Auto Service World
News   May 31, 2013   by CARS Magazine

Aftermarket Auto Industry’s Call to Action

Ten years from now, Jiffy Lube and NAPA franchise owners will stand desolate in front of their stores, watching sedan after minivan pull into the dealership next door. At least, that is the fear of independent automotive services companies...

Ten years from now, Jiffy Lube and NAPA franchise owners will stand desolate in front of their stores, watching sedan after minivan pull into the dealership next door. At least, that is the fear of independent automotive services companies contemplating tomorrow’s connected car.

“The growth of embedded vehicle connectivity systems by auto manufacturers is a tangible threat to the aftermarket automotive service and parts industry,” says Scott Luckett, chief information officer for the Automotive Aftermarket Industry Association (AAIA) based in Bethesda, Md. He adds, “the aftermarket industry must develop effective ‘connected car’ alternatives to assure that drivers have a real choice when it comes to auto repairs, maintenance and parts.”

“Car manufacturers are building a closed ecosystem for the entire vehicle ownership lifecycle,” said Vehcon CEO Fred Blumer. Blumer was the keynote speaker at the AAIA’s 2013 Aftermarket eForum, along with the president of Delphi Product & Service Solutions; the vice-president of Customer Solutions, Automotive for UPS; and the head of eBay Motors.

“OEMs claim ownership of most, if not all, of the data generated by embedded telematics systems. Thus car dealers are first in line to get repair and maintenance data,” Blumer continued. “Within the next 10 to 15 years – unless the automotive aftermarket develops an effective response – they will be shut out of the service market significantly.”

A telematics expert, Blumer estimates the service market to be worth about US$1.8 trillion annually. OEMs are steadily gaining control of the market by first gaining control of consumers and their vehicle data.

Blumer described how an embedded vehicle diagnostics system sends data packets back to the OEM’s customer relationship management (CRM) system. The CRM system analyzes the data. An e-mail is triggered on regular maintenance or an emergency need, sending consumers directly to OEM dealers.

Luckily for the automotive aftermarket industry, most OEM embedded systems come at an ongoing price to the consumer. “The cost to the consumer is cash, as many of these systems have monthly fees; control, as consumers’ rights to their own data gradually are eroded; and choice, as consumers may have gotten a better deal by going somewhere else for service,” outlined Blumer.

“The key is to partner with the consumer,” said Blumer. Blumer encouraged the aftermarket to side with consumers on data rights and, more than anything else, to provide the consumer with alternative, attractive options to OEM systems.

“As consumers realize the value of their data, they will seek to utilize it for their benefit,” said Blumer. Blumer presented the example of usage-based insurance (UBI) as a win-win for both the insurance carrier and the consumer.

The aftermarket could leverage existing hardware for accessing consumer data. Options include UBI, fleet connectivity, and subprime lending/GPS tracking systems. However, these systems may be costly as they involve manufacturing, distribution, repair and other expenses that are borne by the companies using the data.

As an alternative to hardware-based systems, Blumer went on to speak about the emerging field of smartphone data and vehicle connectivity solutions. It is an area where his company, Vehcon, excels.

“Smartphone solutions have no hardware costs, provide real-time car and consumer data, enable location-based offers, and work on every car,” said Blumer. “This enables the right offer, at the right time, in the right place.”

As well, Vehcon’s smartphone solutions provide key data missing from today’s hardware data systems: accurate odometer readings. Without odometer readings, aftermarket hardware systems are usually guessing regarding major portions of the US$1.8 trillion service market.

“Odometer readings are critical. Everything from routine maintenance to parts replacement offers center around that tick of the dial,” said Blumer. “Vehcon is the only company able to offer that data reliably and affordably.”

Blumer closed his presentation by encouraging the aftermarket not to fear, but to definitely get moving on partnering with the consumer and defining a data capture solution. Concluded Blumer, “Consumers demand choice. Provide them with a good option for vehicle connectivity, and they won’t let OEMs dominate the vehicle service ecosystem.”

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