Most global OEM’s have announced their intention “monetize” data from their cars and trucks. The legacy companies are going through massive efforts to re-design their vehicles to be “software-defined,” so that more data can be extracted and so that new software applications can be delivered. Many have also communicated aggressive targets for generating new revenues from software-based subscription services. That’s all great, but while that work is underway, OEM’s are missing opportunities to “monetize” the data they already have. Existing data could be used right now to sell more cars and trucks, while also improving customer satisfaction and repurchase loyalty. Let me illustrate with a personal example.
Current approach — partially connected
I own a 2018 Chevy Colorado. It’s a great truck, and I’ve really enjoyed owning it for over five years now. When I bought the truck, I signed up to have my dealer notified whenever my truck needs maintenance or service. This feature has worked like a charm. Recently I was notified that my oil life was under 20%, and that I would need to schedule an oil change. I clicked a link in the notification and was able to pick an appointment time about two weeks out. The dealer did a good job of confirming the appointment and reminding me of the upcoming appointment. On the day of the appointment, I went in, waited about 90 minutes while the service was done, paid, and left.
Use the data to connect Service and Sales
Perfectly good experience, right? In the inevitable post-visit survey, call me “completely satisfied.” But Chevrolet and the dealer missed an opportunity to make a lot more out of this visit, using the data that both already have about me and my truck. Following is a picture of how my recent visit could have gone, using currently available data:
Chevrolet and the dealer know exactly how many miles I have on my truck – that data is in the same feed that told them that I need an oil change. That information indicates that my 2018 truck is starting to build up some miles.
Chevrolet and the dealer know that I bought the truck using a “Friends and Family” discount, and that I’ve had all my service done at the same dealer. That might indicate that I’m a likely repeat buyer.
Chevrolet and the dealer know that my truck is in very good shape and has had all required service done on schedule. That gives a very good idea what my truck is worth.
There is a brand-new Colorado this year, and it probably has features that are improved, vs. the 2018 model.
The dealer has a fleet management application that uses connected car data from Chevrolet to know location and condition of all its service loaners at any one time, and when they are due to be available. This system could easily be used to track and schedule demonstration vehicles, as well.
A better experience, and a more likely buyer
So, in a better version of my service experience, my truck notifies Chevrolet and the dealer that I need service. Chevrolet uses available data to identify me as a strong prospect for the new Colorado and tells the dealer that I should be offered a test drive during my next service visit. The dealer sends the usual service scheduling notification to me and uses their fleet management tool to ensure that a new 2023 Colorado is available at the time of the scheduled appointment. The dealer prepares an estimate of the cost for me to buy or lease the new Colorado, including the trade-in value of my 2018 truck. When I arrive for my service appointment, expecting to wait in the dealer’s “lounge” for 90 minutes, I am surprised and delighted when I am offered an opportunity to take the 2023 Colorado for a spin. When I return with a smile on my face, I am given a firm offer for a trade, with personalized price and payment information.
This scenario won’t necessarily result in a sale on the spot. That wasn’t the purpose of the dealer visit. But the objective of this “data monetization” exercise is to improve the probability that I will consider a new Colorado, from this specific dealer, sooner than I would otherwise. With the margins to be made on a new Colorado for both Chevrolet and the dealer, that is “monetization” worth pursuing.
Global OEMs, such as General Motors, VW, Ford, Stellantis, and Hyundai, aim to establish subscription-based businesses in the coming years, with GM targeting an additional $20-$25B by 2030. These OEMs have conducted customer research indicating an average willingness to pay over $100 per month for subscription services. The appeal of this model lies in its financial advantages, with regular and high-margin revenues and lower capital requirements. The investment community’s pressure to demonstrate progress towards subscription models has prompted OEMs to emphasize this strategy in their investor day presentations.
Key to a successful subscription services strategy is ensuring vehicles can support new software-based services delivered securely over the air. Therefore, global OEMs are making significant efforts to adopt a “Software-Defined Vehicle” design for their electrical and data systems. However, challenges have emerged, such as delays encountered by OEMs like VW. In addition, OEMs plan to hire and develop thousands of software developers to create, deploy, and manage software-based subscription services. While these efforts are essential, they may not be sufficient for OEMs to succeed.
In addition to vehicle design and software skills, OEMs must enhance their capabilities in subscription marketing and partnering. Successful subscription companies excel at ongoing customer engagement — analyzing data, and swiftly responding with new services, packages, and pricing. Traditional OEMs, focused on mass manufacturing and distribution through dealers, are not accustomed to direct customer engagement or rapid service deployment based on customer demand.
To succeed with a subscription strategy, OEMs must also master partnering. Collaborations with external software developers will be crucial to offer a wide range of software-based services to customers. No single OEM is likely to monopolize innovative ideas, and leveraging the creativity of outside developers will be important. Additionally, OEMs will need to work with partners to enable services that can function across different OEMs, avoiding the need for separate applications for common vehicle-related services.
