Telematics Changing the Aftermarket

Most persons today think of a car as nothing more than a mechanical device. You have an engine, a transmission and wheels etc. that work harmoniously together. In the last decade, that has changed dramatically as modern vehicles have taken on an ever growing array of data communications technologies, on-board sensors and advanced computer-controlled systems. Today’s vehicle now monitors itself through dozens of systems that then communicate with each other through internal networks.

Now vehicle manufacturers and service operations are using those vehicle networks to monitor vehicle health in real time, and using that information to proactively reach out to owners. There is a push to add more complex networks and systems to vehicles in the coming years.

Chris Gardner, vice-president, programs and member services with the Automotive Aftermarket Suppliers Association (AASA) and executive director with the AASA Technology Council, says that there are several forces driving telematics in vehicles. These include:

 •  Consumer technologies that enable the flow of data over networks through mobile devices

•  Commercial applications that enable insurance companies to tailor plans to motorists’ behaviours

•  ‘Connected loyalty’ programs that tether drivers to OEMS and OE dealers

Malcolm Sissmore, North American sales director for telematics, diagnostic tools, service data and training country director for Canada, Delphi Products and Service Solutions, says that last part is going to be key to the automotive aftermarket. Telematics is being used by vehicle makers to improve their customer relationship management, basically to continue that relationship with the owner after the vehicle has passed out of its warranty coverage and when the owner is most likely to look for aftermarket service opportunities.

At its core, telematics is a means to change the relationship between a vehicle owner and the service provider. Insurance companies realized this early and have been big proponents of telematics. A 2013 J.D. Power Insight report on Progressive, a major U.S.-based insurance company, shows how impactful telematics is on the relationship between vehicle owners and insurance companies. Progressive was an early proponent of usage-based insurance (UBI) and promoted UBI through its telematics Snapshot product. Progressive has some one million customers using Snapshot across 43 states. J.D. Power looked at the impact of Snapshot on Progressive’s customer relationships with the insurer. What J.D. Power found was those who used the Snapshot service had higher levels of customer satisfaction with the insurer than those who had forgone using the service:

“Findings of the 2013 U.S. Auto Insurance Study show overall customer satisfaction is a significant 21 points (on a 1,000-point scale) higher among Progressive customers who use the Snapshot program than among those who do not use it. Satisfaction with both Price and Policy Offerings is significantly higher among customers who use Snapshot than among those who do not, with Price satisfaction increasing the most (32 points) among all the factors.

Expectedly, satisfaction levels in the factors that are less related to Snapshot—specifically, Claims and Interaction—are comparable across both of these customer groups.”

The AASA’s 2013 Telematics ‘Hot Topic’ Survey found that amongst respondents, 61 per cent believe that telematics will have a positive impact on their aftermarket business and many of the respondents said they believe telematics will create “meaningful dialogue” with customers, and that those who best connect with customers will ultimately win. This is how one participant responded to the question: “Over the next 5-10 years, how do you think increased telematics will really affect the way consumers repair or maintain their vehicles and/or consumers’ relationships with professional technicians?”

“I think technology will eat into deferred maintenance providing tailwinds that will enable the aftermarket as a whole to rise. I do believe, however, that there will be a more pronounced shift to more technologically sophisticated professional installers.”

Delphi’s Sissmore says the challenge for the aftermarket will be twofold. One is gaining the vehicle owner’s trust and confidence to allow the service provider to access and use the telematics information in order to maintain and repair the vehicle in real time. Remember, people are often wary of divulging what they consider private and confidential information, and that goes for vehicle information. If they don’t trust you, they will not give that information to you. As well, aftermarket service operations will have to up their service and customer relationship game in order to attract those customers, focusing on using the real time telematics information to proactively keep in touch with customers in ways are beneficial to them and the health of their vehicle while not seeming intrusive.

The aftermarket will also have to put an increasing focus on existing vehicles that do not have built-in telematics, but can be fitted with aftermarket telematics systems. Sissmore says there are some 160 million vehicles on the road today that have OBD II ports but no embedded telematics. “This is an opportunity for the aftermarket to create a telematics program for them.

“[Service operations] would have to have a supplier of telematics hardware and the services to operate the platform,” he continues. “They can then resell those [telematics] services by making the consumer understand the value of those services to them. That is where the rubber hits the road. There are consumers today who will pay for the features and services provided by the telematics.”

“There is no doubt that the industry will see an increase in the number of devices, applications and services to connect vehicle performance data with motorists and repair facilities,” adds AASA’s Gardner. “Several AASA members have been developing products and services to do just that for several years and increasingly are partnering with providers of some of the emerging technologies.”

Gardner agrees with Sissmore that one challenge will be getting that telematics information to independent service operations from vehicles that come with built-in telematics systems. Those systems will initially be defaulted to the dealership service operations. “Industry leaders are collaborating through the Aftermarket Telematics Task Force to address this proactively through policy and technical approaches, creating a gateway through which secured and standardized data can be communicated to entities designated by the driver. Ensuring access to the vehicle data through a standardized gateway would open the development of numerous applications and tools for remote diagnostics and connections with drivers.

“Regardless of how quickly that happens, service providers should consider partnering with companies that can connect with motorists and vehicle data through mobile devices and other mediums.”

Sissmore says one area of growth will be in small fleet monitoring and maintenance, a market segment that independent service providers can enter with a high potential of success. “Eighty per cent of the fleets in Canada are of less than 10 vehicles. Those are small companies and because they are so small they rarely do their own maintenance. The idea is to use telematics to sell your shop’s fleet maintenance and services.”