The Web tech: Will online vehicle diagnosis revolutionize the aftermarket?

During a recent broadcast, the brothers, whose real names are Tom and Ray Magliozzi, started laughing about something. Yes, they laugh often during their show, but this time they were laughing so hard they both were gasping for breath and couldn't even speak. The whole situation actually became funnier the longer it went on. After about 15 seconds, half the listening audience must have had tears rolling down their faces.

Hysterical laughter also may be the initial reaction of the aftermarket industry to the idea of providing auto service and repair quotes online. How can someone diagnose and quote a repair without even seeing the car? But think about it — what do Tom and Ray do on the radio for an hour every Saturday? Then look at how the Internet has revolutionized traditional "in person" industries such as real estate and mortgages. So how far-fetched is it that the Web could be the next big thing in automotive diagnosis, service and repair, and pricing?

For many players in the automotive aftermarket, the repercussions of such a scenario are no laughing matter. In fact, parts distributors in particular may find that such Internet "services" could make their lives miserable by increasing the already onerous problem of returns.

A look at one such service helps illustrate the benefits and hazards to the aftermarket. International Auto Network (IANAuto) touts its ability to allow consumers to compare estimates from service professionals in their own areas. The primarily Chicago area service sums up its vision on its Web site: "To revolutionize how people view and purchase automotive repair services."

On that Web site, consumers can enter a car's year, make, model and a brief description of its ailment and receive not only a diagnosis but also a repair price quote.

Although several other such services, such as 2carpros.com, myrepairgirl.com, and even the venerable Magliozzi Brothers' CarTalk.com, are available, IANAuto sets itself apart with the pricing aspect.

"It's unfortunate, but many people feel like they are 'taken advantage of' when they go in for a car repair," says IANAuto's founder, Drew Turnbaugh. He notes that his service takes factors about which people can be sensitive, such as gender, age, and race, out of the equation, and reduces the repair situation to two things: the car and the service issue.

To a certain extent, it's easy to see how such a service could be a boon to consumers and repair shops. "With our system, consumers ask questions, and our member shops are willing to treat them like human beings and educate them," Turnbaugh says. "This gives shops an opportunity to establish a personal contact with customers and establish themselves as helpful authority figures rather than faceless repair shops."

Turnbaugh says IANAuto has signed up roughly 60 repair shops in the Chicago area, with a national rollout planned for later this year. He says the site gets about 250 hits each day from consumers "looking for help" from all across the country.

"Our members love it," he adds. "We get shops pulling in $750 jobs just because they took the time to answer one e-mail."

The service has potential benefits for the distribution end of the business, too, according to Turnbaugh. He says the national rollout may include an affiliate program that offers financial incentives for distributors who refer their shops to the service. In addition, the site also ultimately will feature a module that allows distributor members to offer online specials in an "eBay" style format.

"A distributor could use our site as a forum to say, 'OK, I have this many parts to clear out, and this is what I want to sell them for,'" he says.

While the potential upsides seem reasonably clear, the picture becomes a little murkier when it comes to the online price quotes and what effect those quotes might have on the industry. If a customer has been quoted a repair and a price, what happens if the diagnosis is incorrect and parts already have been ordered in anticipation of the customer's visit?

As Chris McDonnell, lead technician at Firestone Complete Auto Care in Strongsville, Ohio, points out, it can be hard enough to diagnose a problem in the shop let alone online without ever seeing the car.

"We had a customer recently who was convinced there was something wrong with his brakes, because of a rattling noise," McDonnell says. "We checked it out, and it turned out the noise was from decorative lug nuts on his wheel covers.

"So the problem is under-diagnosing or over-diagnosing. If you under-diagnose and don't quote a high enough price, who makes up the difference? And if you over-diagnose and order parts that you end up not needing, what do you do with them?"

That is the crux of the problem for the distribution side of the business, agrees Steve Hoellein, president, Felt Auto Parts, Ogden, Utah. "What kind of price quote is the customer getting?" he asks. "Is the customer agreeing to pay a set amount to a shop that's just reciting a list of parts it's going to change out to solve what it thinks the problem might be?

"Returns are a killer," Hoellein continues. "Being a parts individual, I have told my shops flat-out that if they're taking electronic parts out of here, they can't put them on the car and then remove them and bring them back. The day has come that we have to put our foot down. We just can't afford to send parts out and then take them back, and I support the fact that the manufacturers don't want to do so, either. The OEM doesn't do it that way, so why would we?'

Not so far-fetched

Not everyone thinks the concept of online diagnosis and repair is far-fetched, however. Although the pitfalls for distributors that concern Hoellein are real, on-board diagnostics has made the diagnosis itself quite feasible.

