April 2020

the world for helicopter engines and turbines. They sell a lot of pay per hour, and right now for a customer this helps reduce operating costs. It is predictable and eliminates cash peaks. 40% of Safran’s contracts are a subscription - pay per hour. “If you go into automotive, take for instance Porsche Passport - You pay a subscription for the car. This of course includes access to the car, mileage, servicing, repairs the insurance, the right to flip or switch to any car. A concierge team also delivers your car. The outcome for Porsche was they increased their markets. The CEO said that 80% of the people in the programme were not Porsche customers, and that the average customer was several years younger than the classic Porsche customer. What does it mean? It means things are shifting, chiefly the focus of responsibility: “From a B to C perspective, that means that the VM now is responsible for the vehicle. Then the interest is to make it serviceable, having it serviced and optimising the lifetime value of the car to increase the lifetime value of their own customers. They do that by making sure it is well serviced, which a consumer may not do, because their margins depend on it. That shifts the vehicle from something that was inventory under dealers, and becomes an asset. That is the first shift. “The second shift is where they are also trying to expand by adding new value-added services, so that is things like in-car Wi-Fi hotspots, or infotainment. They use the sensors in the car to sell. When a customer is in the dealership it may not be the right moment, but if you are on holiday and you have your children in the car, maybe it is the right moment to sell you infotainment. This would mean that on the journey you can have audiobooks, or whatever. “I would assume that the importance of servicing would increase, and the dealer or independent garage will have a big role to play, in order to make these operations as smooth as possible. It is not just individual customers, but also a lot of fleets that would need to service their cars. That means a lot of services that are not directly linked to the car, for the driver’s and passenger’s journey, are going to shape the value.” Opportunity The sharing economy is great for consumers, and it is great for the vehicle manufacturers – they keep control of their products, and get to keep making money from them when normally it is a one-time sale. Where does it leave independent aftermarket operators, where the business model is based around servicing vehicles owned by individual customers? These are people who have chosen to take them away from the franchised dealer network. Do these changes mean garages need to change at how they do things? “I would say this is a huge opportunity for them,” posited Michael. “Car manufacturers are not fleet operators. They do not have the reach or the relationship with those customers. When I move to a subscription for a car, or even when I move to car sharing, it is very similar, except the pace of how many customers use the car. The car needs to be serviced, if it is not serviced, it leads to downtime and downtime leads to fewer subscriptions, or less hours. This in turn leads to less revenue. For the user or the fleet, that is going to be bad for customer satisfaction. What you have to assume is actually that the aftersales will increase. At present there is a lot of reactive servicing. This will become a lot more proactive, or predictive.” New roles Would manufacturers surely not prefer their dealers to be the ones performing the work though? After all, that’s what they think they are there for. Factor in their enthusiasm for the connected car, and independents could have a problem. In this instance, will independents not be cut out of the loop? 10 AFTERMARKET APRIL 2020 BIG ISSUE www.aftermarketonline.net At present there is a lot of reactive servicing ”