New products and technologies mean the dealership’s business offices need new offerings and training
Like the classic hit foretelling how “video killed the radio star,” dealerships are eyeing the threat of a similar disruption as EVs charge into our business offices. But, is it really all doom and gloom or could we just be flipping tracks?
Although video didn’t end music, or even “radio stars,” we have seen a huge transformation in how music and content is consumed. Similarly, the rise of electric vehicles in Canada will change the rhythm of the automotive industry’s F&I department.
The transition to electric vehicles (EVs) in Canada represents a significant shift in the automotive landscape, driven by the government’s ambitious Electric Vehicle Availability Standard.
This initiative, targeting 100 per cent sales of new light-duty vehicles as zero-emission by 2035, is not just about environmental stewardship; it’s a pivot towards a new economic era in the automotive industry
For F&I offices, this wave of electric vehicles will introduce both opportunities and challenges. EVs typically come with price tags that are thousands of dollars more than traditional vehicles, and this price increase could translate into more opportunity to pick up lender finance reserves.
These higher costs, however, also introduce complexities, specifically with the leasing process. Since residual values of EVs are not as predictable as those of conventional cars, we could see less favourable terms presenting new challenges around financing options.
In the cold weather climate that Canada offers to most of the country, the challenges for EV buyers and F&I offices take on additional dimensions.
The reduced battery performance in colder temperatures can affect vehicle range and efficiency, influencing buyer decisions. F&I offices are going to need options that cater to these unique challenges, such as extended warranties that cover battery performance.
These new product lines will create a whole new wave of required business office training as finance managers will have to know how to guide buyers in cold climates with information on battery health and the implication of longer charging times during colder months.
They need to be skilled in informing customers about the nuances of owning an EV in a cold climate, which might include items related to home charging systems and available tax incentives.
In terms of vehicle service contracts (VSCs), the narrative is also evolving. Traditional VSCs might see reduced relevance with EVs’ lower maintenance needs and fewer mechanical parts. Vendors will need to adapt these contracts to the nuanced needs of EVs, which demand coverage for advanced electronic systems and battery performance rather than conventional mechanical issues.
Extending the conversation specifically to EV battery warranties, given the high cost of replacement and the impact of extreme temperatures on battery longevity, this coverage will be vital. Tailoring warranty presentations to focus on concerns around battery degradation will be a key selling point for EV buyers.
Turning to technology, EVs are as much about software as they are about hardware. No longer are software updates solely about updating navigation maps. We are likely to start seeing F&I software update packages that include everything from regular software updates essential for vehicle performance, to more advanced features like autonomous driving capabilities, ensuring that the vehicle stays on the cutting edge of technology throughout its life.
Similarly, the advanced technology and higher cost of EVs creates greater opportunity for products like GAP protection. With EVs being more expensive to finance and replace, coupled with the cost of their batteries and the plethora of tech they house, GAP insurance becomes a no-brainer.
Recognizing this, more providers are developing policies specific to EVs and demonstrating that value to our customers will be a crucial part of the business office evolution.
By harnessing the opportunities presented by EVs — through strategic financing, tailored insurance products and informed customer service — dealerships can navigate the challenges ahead.
As they do so, they’ll be contributing to a greener Canada, making a significant shift not just in automotive sales but in the fabric of Canadian transportation.