There are existing examples, both within and outside the auto industry, that can serve as valuable references for global OEMs. For further information about current best practices and successful models, please reach out for a more in-depth discussion.
It’s no secret that significant consolidation of automotive retail is underway. Every week, Automotive News reports additional acquisitions by the leading retail consolidators. Earlier this year, Automotive News reported that the consolidation trend has continued steadily over the past 10 years – even through the pandemic. At the end of 2020, the Top 150 Dealer Groups owned 21% of all dealership locations and represented 23% of industry sales volume. This is up from 13% of locations and 16% of volume ten years earlier.
The need for significant technology investments is one driver of consolidation. Smaller dealers are faced with large investments to enable digital retailing to meet customer expectations. Dealers are also facing new investments in electrification technology to accommodate the industry shift to EVs. And some dealers are choosing to sell rather than make the investments. For example, approximately 20% of Cadillac dealers are reported to be walking away from their franchises, rather than make required investments in selling and servicing Electric Vehicles.
Tesla’s Retail Approach Shows What is Possible
Tesla’s retail network shows that technology can not only be a driver of consolidation, but also an enabler. Tesla has fewer than 200 Sales Galleries and fewer than 150 Service locations. Connected Car technology is one of the keys that makes it possible for Tesla to service its customers with so few facilities. On the sales side, Tesla enables comprehensive on-line shopping. In service, Tesla says that it can accurately diagnose 90% of all issues remotely and that it can repair 80% of problems without a visit to a service center. Connected Car technology makes this possible by allowing Tesla to remotely connect to its vehicles for diagnosis and for ongoing insights into real-world customer usage. Tesla can also determine the customer’s location if it needs to dispatch a remote repair and Tesla can often repair vehicles with an over-the-air software update. It is safe to say that Connected Car technology is the only way that Tesla could operate with so few physical locations. As this technology becomes more widely used by all OEM’s, there will be growing opportunities for other OEMs to consolidate sales and service facilities.
Lessons from the Pandemic and the Chip Shortage
Both the pandemic and the chip shortage have accelerated trends toward digital retailing and reduced inventories. As reported in Car and Driver, Ford has concluded that the pandemic accelerated customer interest in shopping and ordering vehicles on line. Many dealers successfully responded by offering at-home test drives and deliveries. A build-to-order mindset for consumers has been further accelerated by the chip shortage, which has made it difficult for dealers to hold inventory and for customers to shop from inventory on the dealer’s lot.
Connected Car Technology Will Enable Further Consolidation
Connected Car technology will further enable the trends toward retail consolidation and digital retailing. As Tesla has demonstrated, a well-connected OEM and Dealer network can easily provide remote sales and service to customers without needing so much real estate. As customers become more comfortable with online ordering and remote service, the most successful dealers will be those who make the best use of technology to serve customer needs.
We will soon see dealers making extensive use of Connected Car tech in their sales and service operations. For example:
In Sales, vehicles can be made available for any-time test drives and parked inaccessible locations. Vehicles can be electronically disabled to prevent theft and only enabled for prospects with a valid authorization code.
Also in Sales, a limited test drive can be extended to a short- or longer-term rental, with data collected to make effective suggestions to the customer for a customized vehicle, accessories, and software.
In-Service, ongoing monitoring of vehicles will create increasingly sophisticated predictive models. These will allow Dealers to contact customers long before a failure occurs and offer either a physical repair or a software update.
Also in Service, Dealers can monitor vehicle diagnostics trends, and can proactively schedule vehicle maintenance to be done at a time that is most convenient for the customer and also the most efficient for the dealer.
The bottom-line result will be continued consolidation and more efficient use of real estate to meet the needs of automotive shoppers and owners.
Native Connected Car Services Now Coming to Dealerships
In past articles, I’ve touched on the many services that dealers can expect from Connected Car technology. Some of these have included vehicle location, lock/unlock, key management, theft notifications, diagnostics, inventory audits, loaner and demo administration, service reminders, and many more. Together, these services promise to increase dealership productivity and reduce costs, while improving customer satisfaction and retention.
Today, Connected Car services for dealers mostly rely on independent third parties, using aftermarket OBD2 plug-in devices for data collection. There are many capable providers offering these dealer-focused connected services. Some good examples of these include Spireon LoJack, Dealerware, and Geotab.
But, as I’ve also mentioned in past posts, vehicles increasingly come equipped by the OEM with built-in telematics systems that can provide the data and commands needed for dealer-focused connected services. And, some service providers are beginning to take advantage of these native connections for a limited range of services, particularly in the management of loaner fleets. Connexion Telematics and TSD Solutions are offering these connected services, with the support of select OEMs.
And finally, some OEMs are now beginning to offer limited dealer-focused connected services directly to dealers – mostly focused on post-sales & delivery as well as service-based customer retention. OnStar’s Dealer Maintenance Notification is one example, in which Dealers are notified when vehicle diagnostic codes indicate an upcoming need for service.
