According to ABI Research, more than 30 million new cars will ship with onboard telematics units worldwide by 2013.
General Motors is leading the way in turning telematics and onboard diagnostic data into actual service leads through its new GM OneSource Pipe, a lead generation service that provides sales leads from OnStar, GM's corporate Web sites and the DealerPulse Pro customer retention system. Other OEMs are also exploring the potential for telematics-based services.
"There is a definitely a case to be made that, for the warranty period of the vehicle, there is at least some take-up on telematics," says Ron Pyle, president of the Automotive Service Association (ASA). "After the warranty period, it's not clear whether people will continue to subscribe, or if they want the unit referring them to have their service done with the dealership."
The ASA recently published a report, Telematics: Past, Present and Future, that outlines the challenges and opportunities that telematics systems will present to the aftermarket.
"Although the total dealership network may be too small to handle the total number of potential customers, OEMs have the capability to use telematics to potentially bring more customers to the dealership or dealer satellite service facilities," the report says. "This scenario could redirect the amount of repair work and routine maintenance that has predominantly gone to the independent sector of the industry."
For customers with GM's OnStar service that opt in to the lead generation system, the selling or preferred servicing dealer is notified when the consumer is due for maintenance or is impacted by a recall alert. GM is now sending nearly 2.5 million monthly diagnostic e-mails to consumers, but only 5 to 6 percent of these consumers have opted to share that information with dealerships. However, GM executives claim a 90 percent appointment rate from OnStar-based service leads.
In 2006, GM reported that more than 1 million vehicle owners signed up for OnStar Vehicle Diagnostics.
Diver Chevrolet in Wilmington, Del., began piloting OneSource in November 2007, and the system officially went live this spring.
"We check the OneSource Web site to see if there are any leads and that allows you to contact the customer and set up an appointment," says Herb Hoeflinger, service manager at Diver. "You can monitor what's going on with those customers, whether or not they responded, etc. We have gotten some OnStar leads, but most of the leads we get that turn into real appointments are customer generated."
While the value of onboard diagnostics leads will grow, Leslie Petrick, Internet sales manager at Diver, thinks that Web-based leads, e-mail communication with customers and a more "connected" service department will have the largest impact on expanding the service business.
"People are still kind of shocked that their vehicle can e-mail them," says Petrick. "Ten years ago, most sales departments weren't even set up for Internet sales, but now 75 percent of consumers do their research online before approaching a dealership. Service is going to be like that eventually. Who's offering the best price? Consumers will do their research at home before scheduling an appointment."
Hoeflinger adds that an increasing number of customers are opting to schedule service appointments online rather than over the phone.
Low Rate of Adoption for Advanced Services
Using telematics systems to deliver diagnostic information to the OEM or dealership could help boost after-sales revenues by capturing more service business. That connection with the customer could also potentially make service operations more predictable, improve operational efficiency in the service bay and boost consumer awareness of routine maintenance issues.
But before any of that can happen, there has to be wider adoption of telematics systems, and more consumers have to opt-in to the type of diagnostic alert programs that GM now offers. As ABI points out, though, the applications driving the current growth in telematics are not service-based, but centered on infotainment, navigation and emergency services.
While other OEMs are having success with similar programs in Europe, adoption in the U.S. has been stymied by high costs and low demand for the more advanced telematics services.
Pyle says that given the current economic situation (high gas prices, tight credit, etc.) it's unlikely that we'll see higher adoption of those services in the short-term.
"We'll see more strategies aimed toward it, but considering the subscription fees and hardware costs, it will be more difficult for them to increase adoption," Pyle says.
In the meantime, the aftermarket should at least start thinking about how the technology could be used to the benefit of the entire service market, not just the dealerships.
He also believes that the proliferation of portable devices like cellular phones, personal digital assistants and aftermarket portable navigation devices could open up even more opportunities for the service industry, depending on the level of connectivity available in the vehicles. Ford has taken a step in this direction by partnering with Microsoft for its SYNC wireless system.
"How far do we want to go?" Pyle says. "Connecting to the diagnostic data stream is not a big issue. But do we believe that there's an opportunity for companies to create an aftermarket application that can refer customers back to our outlets? Do we create an onboard strategy and sell actual units, similar to what has happened on the navigation side?"
While demand for remote diagnostic services may take a while to ramp up, Petrick says that Diver's experience with Web-based leads and with using e-mail to communicate with customers has been a positive experience.
"We've never had a customer e-mail us back asking us to stop contacting them, unless they no longer have the car," Petrick says. "Most people love the fact that they can schedule online and don't have to pick up the phone. We do make follow-up phone calls for warranty work and things like that to make sure everything is okay."
"When we send the monthly special out to everybody, we will sometimes have customers e-mail us back about setting up appointments for other service beyond the special," Hoeflinger says. "It reminds them that they needed to have that service done, and we may get an extra appointment for maintenance or repair that we might otherwise not have had."
