the electric vehicle revolution is coming, and the market is changing with it. That means dealers must adapt, and to do so they must take adequate steps to be prepared. 

One of those steps is to become a member of NIADA. NIADA has supported the used car dealer community for more than 75 years. Learn how joining NIADA can help you navigate the changing market. 

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