The choices for connected services available to dealers will continue to evolve rapidly as more of these OEM-provided connections become available, and as new dealer-focused connected services develop.
Fleet Industry Offers a Preview for Dealerships
For a window into the way that services are likely to develop in the next 18-36 months, dealers can look to the experiences of the Fleet industry. Fleets have been using telematics to manage vehicles and drivers for many years now, with obvious benefits in terms of additional uptime and increased driver productivity. These benefits have easily supported the development of several fleet telematics providers. As with dealer-focused connected services, Connected Fleet services were all originally delivered through third-party, aftermarket devices – but they are increasingly delivered through native OEM-provided connections.
Most fleets include vehicles from more than one manufacturer, so there is a natural inclination for fleets to use brand-independent fleet telematics providers. Companies like Geotab, Donlen, FleetComplete, Spireon, Samsara and others offer comprehensive fleet management solutions that were all originally powered by aftermarket plug-in devices. Increasingly however, OEMs have enabled native data connections to these providers in response to demands from their fleet customers. Ford Data Services, OnStar Business Solutions, and Toyota Data Solutions all offer connections for fleets through fleet telematics partners. Fleets can go to a provider of their choice and take advantage of OEM data connections when available, or use aftermarket connections for older vehicles or for OEM makes that are not yet capable of connecting to fleet applications.
To create further options for fleets, some OEMs have also begun to create their own proprietary fleet management systems. GM offers its OnStar Vehicle Insights service, which provides comprehensive fleet management services. And in a recent announcement, GM is making OnStar Vehicle Insights compatible with aftermarket devices. Ford has also announced a similar move.
Expect Similar Offerings, Options, and Interoperability for Dealerships
These trends in Connected Fleet services point to the kinds of options that dealers should expect in the next 18-36 months. Dealers are similar to Fleets, in that most represent more than one OEM brand, plus used vehicles of varying ages. Dealers should therefore expect choices for their Connected Services between:
Independent Service Providers using plug-in aftermarket devices
Independent Service Providers using both aftermarket devices and OEM data feeds
OEM-Designed Services using both OEM data feeds and aftermarket devices
As fleet owners do today, dealers will need to choose the service provider that provides the best-connected services for their particular situation. It is a good idea to get started with an independent dealer-focused provider to begin to experience the benefits of Connected Dealership Management. An independent provider can get dealers up and running quickly, using easily installed aftermarket hardware. As dealers learn how to use these services effectively, they can then consider some of the OEM-provided or hybrid options as they come to market.
In the November, 2020 election, voters in the Commonwealth of Massachusetts passed a ballot initiative, Question 1, by an overwhelming margin (75% approved). Question 1 requires that OEM’s make diagnostic data collected remotely — through OEM telematics systems — available to individual vehicle owners and to independent repair shops. The 2020 initiative expands on a “Right to Repair” initiative passed in 2013. The original initiative required OEM’s to make diagnostic and repair data available to individual owners or independent repair shops. In 2013, this meant that OEM’s had to provide data access to diagnostic repair tools.
In 2020, this requirement was expanded to include data collected remotely through telematics systems from vehicles that are on the road.
The original “Right to Repair” was also first passed in Massachusetts, but in 2014, the Alliance of Auto Manufacturers signed a memorandum of understanding to support implementation in all 50 States and the District of Columbia. This move pre-empted “Right to Repair” initiatives in several other States that were similar to the one in Massachusetts.
With the “Telematics Right to Repair” initiative of 2020, however, the Alliance is challenging the expansion of Right to Repair into data collected through telematics systems. The trial began on June 15 and is ongoing. If the Telematics expansion is allowed to proceed, however, dealers should be thinking about the implications to their service business, because this expansion might be much more significant than it at first appears.
“Right to Repair” and the Connected Car
On the surface, expansion of “Right to Repair” to include telematics may not seem like a big difference. But the difference has the potential to be enormous for service retention, which is why independent repair shops and service chains fought so hard for the Massachusetts initiative. With this change, customers will be enticed to set up an ongoing remote connection to their service provider of choice, putting that provider in the best position to capture and retain that customer.
Once this system is in place, a visit to the local quick lube shop, tire store, or parts store will change. As the customer wraps up an oil change, for example, the attendant will ask the customer to authorize the shop to monitor the vehicle’s diagnostics. This will allow the shop to see when the vehicle is in need of its next service and send out a text or email with a perfectly timed service reminder. Well-run shops will eventually analyze their base of connected customers to determine the optimal time to bring them in – both when the vehicle needs service and when the shop has available capacity. Service shops and chains that do this well will cement a closer relationship with their customers and increase repeat service loyalty.
Alternatively, customers may choose to authorize an intermediate service “broker” to monitor their diagnostics and manage their vehicle’s maintenance. The broker will then be in a position to act as the customer’s trusted advisor, and will route service jobs to the most competitive service provider.
