By Ignacio F. Caravia
Even the dashboards have changed, now they fit more SERVICES! and people want to enjoy them. The customer wants to not worry about his car and it is in our interest to anticipate. For this change, data management is the key. This means that we will have more and more people in our teams behind a computer and, therefore, we will need technologies according to today’s needs, but it is not the only thing that is changing. Indeed, there will be fewer and fewer nuts to tighten and more and more data to work with. There are reflections to make and decisions to take and from RLE INTERNATIONAL Iberia we tell you the best alternatives. Let’s get to it!
200 years of revolution. The question remains whether or not we are prepared to face it.
The events in the past shows us that we live in a volatile, uncertain, complex and ambiguous prediction environment, which means that the task of understanding the current scenario and predicting what is to come is not an exercise in divination, but to discover the keys to ensure that our organizations are able to adapt in time to the trends set by Mobility, Vehicle Autonomy, Digitalization and Electrification [“MAKE”] and, with the help of the right tools and specialized professionals, lose the fear of change, helping our teams to meet the challenge of the necessary transformation.
From Leonardo Da Vinci’s concept of the self-propelled car at the end of the 15th century until today, despite the great evolution of technologies, -in essence- we still maintain the same concept of the car: its propulsion, its mechanical, physical and even chemical processes. However, understanding the automotive’s aftersales takes us back to the origins of production in 1896 when Henry Ford built the first experimental car in a Detroit workshop and, based on the interchangeability of components and the design of the moving assembly line, gave rise to mass production. It was then surpassed by General Motors with its decentralized organizational structure + product diversification, by the organizational revolution of Japan’s Toyota: Toyota Production System, [TPS] and now with the innovations of new players such as Tesla, among others. All these and the rest of the innovations of the different manufacturers have tried nothing more than to identify (even generate) and solve the needs, demands and expectations of the users, resulting in a temporary competitive advantage to face the regionalization, saturation and fragmentation of the markets.
Are we moving in the same way … or worse? The transformation in mobility and its impact on the aftersales.
We need to better understand mobility, which, in addition to being a factor, is the trigger for the other two factors that influence turnover: registrations and repairs. And that hasn’t changed. In fact, a couple of centuries ago, if you wanted to get around, you had horses and carriages at your disposal, alternatives characterized by slowness and high cost. By 1920, horse-drawn carriage manufacturers were seeing their reality change: there were millions of cars on the road taking up their space. Many went bankrupt. Many surely lived these changes with uncertainty, others with anger, others with rejection due to fear of change or perhaps just the idea that their customers would eventually return to the carriage when Ford’s infernal invention went out of fashion. The fad did not go out of fashion.
Two hundred years later, with more than 1.6 billion vehicles circulating in the world, we are once again unable to move! there is too much traffic. Once because of lack and now because of excess, solving mobility has never ceased to be a challenging problem. In fact, in the course of our lives, we spend four years sitting in a car. Most of this time we occupy five seats alone using only one seat, creating – from the point of view of using the capacities of our cars – a massive inefficiency! Meanwhile, public transport is neither sufficient, nor adjusted to real needs, nor is it profitable, but on the contrary, it requires huge investments in infrastructure (tunnels, bus stops, control offices, personnel, maintenance of infrastructure and the vehicles themselves, etc.. ) subsidized through the taxes we all pay; and finally, demographic redistribution and the reconfiguration of urban areas causes the displacement of residences to the suburbs due to the saturation of cities, changes that occur much faster than the speed at which public solutions are built.
Hence, new methods of transportation are emerging, from renting and leasing formulas, car sharing (a model seriously affected by the pandemic) renewed under the name of Vehicles for Tourism with Driver – “VTC” -, to the use of scooters and bicycles; which undoubtedly reduces the feeling of needing a car and in some segments, it is no longer an indispensable good. Why are these new models thriving? Simply because these models respond better to the needs of users. But, from my point of view, this is only a preamble – speaking of the future – to what follows:
A dynamic, on-demand transportation system. A network of autonomous vehicles that constantly optimize in real time through algorithms that take advantage of users’ own mobile devices to know where people want to go, calculate route and optimal scheduling according to the volume of requests taking into account traffic, in real time. Book the route on your phone, indicate where you want to go so that in a few minutes a shuttle service will come and pick you up at a nearby corner and take you to the corner near your destination. On the way, it will pick up and drop off other people, like a bus. An on-demand transportation network. There are no stops or stations. You define your station. There is no place for fixed routes, no transfer, fixed scheduling, everything is dynamic, calculated in real time and piloted by a computer. This is already here.
From do-it-yourself (DIY) to the blacksmith and the hot rodding, to (try) to come back to the DIY by Youtube
Anticipating the customer needs.
