In my earlier posts, I explained and highlighted the current shortage of repair and maintenance services. Total vehicle population has increased by more than 30% since 2011 but the service and repair support network has not kept pace, and this is putting a lot of strain on customer service personnel and PR staff. Of course, the technicians are also under tremendous pressure to deliver both in terms of the service quality as well as timeliness.
Automotive players in Thailand are keenly aware of this imbalance between demand and supply, and are actively taking measures to address this issue. The most significant stakeholder in this must be the OEMs themselves. They have to get the customer satisfaction part right in order to enhance their brands in this cut-throat market. In the car business, we know that the sales department sells the first car but it is the service department that sells the next.
OEMs face challenges in the effort to expand the after-sales network, some being external factors not within their control but nonetheless they have to overcome to be successful in their endeavors. Once of them is the shortage of qualified technicians, especially electricians. Thailand’s schools do not produce enough technical graduates that can quickly become productive automotive technicians. The percentage of students in technical courses are far less than those in the social sciences and business schools. Every year Thailand also produces a lot of lawyers but just not enough technician and engineers.
As cars become more complex, the industry needs technicians who can diagnose and repair a mal-functioning hill-assist, keyless start, or active cruise control, just to name a few examples. Every new model across all brands introduced comes with more sensors and electrical parts, so for older mechanics they have to be trained and retrained, and younger ones have to be equipped with the necessary skills in order to hit the ground running from day 1.
Some OEMs are also challenged by head office cost-cutting policies so they have to raise the dealer network technical capabilities while at the same time maneuvering round the lower budgets, all with very specific and tight deadlines. Imagine a combination of tight deadlines and tight budgets, not hard to see the amount of pressure here.
To get round the budget cuts, some OEMs work with third party service providers like TTi and MSXi so that these outsourcing do not appear in the headcounts. However, this adds to the layers of work as the OEMs now also have to manage the relationship with and the work of these third party service providers. Usually, OEM suppliers get included in some of the technical problem solving as the repair issues usually involve them.
I will talk more about the difficulties and challenges facing the OEMs when it comes to repair and maintenance service network expansion for the OEMs in a later post, and why I foresee independents as the fastest and most practical short term solution to fill the gap in the current mismatch between car repair and maintenance services demand and supply.
Last week, while having my lunch break visiting the trade expo Digital Thailand 2018, I received a telephone call from Shanghai. Someone read one of my articles on the recent development of the Thai vehicle after-sales service and wanted to know more to create a market study for a client. I was amazed by this. It is the power of today’s digital technology that allows someone like me to build an audience and quickly reach them, in the hope of positively contributing to the industry’s growth and to make a mark by sharing the information and knowledge I have.
I felt that the focus of the questions asked was on the imminent changes, or signs of change, of the way Thai vehicle service centers are set up and run. For this benefit, let me name a few which I have observed.
First, modern day car mechanics spend lesser time on the bolts, nuts and screws on the car, and more time on the various electronic devices. This slowly debunks the stereotype of a sweaty, oil-stained car mechanic in overalls, replaced by a clean, neat, customer-facing car mechanic with an electronic device in hand working on the car. It is not uncommon now for a car mechanic to spend almost half of their productive hours (that is, billable hours), working on a digital tool, doing software upgrades, scanning for trouble codes, linking up to OEM service database in search of solutions, even looking up Youtube for answers.
Second, with OBD2 dongles becoming easily accessible and purchased (you can order a USD50 dongle online that works very well), more and more customers, especially the lady drivers, will come into the workshop equipped with knowledge and information, and ask very specific technical questions, like I have a check engine light on and my OBD says intake air issue, could be clocked up throttle valve, so these car drivers cannot be fooled as easily as before. Thus, the trend of the future is more informed customers.
Third, the service centers will know more and more about you. By 2020, many Mercedes Benz cars will have internet-enabled electronic computer units (ECUs) that link to the customer assistance centers in the respective countries. From the ECUs, the customer assistance centers can advise the car owners of maintenance service schedules, diagnose car problems remotely through this access to the ECU, store historical data over cloud, and perform a lot more functions.
Fourth, independent vehicle workshops have to continuously upgrade their skills to handle hybrids and electric vehicles. This requires a change in attitude of the workshop operators and a willingness to invest in the business for the long run. The technological advancements are coming fast and furious and the need for skills development and upgrade cannot be over-emphasized. On top of that, the workshops also have to be adequately equipped to handle the electric cars and hybrids, and presently most car workshops in Thailand are not ready.
Fifth, we shall witness the growing power of the component suppliers, where more and more of them will either go it alone or partner with service center operators to establish a much wider service network, and reduce their reliance on the car manufacturers. You can see that most of the car components come from a shared technoloy and supply base. This trend is not slowing down, and is increasingly so, and what you have under the hood of the car, in the cabin, on the dashboard, they are all supplied by third party suppliers. Of course, these component makers also supply to other brands as well, so there is a lot of shared components among brands. Taking advantage of this, component makers are increasingly becoming more vocal about their expertise over the car makers, and are setting up their own workshops focusing on their products. Some examples are turbo charger repairs, service and replacement, air con units, ABS units, transmission repairs and rebuilts, sensor replacements, and soon electric car batteries.
It is my view that the vehicle after-market services will soon undergo tremendous disruption, and this offers a great opportunity for new players to come in with the new game plan and new way of serving customers.