Dealers Should Prepare Now
The Independent shops and service chains in Massachusetts clearly hope to use this new initiative to gain business from franchised dealers (or prevent current business from being lost to Dealers). In order to maintain and grow the dealers’ share of the non-warranty repair and maintenance business, dealers will have to make excellent use of the telematics systems installed by their manufacturers.
Dealers start with a key advantage, which is the opportunity to start a connected service relationship with the customer from the moment the new or used vehicle is delivered. But not all dealers today do a great job activating these systems, and activation for some OEMs is very inconsistent. Dealers must be sure to activate OEM-provided systems and secure customer consent to share service and maintenance data. Dealers then have to do a great job of managing data notifications to quickly schedule customers for any needed service work. Dealers may also want to take advantage of aftermarket systems for their older inventory that lacks OEM-provided telematics. A service like Spireon’s Lojack is a good example of an effective aftermarket system.
Dealers will have a very brief head start to fine-tune their use of connected car service notifications, and they will need to take full advantage. If you are a dealer considering connected service and service retention opportunities, please reach out to motormindz to hear more about how to “get” Connected.
There has been a lot of attention paid to opportunities for Connected Car technologies in Sales and F&I, with ideas like personalized shopping, deliveries, and data-based F&I products. But there are also several opportunities for dealers to use Connected Car technologies to improve quality of service, performance, and efficiency in the delivery of both Parts and Service.
Quick Background:
This topic is relevant now because Connected Car technologies are finally reaching “critical mass.” Well over 90% of all new cars and trucks sold in the US in 2021 will come with built-in abilities to transmit and receive data, remote software, and vehicle commands. This means that key data about each vehicle’s mechanical condition, driving usage, and precise location can be collected and used to improve operations at the dealership. As always, it is critical to remember that customers must be fully informed and provide their consent for any Connected Car services to be utilized.
How Connected Car Data and Commands Can Affect Parts and Service:
Current Operations
In the near term, there are several opportunities to improve day-to-day operations of the Service and Parts departments, while also improving the customer experience.
The highest ROI current opportunity is to use data from the vehicle to determine when maintenance and service events need to be scheduled. The vehicle “knows” what its mileage is, when it needs an oil change, and when it has diagnostic codes that indicate different needs for service. Customer outreach using this vehicle data is much more timely and often more effective than outreach based on customer behavior modeling or “estimated” mileages.
A connected car can also facilitate advanced planning. By checking periodically on maintenance needs, dealers can anticipate approximately when a customer will need maintenance. The dealer can then plan ahead to schedule service at a time that is both convenient to the customer and efficient for the dealer, smoothing out service operations as well as monthly top and bottom lines.
Finally, an advanced review of a vehicle’s maintenance and service needs can facilitate advanced ordering and stocking of parts to ensure that they are available when the vehicle is scheduled for service. In short, dealers can more efficiently utilize their personnel and operations, while providing more reliable and convenient services for customers.
Several OEMs now include automated maintenance reminders within their Mobile Owner Apps, and similar service reminder programs are offered as well. These types of programs have been shown to increase both customer service satisfaction and retention. The dealer plays a critical role in ensuring that all new vehicle purchasers have their Mobile Owner Apps activated during delivery, along with enrollment in automated maintenance reminders. If your OEM has not yet enabled these services, or for older vehicles, dealers should also look into third-party platforms, which not only offer service reminders, but also theft recovery, emergency assistance, and other services.
Advanced Service and Parts Opportunities
Connected Car technologies will allow more advanced capabilities, too. We have already seen extensive use of Over-the-Air software updates by Tesla, but Tesla is not alone in adding OTA capabilities. Every major OEM is working to expand their abilities to update major vehicle systems this way, as well as how to share these responsibilities with their dealers. Tesla and others have also shown the potential for additional revenue from software-based “accessories” and feature subscriptions. These are optional software enhancements that allow the vehicle to be customized versus a base factory configuration. OEM Service and Parts departments will soon be able to recommend and deliver these accessories to an increasing number of vehicle owners.
OEMs are also increasingly developing more predictive service algorithms. These programs process data from large numbers of vehicles to develop models that can accurately predict service problems before they occur. As confidence in these programs increases, dealers will be encouraged to contact customers to schedule service well before a breakdown occurs.
Finally, Connected Car technologies will enable many new remote services. It is easy to locate vehicles and to provide digital keys to give access to an authorized technician. This will facilitate both services at the customer’s location as well as easy pick-ups and exchanges with courtesy transportation vehicles.
The Connected Car will bring dramatic changes and opportunities to all parts of the modern dealership, and motormindz’ Connected Car Practice can help guide dealers on the best ways to maximize the advantages of these developments. If you’d like to learn more, please contact motormindz’ Connected Car Practice Lead, Greg Ross.
There has been a lot of attention paid to opportunities for Connected Car technologies in Sales and F&I, with ideas like personalized shopping, deliveries, and data-based F&I products. But there are also several opportunities for dealers to use Connected Car technologies to improve quality of service, performance, and efficiency in the delivery of both Parts and Service.
