Telematics challenges the aftermarket; Experts claim options exist

Automakers stumble in efforts to use telematics as a competitive advantage.

One of the best attended educational sessions during the Automotive Aftermarket Products Expo at the Sands Expo Center was the update on telematics, a standing-room-only meeting. The high level of interest in this session reflected the concern in the aftermarket that telematics, which allows transferring car-generated information via telecommunications to a remote device, presents a big challenge to the aftermarket.

The session was arranged to give aftermarket members a better idea of how telematics is evolving and what it means to the aftermarket. The Automotive Aftermarket Industry Association (AAIA) has joined with other industry groups to assess the competitive threat the aftermarket faces from carmakers who are introducing telematics as a way to steer aftermarket services to their dealers.

Attendees learned that telematics solutions are growing, but that automakers are experiencing some issues trying to develop it as a viable customer offering. This has given the aftermarket time respond to automakers’ efforts to use telematics to their competitive advantage.

Attendees heard from Roger Lanctot, associate director of automotive for Strategy Analytics, a research firm, and Eric Berkobin, vice president of engineering at Verizon Telematics, the winner of the 2013 Aftermarket Telematics Challenge. The session was moderated by Scott Luckett, AAIA chief information officer.

Luckett began the session by playing a Chevrolet commercial about OnStar telematics. The commercial noted that drivers can check emails while driving and get maintenance notifications. “The monetization from telematics from the car companies is in the VRM (vehicle relationship management),” Luckett said.

All major carmakers are developing a telematics solution, he said. He noted that BMW will be introducing telematics to all new cars in 2014. The system will provide remote diagnostics and automatic crash notification to owners at no extra charge for 10 years, he said.

“The aftermarket is thus far ‘offline’ with the vehicles and hoping to react,” Luckett noted. “Our interest is in the consumer’s right to choose where to have their vehicle serviced.”

He said telematics can be added to all vehicles built since 1996.

Luckett said AAIA wants to work with automakers in establishing technical standards for telematics products. To this end, AAIA has partnered with the Automotive Aftermarket Suppliers Association, AIA Canada, the Equipment Technology Institute and other groups in forming an aftermarket telematics task force.

“We’ll be on Capitol Hill talking about telematics,” he said.

Luckett said European countries have mandated telematics in cars beginning in 2015 in the interest of improved safety. “Telematics has basically been mandated in Europe,” he said.

Roger Lanctot, the researcher, then expanded on the various forms that telematics solutions have taken so far.

Insurance companies are supporting the development of automotive telematics, he noted, for both new cars and the aftermarket. “Aftermarket telematics is getting a big push from the insurance companies,” he said, noting that insurance companies are able to customize insurance policies to individual policyholders based on data generated by the consumers’ vehicles.

Lanctot showed slides of the numerous telematics products that have been introduced. He said there are some solutions that are smartphone-based and some that are used in conjunction with customer relations management software. He said the solutions use a variety of data gathering hardware and software.

Progressive Insurance promotes a telematics solution that has been installed in 1.5 million vehicles, he said.

CarMD, a Website that provides consumers information to lower the cost of vehicle ownership, has also promoted telematics, as has the American Automobile Association.

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