By the end of November 2022, 33 EV models had been launched in Taiwan. The EV market share has grown from 1.5% in 2021 to 2.8% in 2022 (cumulatively through November), with sales increasing from 7,064 units in 2021 to 11,017 units at the end of November 2022. If we add in the Tesla Model Y, expected to arrive in huge quantities at the port in December for delivery, EV sales in 2022 will approach the 15,000-unit mark, while the market share will exceed 3%, and Tesla's annual sales in Taiwan will exceed 10,000 units for the first time. I expect the growth of EVs to be more pronounced in 2023, when the chip shortage eases. Other sources of impetus include the application of the second phase of fuel consumption standards to domestic vehicles as of 2023, the government's extension of the EV tax exemption until the end of 2025, the accelerated introduction of EVs, and the expected delivery of the domestic LUXGEN n7 by the end of 2023. The market share of EVs in Taiwan will soon exceed 5% in 2023.
The surging wave of EVs that is gathering momentum will pose a great challenge to most of the dealers of domestic vehicles in adjusting and transforming their business models in the future. In a previous article of mine, A discussion on GM's buyout offer to U.S. Buick dealers, I mentioned that GM foresaw a significant reduction in the demand of EVs for aftersale services from the dealers compared to the existing demand of gasoline and diesel vehicles, and therefore proposed a straightforward exit plan for dealers unwilling to operate so as to avoid the boiling frog crisis and its repercussions. In the conclusion of the article, I highlighted that the application of new technologies (e.g., VR, AR, AI, autonomous driving, etc.) or the expansion of operational projects (e.g., car sharing, drone transportation, driverless courier fleets, etc.) would reshape the future of the auto dealership channel. It is difficult for dealers to make response plans for these happenings right now, happenings that are unscheduled yet inevitable. In the face of the requirements of brands to increase investment in equipment for showrooms as well as service and repair shops, dealers barely have room for additional thinking and action. Having talked with several dealers over the past few months about how to find opportunities for a smooth transition, sustainable operation, and continued growth for the staff and business in the evolving auto world, I figure the following suggestions may provide a more practical, concrete path for those concerned to consider…
- Planning for green energy and energy storage facilities in buildings and on self-owned land. Government policies provide strong incentives and subsidies in this regard, and many manufacturers are willing to have factories and land on a long lease to construct green energy generation facilities as well as plans for container-type energy storage facilities. When bringing in such contractors for projects, dealers can also plan and integrate charging pile facilities at their own sites.
- Business opportunities of energy storage facilities and V2G (vehicle-to-grid) charging piles. In the first stage, dealers basically do not need to make much investment, but the staff can gain knowledge about energy storage and green power, and the dealers themselves can get some rental income and opportunities to sell green energy. (Dealers who have their own land or long-term leases of 10 years or more may refer to this direction.)
- Free up existing space and facilities to pursue opportunities of service OEMs for EV start-ups. This is already happening in the U.S. GM offers maintenance and repair services to Tesla owner in its dealership system, and GM dealers had repaired 11,180 Tesla vehicles by the end of November 2022. The reason is simple. The company calculates that 90% of Americans live within 10 miles (about 16 kilometers) of a GM dealership, making GM dealership garages the most convenient choice for repairs on both gasoline and electric vehicles. "This is a fast-growing business, and a brand new market," GM President Mark Reuss commented during the company's Investor Day presentation. Tesla also adopts the online sales model in Taiwan, so other brands’ dealers can take the initiative to reach out in places where Tesla does not have a presence for various service OEM opportunities (PDI (pre-delivery inspection), body & paint, maintenance and repair, etc.). It is a fast way for the dealers to learn about EV-related maintenance information and site personnel and equipment requirements, and if more and more new EV brands enter Taiwan in the future, they can seize more business opportunities. (A number of dealers are starting to do so in Taiwan.)
- Dealers can make use of the showroom or service garage space to participate in the operation of people flow and logistics relating to online marketplaces, such as providing intermediate resting and charging stations for delivery personnel, as well as relay stations and receiving points for various goods, or turning the PDI space into a logistics center for goods, or even operating a shopping complex on their own surplus land or leasing it to a shopping complex. The primary purpose of all the thinking is to increase the contact rate and the uptime of the personnel in the business space while cultivating multi-functional staff.
The above four different business models can be adopted by major regular dealers, multi-brand dealers, mega dealers that integrate various vertical and horizontal auto businesses, and even independent dealers that operate their own distribution channels in Taiwan. They can try the optimal solution according to their current operations. The dealers will not only increase their business flexibility but also align themselves with various opportunities of green energy, energy storage and sales, and the transformation brought about by EVs without compromising their current operations, and even make some preparations for the likely drone transportation and logistics business in the future. I am sharing some application cases for your reference, in the hope of seeking better possibilities for car dealers during the transformation in the EV century.
About the author - Kenny Liu
Graduated from Dept. of Aeronautics and Astronautics, Cheng Kung University in 1988, started his auto industry career since July 1990 after two year military service. Starting as a service engineer and a temp technician, product marketing specialist in Peugeot/ Daihatsu, marketing and dealer channel specialist in VW LCV from March 1992, then field manager in GM Taiwan from Feb. 1994, sales and service / parts head in Ford Lio-Ho from Sep. 1998 till retirement in May 2019. Kenny then started to work for JLR Taiwan as sales/service head and consultant/ lecturer. After that, he was invited to work at a Suzuki dealer of Taipei as the general manager until April 2022.