Quick Background…
This topic is relevant now because Connected Car technologies are finally reaching “critical mass.” Well over 90% of all new cars and trucks sold in the US in 2021 will come with built-in abilities to transmit and receive data, remote software, and vehicle commands. This means that key data about each vehicle’s mechanical condition, driving usage, and precise location can be collected and used to improve operations at the dealership. As always, it is critical to remember that customers must be fully informed and provide their consent for any Connected Car services to be utilized.
How Connected Car Data and Commands Can Affect Parts and Service:
1. Current Operations
In the near term, there are several opportunities to improve day-to-day operations of the Service and Parts departments, while also improving the customer experience.
The highest ROI current opportunity is to use data from the vehicle to determine when maintenance and service events need to be scheduled. The vehicle “knows” what its mileage is, when it needs an oil change, and when it has diagnostic codes that indicate different needs for service. Customer outreach using this vehicle data is much more timely and often more effective than outreach based on customer behavior modeling or “estimated” mileages.
A connected car can also facilitate advanced planning. By checking periodically on maintenance needs, dealers can anticipate approximately when a customer will need maintenance. The dealer can then plan ahead to schedule service at a time that is both convenient to the customer and efficient for the dealer, smoothing out service operations as well as monthly top and bottom lines.
Finally, an advanced review of a vehicle’s maintenance and service needs can facilitate advanced ordering and stocking of parts to ensure that they are available when the vehicle is scheduled for service. In short, dealers can more efficiently utilize their personnel and operations, while providing more reliable and convenient services for customers.
Several OEMs now include automated maintenance reminders within their Mobile Owner Apps, and similar service reminder programs are offered as well. These types of programs have been shown to increase both customer service satisfaction and retention. The dealer plays a critical role in ensuring that all new vehicle purchasers have their Mobile Owner Apps activated during delivery, along with enrollment in automated maintenance reminders. If your OEM has not yet enabled these services, or for older vehicles, dealers should also look into third-party platforms, which not only offer service reminders, but also theft recovery, emergency assistance, and other services.
2. Advanced Service and Parts Opportunities
Connected Car technologies will allow more advanced capabilities, too. We have already seen extensive use of Over-the-Air software updates by Tesla, but Tesla is not alone in adding OTA capabilities. Every major OEM is working to expand their abilities to update major vehicle systems this way, as well as how to share these responsibilities with their dealers. Tesla and others have also shown the potential for additional revenue from software-based “accessories” and feature subscriptions. These are optional software enhancements that allow the vehicle to be customized versus a base factory configuration. OEM Service and Parts departments will soon be able to recommend and deliver these accessories to an increasing number of vehicle owners.
OEMs are also increasingly developing more predictive service algorithms. These programs process data from large numbers of vehicles to develop models that can accurately predict service problems before they occur. As confidence in these programs increases, dealers will be encouraged to contact customers to schedule service well before a breakdown occurs.
Finally, Connected Car technologies will enable many new remote services. It is easy to locate vehicles and to provide digital keys to give access to an authorized technician. This will facilitate both services at the customer’s location as well as easy pick-ups and exchanges with courtesy transportation vehicles. The Connected Car will bring dramatic changes and opportunities to all parts of the modern dealership!
Most dealers have Courtesy Transportation, or CTP programs in place, with the support of their respective manufacturers. What dealers may not be aware of though, is that these programs are increasingly using Connected Car technology to track and manage the vehicles enrolled in them. Not only does this new technology create opportunities for better fleet management, but it also has the potential to create some exciting new revenue opportunities for dealers in the very near future. The same platform used to operate CTP can be used by dealers to operate Rental programs, Alternative Financing programs, or Demonstrations.
Connected CTP Programs
Manufacturers are increasingly equipping new vehicles with built-in telematics equipment. In 2021, over 90% of all new vehicles will be equipped this way. Fleet owners have long recognized the value of built-in connections for fleet management applications. Fleets can more accurately track vehicle location, maintenance needs, mileage, and driver behavior data using a built-in connection and centralized fleet management. Vehicle manufacturers are increasingly bringing connected fleet management tools to their CTP to let dealers more closely manage these fleets as well.
These programs, operated by companies like TSD Loaner, Connexion Telematics, Bluebird Auto Rental Systems, and ARSLoaner, all enable Dealers to more closely manage CTP vehicles. Dealers can easily enroll vehicles from their inventory into these systems and then track which ones are rented out, how many miles have been driven, how much fuel is being used, and whether any of the vehicles need maintenance. In the event that one of the vehicles goes missing, it can also be located.