"OBD basically turns the diagnosis over to a computer anyway. So this idea is really just one step removed from that," notes Dan Smith, president, Capstone Financial Group, Hilton Head, SC. "Depending on the age of their vehicles, many car owners already can buy an OBD tool and plug it in themselves, then download the results to a service station and get a diagnosis and a price."

As for the potential problem of increased returns for WDs, Smith is pragmatic. "Let's face it, that happens a million times a day already. I don't see this as having much of an effect one way or the other."

Jonathan Carey, an investment banker for BB&T Capital Markets, points out that the collision industry is already using a workable version of online diagnosis: it's not unusual for an insurance adjuster to assess a car using only a written description and a few pictures.

Beyond that, Carey sees three short-term ways in which Web-based repair communities could impact the aftermarket.

The first is consumers increasing using price comparisons for commodity repairs such as scheduled maintenance or customer-diagnosed problems, such as brake jobs. "We can see these sites driving traffic based on price quotes and then, once the car is on site, the shop will be in a position to up-sell other services," Carey says.

Next, such online communities will enable shops, through chat rooms and blogs, to build a rapport with customers who do not have a regular repair location and therefore are potential regular customers. "The investment in time and energy targeting such a ripe customer list would be well worth the investment," Carey notes.

Lastly, Carey says such online communities allow car owners the opportunity to compare notes with other owners and learn about common problems across vehicle lines. "None of these developments removes any layer from the distribution system or threatens any aspect of the aftermarket," Carey points out. "These communities will make better, more informed and more confident consumers, which should enhance the effectiveness of the aftermarket and help it compete with dealerships for the service dollar."

In-person work is still vital

Hoellein, at Felt Auto Parts, says he has a bigger issue with the concept of online diagnosis and pricing beyond just its possible effect on his business: the idea that people don't feel good and trusting of their local shops.

"If a customer would rather rely on a guesswork diagnosis over the Internet than taking a car to a trusted mechanic, we as an industry are really shooting ourselves in the foot," he says. "We need educated people in our industry to educate the public."

IANAuto's Turnbaugh, however, says his company's service enables shops to do just that. "This is actually a great consumer education tool," he says. "Even if a shop's answer to a specific problem is, 'We don't know,' that shop still has the opportunity to explain what it could be, and build a relationship with a customer."

That has been the experience of IANAuto member American and Foreign Car Clinic, with six locations in the Chicago area, where Brady Neff is mechanic/manager.

Neff admits that although his team members can't guarantee 100 percent accuracy on a problem that a customer describes over the Internet, they can usually at least point the customer in the right direction. They don't make firm price quotes on cars they haven't seen in person, however.

"We can offer an initial diagnosis and possibly tell customers we've seen a similar type of problem on vehicles such as theirs, let them know we're experienced remedying it, and give them a ballpark idea of what similar repairs have generally cost," he says. "But we make it clear that by no means are we offering an ultimate diagnosis sight-unseen," he says.

Still, however cautiously it's approached, Felt Auto Parts' Hoellein is unconvinced the concept is a good one for the automotive aftermarket.

"You wouldn't e-mail a doctor and say, 'My leg hurts. Tell me what's wrong and how much it will cost me to fix it,'" he says. "So why would you do that with your car? Why do we in the automotive aftermarket always downplay how much respect we deserve?"

Need a Part? How About a Whole Car? Try Pep Boys

If there is any lingering doubt that the Internet can and likely will affect every aspect of the automobile aftermarket, look no further than the recent caroffer™ agreement between Pep Boys and lanelogic®. As reported in Aftermarket Business' weekly e-newsletter The Edge (2-6-08), consumers now have the ability to receive, in a matter of minutes, real-time cash offers for any vehicles they wish to sell. The offers and payments come from lanelogic, a used vehicle trading network for franchised dealers (www.lanelogic.com).

Through caroffer, a customer logs on to either www.caroffer.com or www.pepboys.com and completes a quick vehicle condition report. Once the vehicle's information is submitted, lanelogic's trade desk generates a purchase offer. If the customer accepts the offer, he or she receives a voucher to redeem for an inspection within 72 hours at any participating Pep Boys location. Pep Boys verifies the condition of the car. The sale is then finalized, and the customer receives a negotiable bank draft.

"This partnership could give us the ability to source thousands of vehicles for our dealers while offering an unparalleled service to the general public," says Bruce Thompson, lanelogic's founder and CEO.

Pep Boys President and CEO Jeff Rachor says, "Consistent with our long-term strategic vision, this partnership helps to further position Pep Boys as the automotive aftermarket solutions provider of choice."

For more, see our Reseller Newsmaker interview with Rachor.