Facing such a strange and uncertain future, just as in its origins, when what was repaired were horse-drawn carriages, steam engines and bicycles or anything that could break, is one of the challenges of the industry since its origins. Until two days ago those who became mechanics came from being expert repairers of the above. With the introduction of the automobile in the late 1800s, drivers began taking their new cars to those who had more than enough skill to fix their problems. Thus, machinists and blacksmiths (the blacksmiths), decided to devote their entire business to automobile repair and maintenance. Most dealerships opened their own stores and so did the gas stations. If you were in a car-friendly town there was a good chance of finding someone to help you when the time came. In fact, by 1930 there were already 60,000 service shops in the U.S. (not as we know them today, of course). (not as we know them today, of course). But what if you didn’t live near a shop? Well, you had to do it yourself, DIY. When the Model T debuted in 1908 it was many Americans’ first experience with auto repair, because tires routinely blew so it was mandatory for drivers to know how to change them and they were forced to learn. Many owners learned how to repair other problems from manuals or from experience derived from trial and error. The simplicity of the Model T made it possible for almost anyone to have a good time getting dirty, playing at repairing or modifying their own cars. The new hobby, at best, required a screwdriver, a wrench and a hammer. General Motor, in the mid-1920s, was faced with clear signs of a stagnant automobile market, with the United States on the brink of the Great Depression of 1929. He believed that the “Ford: one-car-fits-all” model was preventing owners from buying new cars and was concerned that people would get used to the same car and keep it for the rest of their lives. He decided to change the rules. GM would launch a new model every year with new features and colors. The goal was that new and current owners could not live without these new features, even if their current car was fine. This, hence the importance of quoting it, was the beginning of what we would later know as planned obsolescence that has led to so many innovations.
The new models did not stop people from working on their cars and trying to improve them. At the end of the sixties, hot rodding, car tuning, was born. The whole movement deserves its own episode, but the truth is that hot rodding changed the automobile for decades. It was very important, but it would not be so forever. Until the late 1970s, there weren’t many ways to tell if something was wrong with your car, or you just knew it or it was really obvious. In 1968 Volkswagen introduced the first on-board computer, followed in 1975 by Datsun and in 1980 by General Motors….
Undoubtedly, cars are becoming more and more efficient and safer. The complexity gained is most likely worth the benefits. In any case, the degree of complexity of the technology is increasing at the same time as the information is also becoming more and more accessible. In fact, there is no lack of customers who, before visiting the workshop, have already visited YouTube or Google or the fashionable forum, conveniently positioned by the users themselves. In fact, there are many forums and digital magazines that shed light on strange problems and how to solve them, so the consumer, in a way, is returning to work on their cars because of the availability of information they find online. Whether it is then able to provide effective solutions is another matter; in any case, it is a circumstance to take into account, especially when the age of the motor fleet in Spain exceeds 12 years on average. At this point, the “online technical consultant” is already a professional career in growth phase and soon to be consolidated.
The distribution in Spain today. There is still time to change the trend.
It has been proven that it has been continuously necessary to renew business models; a transformation process that has always been accelerated during or after the processes of war, revolutions and crises. The most recent and closest, the crisis unleashed as a consequence of the measures taken by the States in response to COVID-19, has forced economic agents to accelerate their transformation processes in order to recover a seriously damaged economy. In Spain today, after the passage of COVID-19, in 2020 we will lose €2,483M compared to the turnover forecasts, a contraction that leads us to a scenario very similar to that of 2015. However, unlike in 2015, in 2021 the productive fabric is not in the process of recovery, but has been partially destroyed as a result of the confinements. The “rebound effect” is now being left behind. Restrictions on mobility, a tax burden that – far from relaxing – has increased, a hyper-regulation that is not homogeneous in the Spanish territory, the influence of labor costs, the increase in the cost of supplies particularly direct costs associated with energy, the signs of constant increases in costs with a CPI that already exceeded 5, 6% in Spain, well above the average of the countries around us, and uncertainty, make it necessary to focus our efforts on obtaining maximum efficiency in our organizations (which is what is within our reach), especially when Distribution in Spain is highly fragmented.
Some estimates of forecasted closure for 2021 show a difference of around 7% downward in turnover and a reduction of around 150,000 jobs with respect to the pre-pandemic scenario. The impact in the short term has been: fewer personnel, same services, same customer expectations, greater capacity limitations and greater hygiene requirements, in addition to the trends (coupled with the necessary investments) of Mobility, Vehicle Autonomy, Digitalization and Electrification.
