In business, planning for the future is always important, but for the automotive aftermarket, with so many new challenges ahead, it has never been so crucial. Just doing what you did yesterday is no guarantee that your business will be a success tomorrow. Neil Pattemore explains.
If software is the new oil of the vehicle service and maintenance business, then data is the new currency of tomorrow’s aftermarket business models. The automotive sector is an integral part of the ‘fourth revolution’ that will not only change mobility models, but also the current aftermarket value chain of the way that vehicles are diagnosed, serviced and maintained, together with a new range of ‘services around the vehicle’.
There are a number of key challenges developing over the next few years that will not only change the way that you work on vehicles, but also your fundamental business model.
You will be very familiar with the increasingly sophisticated vehicle technology as more and more software-related functions are implemented by the vehicle manufacturers, but this creates a range of challenges when repairing the vehicle. In the past, it was entirely possible to work on ‘anything that came through the door’, but this is less and less feasible.
The risk of not having the competence and the right equipment needed to work on any vehicle is high and increasingly expensive, leading to the risk of not being able to complete the job without making a mistake, or simply within a timescale which is chargeable to the customer – either way you will not make money. This is likely to force increasing levels of specialisation.
However, this increasing level of vehicle technology has also brought greater levels of ‘pass through programming’, where the vehicle is directly connected to the vehicle manufacturer’s website, and new software for re-programming, coding or updating is directly uploaded into the vehicle, allowing replacement components to be coded and activated, or even new ECUs to be programmed without having to take the vehicle to a main dealer. Of course, this comes with an associated cost of both the equipment (standardised vehicle communication interface – VCI) and the cost of accessing the vehicle manufacturer’s software. This may get even more expensive if vehicle manufacturers get their way and only provide chargeable access for pre-verified test equipment via the 16 pin connector or via their websites on a pay-by-use basis.
Vehicle sophistication now includes ‘Driver aids’, or more correctly ‘advanced driver assistance systems’ (ADAS) such as active braking, lane departure warning, driver alert systems and many more. All of these systems are designed to reduce accidents, but with this reduction, there is a direct reduction in the associated crash repair work. The latest version of these driver aids now means that cars can park themselves and even drive themselves, with Volvo claiming that no one will die in one of its cars by 2020.
This is quite possibly achievable if you include the ‘Intelligent Transport System’ (ITS) deployment where cars communicate with each other and with the infrastructure around them to reduce congestion and actively avoid accidents. This is the new world of automated cars – not to be confused with the new world of autonomous cars – where the car is designed to operate without any driver input at all. However, the requirement to calibrate the ADAS camera(s) and sensors creates a new opportunity for the workshop.
Autonomous cars lead into a whole new scenario of car ownership and social expectations. Young people do not see car ownership as an aspirational desire. Car renting is becoming much more attractive than outright purchase – cars are seen only as a mode of transport. Therefore, the owner may be the vehicle manufacturer (or their finance company) and the service and repair work is often included in the price of the contract, so they decide where it is serviced and maintained.
Another threat that will keep more vehicles in main dealers’ workshops is telematics. This remote access to the vehicle and its data is already installed in many new cars, but will become mandatory under the eCall Regulation from May 2018 for all new vehicle types. The telematics system allows vehicle manufacturers (not their dealers) to access in- vehicle data for diagnostics, predictive maintenance and many other services, as well as allowing them to communicate directly with the driver to offer service or repair, meaning that you may never even see the vehicle in your workshop. However, if the European Aftermarket Associations succeed in their lobbying of legislators to provide remote access to vehicles for aftermarket companies, then prognostics and predictive maintenance will become a reality to develop new methods and business models for the aftermarket sector.
Remote access to the vehicle and its data will also allow a new business model of data trading in ‘eco systems’. This can be related to ‘added value services’ to your service and repair activities, such as remote fault monitoring or arranging a hire car when the vehicle is being serviced, but can also be as diverse as the nearest parking space or the nearest restaurant. The possibilities are almost endless and the vehicle manufacturers already see it as the future of their ‘mobility services’ offer. The aftermarket must develop similar services to remain competitive.
Further ahead, the prospect of repairs being conducted by robots is already being discussed, especially for fully autonomous vehicles, so as I have said before, the independent aftermarket will contract, but the remaining garages will be better trained and equipped (and perhaps ‘licensed’) and will compete more directly with not just main dealers, but the vehicle manufacturers themselves.
The European Commission is currently looking into the future of the automotive industry in its ‘Gear 2030’ program where representatives of a wide range of industry stakeholders are involved, not only to understand how the vehicle manufacturers can be competitive in a world market, but also how the European Aftermarket can continue to survive and thrive. This is not going to be a simple discussion!
