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AAIA Sounds the Battle Cry over Automotive Service Hegemony

by Roger Lanctot | Jun 02, 2013

A battle is erupting over the $400B vehicle repair and maintenance market in North America and the clarion call to arms was sounded at the Automotive Aftermarket Industry Association’s (AAIA) Aftermarket eForum last month.  AAIA is sounding the alarm well ahead of the anticipated assault by OEMs, which AAIA perceives as leveraging telematics technology to apply a stranglehold to their aftersales business.


Though slightly premature, AAIA’s concern is real and the organization attributes its decision to raise the alarm to the emergence of embedded telematics and smartphone solutions in cars that are expected to cement the customer’s devotion to his or her dealer for service and repairs.  The irony here is that forces are afoot in the industry to deliver precisely the opposite value proposition – leverage vehicle diagnostic data (openly available via OBDII port connections) to enable an open market for vehicle repairs from which independent shops will benefit.


Before detailing emerging disruptive solutions it is useful to understand the current state of play in the automotive aftermarket, especially as regards embedded connectivity and smartphones:


OEMs – Car makers have only slowly begun to recognize the value of gathering and interpreting vehicle diagnostic data.  OnStar has famously led the way in this area, making use of its connected captive fleet to anticipate potentially expensive problems prior to vehicle launch.


OnStar has yet to completely embrace and use vehicle connectivity as an end-to-end diagnostic solution capable of being applied to supply chain processes during production and delivery of its cars.  Similarly, OnStar has left dealers out – failing to provide dealers with vehicle management tools such that GM dealers could use the telematics system to manage their customers as if they were fleet managers.


GM has taken the step of making a monthly vehicle health report available to the consumer and alerting dealers to diagnostic trouble codes from the vehicle.  But neither dealers not consumers have control of the information and, indeed, information access is limited either online or via smartphone apps.


Ford has yet to completely embrace the concept of embedded connectivity, but Ford has a smartphone-based application that enables the customer to obtain a fixed set of vehicle diagnostic information at the touch of a button in the car.  The button push produces an email with a diagnostic report on the car which is also transmitted to the customer’s preferred dealer and to Ford’s own engineers.


The Ford solution is attractive for allowing access to the information on demand, but it is reliant on email communication of the vehicle information and lacks real-time elements such as an explanation of the problem in the car or the provision for scheduling a dealer visit should one be necessary. 


Mercedes-Benz’s mbrace2 allows the customer to request a “ping” of the vehicle’s diagnostic data in real-time which can then be interpreted at that moment by a call center representative.  Mercedes does not provide for an on-board service scheduling capability, though the call center operator is presumably capable of contacting the dealer on the customer’s behalf. 


BMW’s TeleServices connected service will alert the dealer to scheduled maintenance, after which the dealer is obliged to contact the customer to schedule an appointment.  In the event of a diagnostic trouble code that triggers a message in the dashboard, the dealer is not notified and the customer must depress the in-car SOS button to summon assistance.  If the customer presses the SOS button, then BMW and the dealer will receive the diagnostic information. 


Hyundai is the most advanced car maker in the customer relationship space.  The company’s BlueLink embedded telematics solution enables real-time scheduling of dealer service appointments based on scheduled or unplanned repairs tied to in-vehicle alerts with the help of partner Xtime.  The cloud-based application enables a VIN-specific engagement with the customer along with integration with the dealer management system and access to a comprehensive database of diagnostic trouble codes and correlated service requirements including hours, parts and processes.


Hyundai is also the only OEM that is provisioning its on-board modem early enough to use it as a supply chain tool either during production and delivery or at least post-production.


In broad terms, the OEM threat to third party service providers, though real, is only just beginning to emerge.  Car makers are still coming to terms with core issues such as:


A - The opt-in participation of the customer in sharing vehicle data

B – The sharing of vehicle data with the customer on an ad hoc, on-demand or real-time


C – The sharing of vehicle data with the dealer on a real-time basis

D – The use of vehicle connectivity data as a comprehensive, supply chain proposition

E – The use of vehicle data for customer retention purposes


Most OEMs with smartphone application integration are offering remote access to vehicle functions such as remote start and pre-conditioning.  And most EVs come with a smartphone integration solution that allows the user to determine the battery’s charge status remotely.  But more complete smartphone-based diagnostic tools have not yet arrived on the market. 


Aftermarket – Given the alarm expressed by AAIA at the threat posed by OEM customer relationship initiatives, it is the aftermarket that is making the greatest strides in enabling powerful customer connections intended to help obtain and retain aftersales business.  A growing portfolio of OBDII devices from Verizon (Delphi and Hughes), Audiovox, CarMD, GoPoint, Mavizon, CarShield, and Automatic, along with a host of usage-based insurance offerings are creating new opportunities to engage with customers via smartphone apps and/or customer-facing portals.


An another emerging layer of companies with such names as Vehcon and AutoAdvantage are creating smartphone-based platforms for service engagement designed around opening up service opportunities to third parties.  And there are general purpose diagnostic devices or applications from startups Automatic and Dash Labs, forensic-oriented offerings from companies such as Lysanda, and collision-oriented devices from companies such as In-Car Cleverness.


In fact, the veritable flood of aftermarket products in the market or coming soon promises increased awareness among consumers of the lowly OBDII port.  Whether consumers will embrace the opportunity attach these devices to their cars remains to be seen.  And there is no question that the companies offering these products will have to provide for periodic removal of the device to allow multiple devices to be plugged in at different times.


In the U.S., and in other markets, the battle lines are being drawn over what are called “right to repair” laws.  The state of Massachusetts was the latest entity to pass such a law requiring car makers to share vehicle diagnostic information to enable third parties, or even do-it-yourselfers, to access the codes and software necessary to fix increasingly sophisticated automotive systems.


The next stage in this battle is a growing clamor among independent dealers and the aftermarket industry as a whole to have access to diagnostic trouble codes in real time.  A new vehicle service paradigm is beginning to emerge in this context where service exchanges might emerge where diagnostic trouble codes are gathered and made public, in real time, and independent servicers are able to bid on the repairs.


In fact, one might imagine such an exchange residing in his or her dashboard or manifesting on a smartphone app in real time.  Engine light trips on and almost instantly the driver is provided interpretive information and a quote for the repair from the dealer and a couple of local independent shops.


Of course, it is important to remember that it was not so long ago that an embedded navigation system in a BMW would not even allow the driver to locate nearby Mercedes-Benz dealers from the on-board POI database.  But the opening up of vehicle connectivity, while creating new customer retention opportunities, may also open the door to increased opportunities for third-party parts and repair organizations.


The AAIA has it right.  A battle for the hearts, minds and service appointments of drivers is emerging – especially as cars last longer and longer – more than 11 years on average, according to R.L. Polk’s latest data.  The aftermarket is winning the arms race.  But OEMs are slowly awakening to the risk to their customer relationships.

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