In this brief reflection, we have finally reached the moment to learn about the opportunities offered by the aftermarket, which, as we have seen at the beginning of the article, goes hand in hand with the generation of new business models. Changes for the future that are undoubtedly within our reach, or at least from RLE INTERNATIONAL Iberia we have taken care of designing the mechanisms capable of generating that much-needed high added value. Let’s take a look at the keys:
The infographic shows a (very) typical scenario for aftermarket services. To the extent that production is less dynamic and predictive, that procurement services are less predictive, that customer service is collapsed or overwhelmed by the excess of communications, protocols and unfriendly systems, and that our customer front services are not able to absorb with the quality demanded by the customer their requests when the customer needs it; the need arises to add free services, discounts and gifts as a compensation mechanism for that disappointing experience in favor of a portfolio loyalty adding even more tension in our treasury.
Services are assigned on a daily basis according to the availability of each technician. This makes it unfeasible to make realistic forecasts for each service, generating (1) a higher degree of improvisation in the supply channel, (2) unreliable customer information and (3) greater stress in the internal management of services; consequently, increasing operating costs.
Turning to the specific indicator of occupancy of the after-sales centers, specifically with regard to labor, despite the fact that in Distribution turnover is between 44% and 59%, labor costs remain stagnant, barely exceeding 80% of the effective hours of occupancy of our technicians. More than half of the non-productive time is associated with technical or organizational reasons or lack of availability of personnel or courtesy vehicles. This low occupancy could very well be an indicator of oversupply, but if we take a reading of the complete cycle of after-sales service(s), we find (1) an average waiting list time of over 10 days and (2) a [turnkey] cycle time of between 9 and 14 days (depending on the source of the study).
In other words, according to the data in the activity occupancy evolution table, there is at least 15% of our capacity that we do not invoice (but we do support) due to the impossibility of generating forecasts, except for those workshops and dealerships that use PlanManager. Today, PlanManager is the only specialized aftermarket business process manager, designed to – dynamically, automatically and intuitively – manage production in a 100% digital way, wherever you are, in real time, controlling production deviations in an interactive way, even making it possible for the customer himself to know autonomously the status of the repair of his car and the recommendations of our specialists from the workshop or dealership’s own web site.
Information, information, information. Real-time information is needed! Online services, virtual showrooms and consultations, and online configurators are fast becoming a common part of the service cycle. It is essential to manage the transition from a customer’s initial phone or online engagement to the in-shop or dealership experience. This integrated approach offered by PlanManager also provides complete visibility into each customer’s journey during service, allowing you to tailor your communication and loyalty strategy.
Depending on the type of service, between 50% and 70% of customers go to the workshop by appointment. There has been a change in consumer behavior in general, which gives us the opportunity to solve that 15% of hours that are not covered due to lack of foresight. It’s time to anticipate. Custometric offers convenience to customers who cannot visit or communicate with your workshop during opening hours, either to book an appointment or get advice, or to perform maintenance campaigns, ITV, loyalty or monitoring the quality of service after passing through the workshop, with the highest standards in the market, ensuring maximum occupancy of the workshop.
Our customers’ experience depends precisely on all of the above. The use of digital tools in internal communications, such as real-time image status checks, helps to reinforce trust and ensure transparency, which will keep the customer coming back. Providing a high level of customer satisfaction also increases the likelihood of successfully selling products or services. Working on reducing workshop cycles is part of this, as it will have an impact on reducing the occupancy of our mobility services and ultimately improving the customer experience. Customer expectations not only demand integrated processes, but we have to take into account that YouTube and Google are often there infoxicating our customers. This is why the pressure on the workshop or dealership to train and equip with tools such as PlanManager this new hyperconnected environment, is a reality and a challenge to face.
Major brands and workshop networks are already investing in RLE Ecosystem to ensure the implementation of the necessary technologies for the ENTIRE SERVICE PROCESS, the proper change management and transformation of organizations, the development of specific training programs and the creation of the necessary documentation, as well as omnichannel support services; all according to the customer’s own standards. It is now essential to have a highly trained team capable of interpreting data and mastering management and communications systems. In short: if anything can be digitized, automated, measured, connected and outsourced, do it with RLE INTERNATIONAL Iberia.
 “In the mid-1990’s, after the collapse of the socialist system, suddenly the ONE enemy no longer existed. In U.S. military jargon, VUCA describes the conditions of modern warfare: keywords: asymmetric warfare, suicide bombers, jungle or street fighting. The conditions can no longer compare to the clear front lines of past battles where two great armies clashed.” Source: Waltraud Gläser, (2020). Where does the term “VUCA” come from? https://www.vuca-world.org/where-does-the-term-vuca-come-from/
 (video) Leonardo’s Automobile (2003). Institute and Museum of History of Science. https://youtu.be/2WPuUcP0sZI
 Tanenbaum, Morris and Holstein, William K.. “Mass production.” Encyclopedia Britannica, 27 Nov. 2019, https://www.britannica.com/technology/mass-production. Accessed 31 August 2021.
 Monitorization Rate 2015 – Worldwide (2021). OICA. www.oica.net/category/vehicles-in-use/.