T HE IMPACT O F A LTERNATIVE F UEL V EHICLES O N F IXED O PERATIONS N ATE C HENENKO 13 N OVEMBER 2019
W HO I S C ARLISLE ? C ARLISLE & C OMPANY I S A S TRATEGY C ONSULTING F IRM F OCUSED O N H ELPING OEM C LIENTS I N T HE M OTOR V EHICLE S PACE COMP MPANY NY OVERVI VIEW BUSINE NESS SS SEGMENTS NTS Carlisle & Company is a highly specialized Strategic Consulting: Strategy consulting strategy and implementation firm projects for all aspects of service parts businesses including: channel management, sales and marketing, Exclusively focused on original equipment revenue management, supply chain, and motor vehicle parts and service operational excellence Automobiles ▪ Powersports ▪ Buses / Trucks / Commercial Vehicles ▪ Insights: Annually benchmark OEMs Construction Equipment ▪ across all aspects of the service parts Agricultural Equipment ▪ business around the world and conduct Industrial & Medical Equipment Key markets Project Activities ▪ regular syndicated surveys Operations Excellence: Warehouse and ▪ OEM M Focu cus: Our work is primarily with OEMs distribution network focused, improving Uniquely situated in the motor vehicle industry; ▪ Industry try Experts: perts: Our employees work on projects efficiency and quality of supply chain syndicating benchmarks and surveys across the throughout the industry providing analytical and networks while reducing costs industry globally strategic insight on many issues ➢ Founded in 1993 by David Carlisle ▪ Ease e of Doing ng Busines ess: We are accessible, respond Strategic Solutions: Redesign processes ➢ Syndicated benchmarking and surveys quickly, and adapt solutions to unique client supported by software for Pricing, Retail across the industry globally situations and needs Inventory Management and Inventory Management 3 This information is protected by the Global Benchmarking & Research Non-Disclosure Agreement. No one except an employee of a participating company may be provided with this data, and only after s/he has acknowledged and accepted the terms of that agreement.
A GENDA The e Questi estion on: : How much are alternative fuel vehicles going to affect service & parts revenues? Sub-Ques Questions tions To Help p Us Re Reach ch An Answer: er: I. How much service do alternative fuel vehicles need, and how much does it cost? II. Where do customers service their alternative fuel vehicles? III. How satisfied are the alternative fuel customers with their service options? 4 This information is protected by the Global Benchmarking & Research Non-Disclosure Agreement. No one except an employee of a participating company may be provided with this data, and only after s/he has acknowledged and accepted the terms of that agreement.
A LL T HE F ORECASTS S AY A LTERNATIVE F UEL V EHICLES W ILL B E P OPULAR Units In Operation By Vehicle Type, All Makes, USA 2025 Forecast as of ICE Hybrid Electric 2019 20M Units In Operation 15M 10M Bloomber erg Forecast casts s That by 2040, Globall lly, , EVs Alone Will Represent t 35% of All Car r Sales 5M M 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017 2019 2021 2023 2025 Vehicle Model Year Source: 2018 Q3 Experian UIO Data Source: https://www.jpmorgan.com/global/research/electric-vehicles 5 This information is protected by the Global Benchmarking & Research Non-Disclosure Agreement. No one except an employee of a participating company may be provided with this data, and only after s/he has acknowledged and accepted the terms of that agreement.
E LECTRIC V EHICLES H AVE V ERY F EW P ARTS – T HIS M AY H URT S ALES Electric vs. ICE Number of Moving and Wearing Parts Engine Moving Parts Gearbox Moving Parts Wearing Parts Fewer Failure Points 24 And Less Regular Required Maintenance And Longer Maintenance Intervals 27 Number of Parts Less Service Opportunity 113 11 12 3 VW Golf Chevrolet Bolt Source: UBS 6 This information is protected by the Global Benchmarking & Research Non-Disclosure Agreement. No one except an employee of a participating company may be provided with this data, and only after s/he has acknowledged and accepted the terms of that agreement.
O THER C ONSULTANTS S AY EV R EVENUES M AY B E 60% L OWER T HAN ICE R EVENUES ! 7 This information is protected by the Global Benchmarking & Research Non-Disclosure Agreement. No one except an employee of a participating company may be provided with this data, and only after s/he has acknowledged and accepted the terms of that agreement.