To get the most out of Connected CTP, dealers should take full advantage of available reporting, such as:
Mileage alerts to prevent vehicles from being used past OEM program mileage limits
Fuel Usage, to recoup fuel costs
Rental History, to identify which vehicles are over-and under-used
Over-Time alerts, to identify vehicles that have been kept longer than planned
Tolling Alerts, to recoup toll costs
Some programs also include remote lock/unlock commands, giving the dealer the ability to easily help if a CTP customer gets locked out. Taken together, dealers can use these tools to significantly improve the efficiency of their CTP.
New Revenue Opportunities
While Connected CTP can be useful in managing costs today, they can also create a platform for dealers to easily try out new revenue models. Technically, any connected vehicle on the dealer’s lot – new or used – can be activated and managed from the same platform that is used to manage CTP. That creates some interesting possibilities, such as:
Short-Term Rentals
Any connected vehicle on the dealer’s lot could be enrolled and offered as a short-term rental. The CTP platform could easily bill the rental customer for time, mileage, fuel used, tolls, etc., at a rate negotiated by the dealer. Rentals could be for use by individuals or businesses or could be offered to Uber or Lyft drivers. Dealers should seek information & guidance from their providers & OEM partners. Some of the providers mentioned above already offer integrations that can result in immediate revenue opportunities.
Alternative Financing Models
The same CTP platform could also allow the dealer to experiment with alternative financing models, such as subscriptions or “loan to own.” The platform can easily track vehicle usage, apply a metered price by day, month, or by mileage, and can apply additional charges for fuel, tolls, and maintenance. In the event vehicles need to be recovered, they can also be located. The platform built to enable a Connected CTP can easily be adapted to operate these programs, as well.
Demonstration Programs
The dealer’s CTP platform can also be used to offer vehicles for demonstration. With the roll-out of Electric Vehicles, for example, many customers may want to have a trial of an EV before committing to an all-new method of propulsion. Any other vehicle on the dealer’s lot can also be offered this way, with mileage and usage easily monitored for follow-up with the customer.
These new applications are not yet widely deployed to dealers, but dealers should be aware of the potential of Connected CTP and press their manufacturer sponsors and platform providers to bring these capabilities forward. Motormindz can offer guidance on the potential for CTP and other connected programs, both for savings today and revenues in the near future.
by Greg Ross, Connected Vehicles Practice Lead, motormindz
Connected Car Data: Balancing Opportunity with Responsibility
There is no shortage of opportunity for connected car data and commands, but every opportunity to create value can also be an opportunity for mayhem and abuse. As built-in connections become more widespread and more capable, we will continue to see innovation at all levels, in every part of the automotive industry. But to create a healthy environment for innovation around connected car data, it is essential to build in protections for data security, access management, and consumer privacy.
The ultimate responsibility for creating and managing a secure connected car ecosystem falls squarely on OEMs. Manufacturers have a custodial responsibility to ensure that access to both vehicle data and systems is secure, that data collected from vehicles is carefully stored and managed, and that user consent is clearly obtained and honored. To their credit, the OEMs have acknowledged this responsibility in a statement of principles, which are regularly updated by the Alliance for Automotive Innovation, representing manufacturers of nearly 99% of vehicles sold in the US.
Having taken responsibility for a secure connected car ecosystem, the OEMs are now faced with the significant challenge of ensuring that the ecosystem is well-functioning – and this is no easy task. The ideal ecosystem will provide innovators and third parties with easy access to vehicle data as well as read/write access to vehicle systems – while at the same time ensuring that that access is highly secure and strictly compliant with all privacy, contractual, and regulatory commitments.
Some of the most difficult challenges to be solved here include:
On the vehicle: Each controller produces useful data and can benefit from periodic software updates and enhancements. But OEMs must strictly control the data that is extracted. OEMs and their Suppliers must also carefully track and manage any software updates.
Vehicle to Cloud: innovators envision connections from vehicles to other vehicles, to road infrastructure, to merchants, and to the manufacturer’s data center. At the same time, this complex web of connections has to be managed to ensure that only authorized connections are made, and only authorized data is exchanged.
Cloud to Third Parties: A whole range of third parties, including dealers, insurance companies, finance companies, fleet managers, municipalities, toll operators, and many others are lining up to use connected car data to provide enhanced services. This puts data in the hands of a huge number of entities, and the OEM-designed system must ensure that all are obtaining proper consent and that only authorized data is being exchanged for authorized purposes.
Owner Data Management: Finally, vehicle owners expect to have a degree of control over the data produced by their vehicle. These expectations are increasingly becoming regulatory requirements. OEM systems must therefore provide owners visibility and control over their data’s collection and usage.
