Lessons from Norway’s more mature EV market show that falling workshop traffic, weaker loyalty and rising competition are already reshaping dealership economics, forcing dealerships with foresight to rethink retention before margins come under pressure.
Dealerships that fail to rethink retention strategies in an EV-led market risk eroding long-term profitability with evidence from Norway suggesting the impact will be both structural and difficult to reverse.
Insights shared by automotive retail expert Glenn Mercer indicate that electrification is not simply changing what dealers sell but how they sustain customer relationships and generate profit over the longer term.
“Retention is more valuable than ever, it is under threat and inaction will be costly,” the US-based analyst (pictured) said at Autotrader’s recent Road Ahead conference.
In the UK, where brand allegiance is already low and dealer loyalties continue to soften, the shift to EVs is accelerating a move towards a more fragmented, less predictable customer base.
Autotrader estimates loyalty rates have fallen from around 41% to 36% in recent years and are expected to decline further as more consumers switch between brands and powertrains.
With up to 90 brands forecast to compete in the UK market by the end of the decade, roughly double the number at the start of the 2020s, competition for each customer is intensifying throughout the whole of the ownership lifecycle.
“The more we transition towards electrified technologies, the more likely it is that customers will move into different solutions,” Mercer warns.
For dealers, the implication is clear: the traditional model, built as it is on repeat servicing and predictable lifecycle events, is weakening. Retention can no longer be assumed and must instead be actively rebuilt across the customer journey.
Retention under pressure
In doing this, Mercer argues that retention must now be approached as a multi-layered strategy spanning part exchange, the next vehicle sale and the all-important aftersales with the latter remaining the economic engine of the dealership.
This is reflected in the financials of major dealer groups where parts and service continue to account for a disproportionate share of gross profit as margins on vehicle sales continue to come under pressure.
EVs have fundamentally disrupted the traditional dealership business model. With fewer moving parts, longer service intervals and reduced maintenance requirements, workshop traffic is set to decline which also weakens one of the primary touchpoints through which dealers maintain customer relationships.
Without intervention, Mercer warns, this reduction in contact risks accelerating customer defection, particularly as independents and fast-fit chains compete ever more aggressively.
Drawing on US insights, he notes that convenience not loyalty has overtaken price as the leading reason customers return to dealerships with location, accessibility and ease of service ranking as key differentiators.
Retailers must therefore respond by rethinking service delivery, including expanding mobile servicing which in the US is delivering strong satisfaction, repeat visits and improved retention outcomes. “Mobile service is a crucial way to improve convenience,” Mercer says.
He points out that mobile operations can extend reach, improve utilisation and create additional revenue streams and do so without requiring investment in additional physical infrastructure.
Connected car technology is also emerging as a retention tool, enabling proactive engagement through maintenance alerts, software updates and data-led interventions, although Mercer noted that this potentially introduces new challenges around data ownership and customer control.
Norway aftersales warning
Mercer points to Norway as a leading indicator of how dealership economics are evolving in a mature EV market, offering clear signposts for UK dealerships in terms of what comes next.
In a market where EV adoption is already high, the Norwegian traditional aftersales model has been under sustained pressure for some time, forcing dealers to actively rebuild retention rather than rely on a business-as-usual approach.
Faced with structurally lower servicing demand from electric vehicles, Norwegian retailers are not simply absorbing the impact, they are redesigning their operating models to protect both customer relationships and revenue.
The most significant shift is the emergence of alternative servicing structures aimed at keeping customers within the dealer ecosystem for longer.
Some retailers are establishing secondary workshop operations or partnering with independent service networks to create lower-cost maintenance options for older and out-of-warranty vehicles.
Examples cited include multi-brand dealer groups such as Fylkesnes Bil which works with aftermarket repair chain Mekonomen to provide more competitively priced servicing and Solberg Bil, which operates both Meca and Mekonomen workshops alongside its franchised dealerships.