W E S URVEYED 1,987 O WNERS T O S EE W HAT ’ S G OING O N – 50% ICE, 50% A LT F UEL Respondents Plotted By Location Legend Internal al Combustion ion Engine Alternat nativ ive Fuel ▪ Battery Electric ▪ Fuel Cell ▪ Gasoline Hybrid ▪ Plug In Hybrid *Participants acquired via paid consumer panel - The larger the Sourced Sept 2019 circles, the greater All respondents live in the United States the population is in our survey 8 This information is protected by the Global Benchmarking & Research Non-Disclosure Agreement. No one except an employee of a participating company may be provided with this data, and only after s/he has acknowledged and accepted the terms of that agreement.
A LTERNATIVE F UEL V EHICLES R EQUIRE S LIGHTLY L ESS M AINTENANCE P ER Y EAR Average Number Of Times Serviced Per Year 2.5 2.42 Avg. Number of Services Per Year 2.325 2.21 2.15 1.975 1.8 Fuel Type 9 This information is protected by the Global Benchmarking & Research Non-Disclosure Agreement. No one except an employee of a participating company may be provided with this data, and only after s/he has acknowledged and accepted the terms of that agreement.
T HE P ATTERN H OLDS U P W HEN W E L OOK B Y V EHICLE A GE Average Number Of Times Serviced Per Year By Vehicle Age Avg. (Q20) Number Of Times Serviced 3.375 Avg Number of Services Per Year 2.66 2.53 2.54 2.7 2.28 2.10 2.02 2.025 1.35 0.675 0. 0-3 Years 4 - 7 Years 8-10 Years 10 This information is protected by the Global Benchmarking & Research Non-Disclosure Agreement. No one except an employee of a participating company may be provided with this data, and only after s/he has acknowledged and accepted the terms of that agreement.
E LECTRIC V EHICLES S HARPLY E XAGGERATE T HE M AINTENANCE D IVIDE Average Number Of Times Serviced Per Year By Vehicle Age 2.53 2.6 Avg Number of Services Per Year 2.10 29% 1.95 1.80 30% 1.47 1.3 0.65 0. 0-3 Years 4 - 7 Years 11 This information is protected by the Global Benchmarking & Research Non-Disclosure Agreement. No one except an employee of a participating company may be provided with this data, and only after s/he has acknowledged and accepted the terms of that agreement.
O UR A LTERNATIVE F UEL F LEET S ERVICE C OST I S S IMILAR T O T HE ICE C OSTS THINGS WE THINK WE KNOW Alternative fuel vehicles cost roughly 7% more to repair over the first ten years of their life WHY WE CAN’T SHOW YOU A CHART There are too many uncertainties: Service provider (dealer v. independent v. chain) Vehicle age Specific fuel type (hybrid v. battery) Geographic location WHAT WE’RE COMFORTABLE SAYING Service cost for alternative fuel vehicles is similar to ICE vehicles 12 This information is protected by the Global Benchmarking & Research Non-Disclosure Agreement. No one except an employee of a participating company may be provided with this data, and only after s/he has acknowledged and accepted the terms of that agreement.
I T S EEMS L IKE W E ’ VE G OT A P ROBLEM ! More Alternative Fuel Vehicles… …Each of which requires less service at similar prices… …Results in a smaller revenue potential $ 13 This information is protected by the Global Benchmarking & Research Non-Disclosure Agreement. No one except an employee of a participating company may be provided with this data, and only after s/he has acknowledged and accepted the terms of that agreement.
B EFORE Y OU Q UIT Y OUR J OB , L ISTEN T O T HE S ECOND H ALF O F T HE S TORY REVENUE POTENTIAL MARKET SHARE $ % What percentage of the population can you retain How much does each customer spend? as a customer? We think: Smaller We think: ??? 14 This information is protected by the Global Benchmarking & Research Non-Disclosure Agreement. No one except an employee of a participating company may be provided with this data, and only after s/he has acknowledged and accepted the terms of that agreement.
T O E STIMATE S HARE , W E H AVE T O K NOW O UR C USTOMER – T HEY ’ RE D IFFERENT Purchasing Decision Drivers 100% 7 75% Environmental 50% 25% 0% Alt Fuel ICE 15 This information is protected by the Global Benchmarking & Research Non-Disclosure Agreement. No one except an employee of a participating company may be provided with this data, and only after s/he has acknowledged and accepted the terms of that agreement.
A LTERNATIVE F UEL D RIVERS , O N A VERAGE , E ARN M ORE T HAN ICE D RIVERS Income by Vehicle Type $100K $79,694.60 $80K Avg. Household Income $69,399.10 $60K $40K $20K $K Alt Fuel ICE 16 This information is protected by the Global Benchmarking & Research Non-Disclosure Agreement. No one except an employee of a participating company may be provided with this data, and only after s/he has acknowledged and accepted the terms of that agreement.
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