Some OEMs are beginning to explore pieces to put in in place to enable innovation and ensure security. Several start-ups have emerged with cybersecurity solutions for both on-vehicle and vehicle-to-cloud security and data management. Data aggregation startups have also emerged not only to create a market for OEM consumer data, but also to implement required security and consent management. There are also well-established entities in industries like Finance, Insurance, and Data Management that have established methods for ensuring data security, but much more needs to be done to take full advantage of the myriad of opportunities for connected car data and commands.
motormindz’ Connected Car practice regularly helps our OEM, Suppliers, and technology innovator clients solve challenges inherent in building and operating secure connected car ecosystems. Our Connected Car veterans have decades of real-world experience in building highly recognized and successful systems for many of the major OEMs. We can help you build a system that enables disruptive innovation through secure Connected Car technologies – that also ensures responsible management of your customer’s data. Reach out and get connected with us – and we’ll help you “get” Connected.
by Greg Ross, Connected Vehicles Practice Lead, motormindz
Four Ways Dealers can drive their business forward with Connected Car
This article is the first in a four-part series exploring how Automotive Dealers can enhance their businesses and their customers’ experiences to drive revenue and loyalty.
It has never been easy to be a successful Auto Dealer. Dealerships are complex, evolving businesses, with large capital requirements, lots of regulations, a large number of employees to manage, and many other concerns from supply chain to customer experiences. But increasingly, dealers are faced with even more challenges from new and disruptive technologies like digital retailing, electrification, mobility services, and — somewhere on the horizon — autonomous vehicles. In addition to all these disruptors, dealers also need to be aware and prepared for the coming impact of vehicle connectivity, and how it will affect each and every component of their business — and their dealership’s top and bottom lines.
The Basics
In 2021, well over 80% of all new vehicles sold in the US will come with the ability to connect to the internet through a built-in cellular modem. That percentage is rapidly growing toward 100% of all new vehicles sold, according to the announced product plans of all of the major OEM’s. This means that today, almost all new vehicles are able to easily communicate data about both the vehicle itself, as well as its driver, and that many vehicles are also capable of receiving over-the-air commands and software updates directly.
In order to maintain security and to honor customer privacy commitments, these vehicle connections and the data shared over them are all exclusively routed through each OEM’s data centers. Within these data centers, the vehicle and driver data and the vehicle commands are stored and managed by the OEM, according to its data policies and the terms of use. Many OEMs use this vehicle and driver data for internal improvement purposes, such as in-field vehicle performance analysis and over-the-air software updates.
OEMs are also beginning to seek “monetization” opportunities by providing data and command access to 3rd party applications, such as insurance companies, fleet management companies, and data aggregators. Still others are using these new data connections to create their own value-added services, such as GM’s OnStar vehicle assistance and concierge program
So, with all of this OEM activity, where does the Dealer fit in? As it turns out, the dealer is actually essential in both enabling and realizing the potential value from all of this connectivity for both the OEMs and themselves – and so dealers should insist on more OEM support for development of connected car services tailored to enhance, streamline, and benefit dealer operations.
There are dozens of opportunities across all the departments of a dealership. This article will be the first in a series, where we will focus on laying out these opportunities in Sales and F&I (Finance and Insurance). In future follow-ups, we’ll take a closer look at Service, Parts, and even Collision Repair. The common thread will be to begin understanding and planning for the very near future when all of the cars and trucks running through the dealership are fully connected — capable of both sharing data about the vehicle and the driver, and receiving both commands and software updates.
OEMs and dealers will also have to work closely together to activate the opportunities created by connected car technology. They will need to work together to resolve questions of data “ownership” and responsibility, and to resolve policy issues such as warranty repair compensation for over-the-air repairs. Investments will also be needed to integrate connected car data with DMS systems, scheduling systems, on-line shopping and ordering systems, and many others. The goal, however, is worth pursuing because it promises to deliver a much better customer experience and much more efficient dealer operations.
Part I: A Vision for the “Connected Sales Department”
1. Ordering and Inventory
New vehicles become connected from the moment they pass final assembly at the factory. At the first “ignition on,” a data file is uploaded to the manufacturer’s data center, showing that all diagnostic tests have been passed, and showing the state of the battery, fuel, tires, etc. For customer orders, the dealer can use this data to send the customer a “birth announcement,” showing that the ordered vehicle has been built and is on its way. For dealer orders, the dealer gets a report, showing when ordered vehicles have been built. Dealers can then track the location of vehicles as they move through the logistics chain. Dealers get notices as vehicles pass checkpoints along the way, up until vehicles arrive at the dealership. Dealers can use this information to manage expectations with customers and to prepare their lots for arrival of new inventory. If any incoming vehicles report diagnostic trouble codes, such as a low battery or under-inflated tires, these vehicles can be flagged and repaired before going into inventory.
Once vehicles are delivered into dealer inventory, dealers can use an application to check the precise location of any vehicle on the dealer’s lot at any time. The application can also notify the dealer if the vehicle moves, or if it has maintenance needs. Dealers can leave keys in each car without fear of theft, because all vehicles are “locked down” and unable to start without authorization by the dealer. Floorplan inventory audits are greatly simplified and can be completed in minutes. The finance company only needs to remotely check whether financed vehicles are on the appropriate site. These functions can save the dealer time spent tracking vehicles and managing keys. Time is also saved in locating and preparing vehicles for demonstration and sale, and it becomes easier to identify vehicles that have been in inventory too long.