He also references Gumpen with its Volkswagen, Audi, Skoda, Nissan, and MG franchises which has introduced a separate service operation focused on older vehicles, offering a differentiated proposition that allows it to compete more effectively with independent garages.
These models reflect a more pragmatic approach to retention, recognising that customers will not remain in the franchised network unless pricing and convenience are competitive.
For UK dealers, the implication is clear: hoping for customers to return to the workshop is pointless. Retention outcomes must be engineered.
Segmenting lifecycle retention
Mercer suggests this shift is being driven not only by EV adoption, but by broader parc dynamics as older vehicles fall outside warranty and migrate en masse towards lower-cost alternatives.
Here, Norwegian dealers are responding by actively segmenting their customer base, protecting high-margin, brand-led servicing for newer vehicles while creating alternative pathways to retain older cars that would otherwise be lost to independents.
This represents a deliberate departure from the traditional dealership model, which has historically prioritised newer vehicles and allowed older ones to drift out of the network.
For UK dealerships, this raises a more fundamental strategic question: whether to defend margin at the expense of volume or to adapt the model to retain customers across the whole vehicle lifecycle.
“The challenge is real, but the best retailers will turn that challenge into an opportunity,” says Mercer.
The Norwegian experience suggests that those who choose the latter are better positioned to protect long-term profitability, even if it requires rethinking pricing structures, brand boundaries and the role of the franchised workshop itself.
Crucially, EVs accelerate this shift by removing the natural cadence of workshop visits that has historically underpinned retention. Without that regular contact, dealers must create new reasons for customers to engage.
For UK dealers, Norway is not an outlier, but a preview. The retailers that act on these signals early will be better placed to retain both customers and revenue, while those that delay risk seeing both migrate to competitors.
Mobile servicing battleground
Beyond Norway, Mercer suggests convenience is becoming the primary battleground for retention globally with independent operators often outperforming franchised dealers in this respect.
Retailers must rethink their service proposition around customer needs, considering how they can deliver accessibility comparable to other consumer sectors.
Mobile servicing is one key enabler, allowing dealers to reduce friction and extend brand presence beyond the physical site but Mercer also highlights the importance of creating additional customer contact points, with services such as tyre replacement becoming increasingly important as service intervals shrink in an EV-driven market.
Retention across lifecycle
Retention must also extend beyond aftersales into vehicle sourcing and repurchase strategies.
Mercer here highlights the role of instant cash offers as a way to retain control of vehicle supply, particularly when deployed through the service lane, where trust is higher and acquisition costs lower.
“Some of the most practical retention tools are also the simplest and cash offers on used cars are one of the clearest examples,” he says.
Best-practice dealer groups are already sourcing a growing proportion of used stock through these channels, reinforcing the link between aftersales engagement and inventory strategy.
On the sales side, as brand loyalty becomes less reliable, on-site multi-branding is emerging as a more resilient long-term approach.
“You have a world today with 75 brands in the market, and probably 90 in the next couple of years. That creates a highly competitive environment and leads people to ask more questions when they buy their next car,” Mercer said.
This shift requires organisational change, including empowering sales teams to operate across brands and locations, supported by aligned systems and incentives.
OEM role in arresting decline
Maintaining customer trust will also be critical. Mercer warns that inconsistent OEM pricing and incentives risk undermining relationships with the customer and accelerating retention decline so retailers must counter this through transparent communication and consistent customer experiences.
While the strategic direction is clear, execution will be key. Dealers must translate retention strategies into practical actions that improve convenience, deliver value and create multiple engagement points across the lifecycle.
Mercer suggests that the lessons from Norway, combined with broader global trends, underline the urgency of this transition.
Dealerships that adapt early and invest in retention-focused models will be better positioned to sustain profitability, while those that fail to respond risk losing relevance.
“The retailers who adapt early will be in a much stronger position than those who wait for the market to force the issue,” Mercer said.
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