Building a strong dealer network for EV manufacturers

As the eMobility market continues to grow, the success of electric vehicle (EV) manufacturers hinges on more than just innovative technology and sustainable solutions. A robust dealer network plays a crucial role in accelerating the transition to electric and hydrogen transportation. Is your dealer network ready for the future of eMobility? Explore our blog to learn more.

Establishing and expanding a dealer network is essential for Original Equipment Manufacturers (OEMs) who aim to succeed in this evolving landscape. In this blog, we will explore the importance of a strong dealer network, the current state of the EV manufacturer market, and the pivotal role of finance in this transition.

The imperative for a strong dealer network

Building a strong dealer network is pivotal for OEMs, especially those seeking to scale up their electric vehicle models. Dealers serve as the bridge between manufacturers and end customers, providing the necessary sales and after-sales support that fosters customer confidence and drives market adoption. However, the shift to EVs introduces unique challenges, including high upfront costs, uncertain residual values, and evolving infrastructure requirements. This is where a strategic finance partner becomes necessary.

The eMobility landscape

The EV market is rapidly expanding, with numerous active OEMs participating and innovating. Understanding the size and scope of this market is crucial for OEMs aiming to establish a competitive dealer network.

A growing number of players

The electric vehicle market is burgeoning with over 100 active OEMs. 2023 saw global light commercial vehicle (LCV) sales grow by more than 50% year-on-year while electric truck sales grew by 35%. The competition is fierce, and each manufacturer is striving to innovate and capture market share with the global electric commercial vehicle sector projected to grow from USD 105.66 billion in 2024 to USD 323.73 billion by 2029.

Distribution network

EV manufacturers use various market routes, including traditional dealerships, direct-to-business models, and hybrid approaches, each with their own pros and cons. Traditional dealerships offer localised expertise and personalised support, building customer trust and ensuring reliable service. Direct-to-business models streamline purchasing and offer tailored solutions for fleet operators.

Hybrid strategies combine direct sales with dealership networks, providing specialised support for large clients while maintaining broader market coverage and local service. This multifaceted approach means manufacturers effectively reach and support their commercial customers, promoting widespread adoption in the industrial, transport, and logistics sectors.

Financing support

A critical aspect of supporting dealers is offering tailored financial solutions. Vendor finance and captive finance models are prevalent in the EV market. Vendor finance involves third-party financial institutions providing credit facilities to dealers, while captive finance companies, owned by the OEMs, offer financing directly. Both models play a significant role in enabling dealers to manage inventory and offer competitive financing packages to customers.

The growth of commercial EVs

There is a significant increase in end-users, particularly in electric LCVs, investing in EVs. Fleet operators and logistics companies are increasingly transitioning to electric vehicles to reduce operating costs and meet sustainability goals. According to Mordor Intelligence, the global market for electric commercial vehicles is expected to have a compound annual growth rate of 25% through 2029.

How to be competitive?

To be competitive, OEMs and their dealers must understand and communicate the total cost of ownership (TCO) benefits of EVs. TCO includes not only the purchase price but also long-term savings on maintenance and fuel. For instance, EVs generally have lower maintenance costs due to fewer moving parts and regenerative braking systems. Additionally, the cost of electricity is often lower than that of petrol or diesel, with the potential to further reduce operational expenses.

For a deeper dive into the current state of the eMobility market and its challenges, read our comprehensive overview. eMobility: Navigating the Electric Vehicle Landscape

The role of finance in eMobility

Financial solutions tailored to the needs of the EV market can significantly alleviate the challenges faced by OEMs and dealers. Here are key aspects to consider:

Leasing and financing options

Flexible leasing and financing solutions are crucial for dealers as they manage their inventory and offer competitive financing packages to customers. Leasing options can make EVs more accessible by lowering the upfront costs for consumers and businesses, spreading payments over time.

Floor plan financing

“Pay as sold” floor plan financing helps dealers manage their inventory by financing vehicles until they are sold. This reduces the financial burden on dealers, ensuring they can maintain a diverse and appealing inventory of EVs without significant capital outlay.

Total cost of ownership (TCO) calculations

Understanding TCO is crucial for OEMs and customers. Accurate TCO calculations highlight the long-term financial benefits of transitioning to EVs, aiding in discussions on economic viability with potential buyers. For instance, the reduced maintenance costs and fuel savings associated with EVs can offset the higher initial purchase price over the vehicle’s lifetime.

Learn more about the impact of transitioning to an EV fleet and how it affects the total cost of ownership in our detailed blog. Discover the impact of TCO here.

Collaborative efforts across the value chain

Transitioning to electric transportation requires collaboration across the entire value chain. OEMs must work closely with partners in energy production, storage, and charging infrastructure to ensure comprehensive support for their dealer networks. This collaborative approach addresses market dynamics and mitigates risks.

DLL’s extensive network leverages connections in different product categories, including partnerships with energy producers, storage providers, and charging infrastructure companies. By harnessing these relationships, OEMs can provide holistic solutions that support the entire ecosystem required for a successful EV market expansion.

Discover how global vendor financing plays a crucial role in the success of our partners: Haulotte Customer Story

The DLL difference

Partnering with DLL brings several advantages to OEMs and dealers looking to strengthen their presence in the EV market:

• Expertise in eMobility: DLL’s specialised team has deep expertise in eMobility and the energy transition, offering tailored solutions that align with the unique challenges and opportunities in the EV market.
• Risk management: DLL helps OEMs and dealers navigate financial risks by providing insights into residual values and market trends. This enables informed decision-making and strategic planning.
• Global reach: With a presence in multiple markets, DLL offers global perspectives and solutions, ensuring OEMs and dealers can scale their operations internationally with confidence.
• Innovative financing solutions: DLL continuously innovates and tailors its financing products to meet the evolving needs of the EV market, ensuring OEMs and dealers remain competitive and agile.

Success in the eMobility space

A rapidly evolving EV market presents both challenges and opportunities for OEMs and their dealer networks. A strong dealer network, supported by tailored financial solutions, is essential for driving market adoption and achieving long-term success. By understanding the current eMobility landscape and leveraging strategic partnerships, OEMs can position themselves at the forefront of this exciting industry transformation.