2. Demonstration and Sale
Vehicles are placed in demonstration service based on up-to-date information from on-line shopping by customers in the dealer’s local area. Using this data, commonly searched vehicles are identified from dealer inventory and placed into demo service, equipped with commonly searched accessories. Each demo vehicle has a demonstration app downloaded to the head-unit of the vehicle with the dealer’s logo and a suggested route for a test-drive. The vehicle greets the test-drive customer by name, using information sent to the vehicle by the sales representative. The app is synched to the drive and provides audio comments to highlight key features.
With full connectivity in place on the lot, dealers can have all demonstration vehicles connected and managed through a booking application. The application keeps track of when vehicles are available, when they are out, which space they are parked in, how many miles have been accumulated, and whether any of the vehicles need fuel or maintenance. Location-tracking can even confirm whether a vehicle has been through the car wash prior to the next scheduled drive. If desired (and with proper customer notification and consent), dealers can also monitor whether vehicles are being abused — driving at high speeds, taking corners aggressively, hard braking and acceleration, or even a collision. If the vehicle does not return, it can be tracked and recovered.
With extensive connected and personalization services in place, the dealer may also consider implementing additional sales tools, such as self-managed or after-hours test drives. Customers could book these drives on-line and access the vehicle through a unique authorization code. Dealers could also deliver customized, personalized communications to customers after a test-drive, based on where the customer went, how the vehicle was driven, and which features were used — all data recorded and communicated by the demo vehicle.
In preparation for delivery, the customer is asked about preferences for infotainment settings, HVAC settings, and other personalization features. At delivery, these settings, plus the customer’s home, work, or other important addresses, are pre-loaded into the vehicle via a software update. Alternatively, returning customers can have preferences transferred from their prior vehicle to the new one. At delivery, the vehicle can greet the customer by name, and offer a tour and further demonstration of vehicle features from an app on the vehicle head unit. Customer use (or non-use) of key vehicle features can be reported to the dealer (with customer consent) to let the dealer know about features that might be causing confusion. The dealer can then address these questions in post-delivery customer satisfaction calls, or offer to send a focused tutorial to the customer’s head unit for playback at the customer’s convenience.
3. Delivery and Post-Sale
At Delivery, the dealer ensures that connected systems are activated, and that customer consents have been properly recorded. This is a vital step because, without it, connected services post-sale cannot happen! Critically, customers are encouraged to allow the dealer to be automatically notified whenever the vehicle needs maintenance or service so services can be scheduled at the right time. This can also be an opportunity for the dealer to offer customized, connected service plans, with the vehicle accurately notifying the dealer of issues that need to be addressed. The dealer can use information from the customer’s daily drive to schedule service at the most convenient time. If the customer needs alternative transportation, a loaner can be managed through a connected courtesy transportation application at the dealership. The application ensures that mileage, maintenance and usage of the courtesy vehicle are managed to minimize costs.
4. Finance and Insurance
In the F&I department, customers are given the opportunity to purchase financing and insurance products that automatically adjust to the actual use of the vehicle. In a connected lease, customers can earn incentives or rebates if they use significantly fewer miles than scheduled. Customers can also earn credits for particularly good care and maintenance practices, which increase the value of the lease vehicle upon return. If a customer shows a trend toward excess mileage, he or she might be offered an opportunity to pre-purchase additional miles at a rate which is lower than the “over-miles” rate in the lease contract. These kinds of customized offerings have the potential to increase dealer margins while also improving customer satisfaction.
A connected car can also mitigate costs in the event that a lease or financing contract goes past due. Reminder messages can be easily delivered directly to the vehicle. In the event that the vehicle needs to be recovered, it can be easily located and immobilized.
Customers might be provided an opportunity to “sub-lease” their vehicles to offset their lease costs — along the lines of an airbnb. These kinds of schemes could be more easily enabled by connected technologies, which could allow easy booking and tracking of vehicles by the vehicle owner. A company called Lynk & Co has already described an approach like this as part of their launch in Europe this year. Dealers might see additional revenues from these programs by providing vehicles for these short-term rental services, and by providing pre- and post-rental and maintenance services.
In the area of vehicle insurance, connected technology will allow customer’s rates to be adjusted based on actual miles driven and on demonstrated safe driving behavior. In addition to data that is currently in use by insurance companies, policies might be further adjusted by looking at data such as activation of lane-departure warnings, close-following alerts, or other indicators of higher risk driving. In the event of a collision, data from the car’s sensors will be used to quickly and automatically estimate the damage and begin the claims process. With knowledge of the customized insurance products available on new cars, dealers might take a greater role in sales of connected auto insurance products.
Conclusion
These illustrations are only a quick view of the kinds of things that the Dealer should soon come to expect from Connected Car technology. And we have only touched on Sales and F&I! We will return in future posts to talk about the rich opportunities for Connected Parts and Service.
