To understand the kind of disruption and opportunity telematics is bringing to the aftermarket, one only needs to look at how the Internet fundamentally changed today’s vehicle maintenance marketplace.
Less than two decades ago, the aftermarket’s relationship with vehicle owners and jobbers was based on loyalty. Vehicle owners stuck with a trusted repair shop for the life of the vehicle, or over several vehicles. It would take a lot to make one switch to another facility. The same dynamic was in place with jobbers. Jobbers and independents formed a long-term bond based on the knowledge the front-line staff demonstrated, and the customer service that same jobber provided to the shop owner and his technicians. Back then, it took a lot for an independent to switch jobbers.
The Internet has changed all that. Loyalty is now in short supply. Vehicle owners can, from virtually any hand-held device, research independent shops and make a quick decision on where to take their vehicle for service. They are no longer loyal to a single independent shop. They can, and will, switch based on a quick Google search of online reviews. The same goes for service writers. A service writer can quickly search three or four jobbers for parts and make the buying decision on price, speed of service, or if online ordering is offered.
No one jobber is favoured over another.
Telematics is expected to have that
same level of disruption on the aftermarket. The difference is that telematics has the possibly to make loyalty a part of the equation once again –
but only if jobbers and independents work together to make telematics a central part of their business model.
In a nutshell, telematics is the connecting of computers over a wireless network in order to improve business functions. For the aftermarket, this means having vehicles connect wirelessly over a network and exchange information about a vehicle’s operation in order to better service and maintain that vehicle. The number of sensors on vehicles today has increased dramatically, and more vehicles are now equipped with factory-installed telematics systems. ABI Research estimates that more than 73 million vehicles will have some kind of commercial telematics system installed by 2020. Toyota is a good example: it has announced that it will begin to install a data communication module (DCM) in a wide range of its 2017 vehicles for the U.S., and the DCM will be able to transfer and share vehicle data over a cellular network.
OBD-II telematics-based solutions –
systems that will plug directly into a vehicle’s OBD-II port to collect information on vehicles without built-in telematics systems – are also expected to grow rapidly by 2020. Frost & Sullivan sees the OBD-II-based telematics market growing to US$1 billion by 2020.
The growing standardization of vehicle telematics is also spurring the development of third-party software that connects vehicle information to independent repair shops and jobbers. The goal is to create a seamless communication network, where the service operation has direct access to critical vehicle diagnostic information in real time, and the jobber also has a direct connection to the independent service operation so that it can quickly deliver the needed parts and accessories to service the vehicle.
Derek Kaufman, managing partner at Schwartz Advisors, LLC, and an expert on the impact telematics is having on the aftermarket, says while telematics technologies have been rapidly developing, “It has been a technology without a business model.”
“Yes, I can get data off my vehicle…but not many applications tie in the parts community to the service providers,” Kaufman says. “The complete package of telematics is when vehicle owners are supported by their service provider of choice and their service providers are supported by their jobber of choice.”
Work currently is being done to bridge that gap, mainly by third-party developers who are working closely with the aftermarket. Solutions are starting to appear that tie vehicle telematics to automotive service operations and jobbers.
The business case is compelling, according to Aaron Lowe, senior vice-president, regulatory and government affairs, at the Automotive Aftermarket Industry Association. “If you want to look at things from a global perspective, there are a lot of efficiencies that can be built into the supply chain through telematics,” he says. “For example, if you know – before the vehicle comes into the shop – what issues it is having, the service operation can take that information and automatically order the needed components, before the vehicle is even
at the shop.”
“If you think of this from an efficiency perspective, it is advantageous to the jobber to get those parts to the customer quickly, and to know not only that they have the right parts in stock, but that the right parts are going to the right place, quickly.”
Lowe says that while a lot of the talk around telematics has focused on the advantages to independent service operations, there are also plenty of advantages for jobbers. He says accurate, real-time information about vehicle types and health can be used to get a better handle on inventories, and to help jobbers make sure the right parts are in stock and that stock matches the kinds of vehicle makes and models that are being serviced by their customers. “This can make parts inventories much more accurate, and improve the efficiencies in getting the right parts to the right place when the service operations need them,” he adds.
Jim Dykstra, president of Aftermarket Telematics Technologies, says telematics has an important role to play in building relationships between jobbers and their independent service provider customers. Today’s independents expect that parts will be delivered quickly and accurately. Jobbers need to be able to have their point-of-sale systems, catalogues, and inventory monitoring systems tied together so that when an order comes in, it will automatically generate a part order and an invoice. That invoice and part will be linked to a delivery vehicle, which can be tracked through GPS monitoring in real time.
“Shops today expect to receive that water pump as quickly as they get a pizza,” Dykstra says. “When you integrate a telematics solution into the jobber’s back end point-of-sales system, you can now see the invoice, what is on that invoice, what truck that part is on, and when that part has been delivered. In real time, you can pull all that information up and see where things are. We are only a couple of years away from when a vehicle triggers an alert to replace a part, and have that information seamlessly integrate with our catalogues and then automatically generate the parts order and invoice, and ship the part to the service bay.”
The advantage of this is that jobbers will have even greater control of their inventories and supply chains, knowing in real time what parts they need to have in stock, and where parts are in the delivery cycle to improve delivery times for their customers, Dykstra adds.
Malcolm Sissmore, country director, Canada, and North American sales director, training, telematics, and tools with Delphi, one of the companies at the forefront of aftermarket telematics, says that jobbers now have a rapidly shrinking timeline in which to make telematics part of their business plan. It is no longer a question of if telematics will arrive, but when – and that “when” is very close.
“From the jobber perspective, we are now moving to a connected-car-care model,” Sissmore says. “Jobbers need to be able to take the information that is happening with the car right now, either from the OE telematics side of the world or from third-party telematics providers, and look to see how they can make that part of their business model.”
Sissmore says that jobbers need to begin working with service operators to get them up to speed on how to make telematics part of their own business relationship, and how to make telematics part of their relationship with jobbers. There is also a tremendous business opportunity for third-party OBD-II telematics solutions for owners of vehicles that do not have built-in telematics systems, which jobbers and service operations can provide. If one can move people to using telematics for assisting in vehicle maintenance and service, the business opportunities are tremendous.
Once the connection is made between the vehicle, the service operation, and the jobbers, efficiencies will quickly fall into place, as will profits. Jobbers need to take the lead in making this happen. nJN
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