Aftermarket develops multiple strategies in battle for access to vehicle, consumer data

As the number of automotive telematics users rises, the aftermarket continues to struggle with exactly how to address what could be a significant threat to the industry's ability to maintain its competitive advantage in the post-warranty period.

At the recent Aftermarket eForum in Chicago earlier this year, telematics dominated most of the program. The discussions were not just about the nuts and bolts of connecting vehicles to repairers; there are plenty of solutions on the market now that do just that. The larger issue is, how can the aftermarket effectively compete with OEM telematics solutions that will come as standard equipment in more and more vehicles moving forward, and will increasingly cement the relationship between the vehicle owner and the dealership service department?

According to ABI Research, the number of telematics users is expected to increase from 72 million to more than 300 million by 2018. "This is isn't about what is happening today," says Scott Luckett, CIO of the Automotive Aftermarket Industry Association. "It's about what our industry looks like 15 or 20 years from now if we do nothing. We have to be in that conversation."

Fred Blumer, founder of Hughes Telematics and current CEO of Vehcon, further outlined the threat that OEM telematics poses to the aftermarket. "Consumers want to be connected everywhere," Blumer says. "The OEMs want a lifetime connected with those customers. When all of these car are connected, you're not invited to the party."

"The connected car is going to happen with or without Delphi, and with our without you," adds Chris Slesak, director of telematics at Delphi Automotive.

According to Blumer, a number of indicators bode well for the aftermarket, provided that the industry can rise to the challenge. First, most consumers don't continue to utilize OEM telematics beyond the trial or warranty period. Second, there is an opportunity to partner with insurance companies that are increasingly turning to aftermarket telematics solutions to drive their own usage-based insurance programs. "This will potentially cover millions of the vehicles in the future, and insurance companies are willing to have this conversation with the aftermarket," Blumer says.

Blumer also discussed the potential of partnering with fleet telematics companies, as well as the technology that Vehcon is touting, which utilizes smart phones to provide vehicle connectivity. Sub-prime auto lending companies also are using tracking devices on vehicles, and that hardware stays in place even after the monitoring period has expired. "Those drivers still need brake jobs and oil changes," Blumer says.

The data battle

Blumer further defined the boundaries of the competitive challenge by characterizing the telematics threat as a data fight. OEMs have essentially claimed ownerships of the data being generated by the vehicles after the customers leave the lot.

"This is a fight for access to the customer," Blumer says, emphasizing that the aftermarket should focus less on accessing OEM data than on empowering customers to take ownership of the vehicle data. "The argument you can win is that this is the customer's data," he says. He compared the battle for vehicle data to the successful fight consumer groups waged with the telecommunications industry over phone number portability several years ago. "When the customer wins, the aftermarket wins."

Slesak says that the aftermarket will need to rely on both smartphone interfaces and "black box" devices to communicate with customers and their vehicles. As for data ownership and privacy, he added that younger customers understand how these solutions work, and they are willing to sacrifice some privacy as long as they receive a clear benefit from the solution.

"We approach this from the perspective that the end consumer owns the data," Slesak says. "The service center doesn't know your location; they get certain information about the vehicle that the customer approves."

The business case is still not completely solidified. There are a number of potential approaches; some of them directly benefit the repair shop, others may have application further up the parts supply chain. Most of the presenters at the eForum indicated that providing detailed diagnostics via a telematics system could be counterproductive, since the trouble codes (even those from OEM data) aren't precise enough to reliably identify the problem and the necessary parts in all cases.

"The interface to the consumer should be simple: a red, yellow, green warning to let them know whether they have to get this addressed right now, or if it can wait," Slesak says. "The bigger challenge now is, how do you communicate to the consumer before they've made that point of sale decision? Right now, the aftermarket model is reactive."

"You need to make a plan today to connect to consumers," Blumer adds.

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