Friday, June 27, 2014

Make ‘em, Sell ‘em, and Fix ‘em

Last week, at the 2014 Telematics Detroit conference, I witnessed leading experts, OEMs, and vendors discuss the future of vehicle telematics. It was an impressive conference, but I left with the feeling that we’re missing the point. As an industry, our number one priority is to produce quality products that bring joy to our customers, our dealers, and to us - the OEMs. Soichiro Honda famously referred to this as “The Three Joys”. Telematics should enable "The Three Joys"; however, buzzwords such as the “Internet of Things” (IoT) and the “Mobile Revolution” have led the industry to focus telematics efforts on in-vehicle infotainment and supporting the customer’s digital lifestyle. Are these truly the most impactful customer delighters?

Ahh. Heck, what does Honda know anyway?

Maybe a lot.

The consumer electronics industry – not the automobile industry – has already cracked this nut. Ultimately, our in-car “connected” experience is going to be dictated by the same technology that powers our mobile devices. Philip M. Abram, Chief Infotainment Officer at GM, sums it up this way: “It’s inevitable, I believe, that people will want their digital lives brought into the car. Right now, that’s being defined by smartphones. As automakers, we have to accommodate that.”

In fact, a recent survey from Gartner found that 58% of vehicle owners agreed that “automakers should just let companies like Apple, Google, or Samsung design and manage their in-vehicle technology offerings instead of developing their own systems.” Of course, this must be a collaborative effort between the auto industry and the consumer electronics giants. So, what’s the best way to employ telematics and the connection it provides to achieve Soichiro’s “Three Joys”?

Let’s take a step back for a moment. At the simplest level, what does our industry do? We build cars. We sell cars. We fix cars. So, rather than designing the next car to function like a Samsung Galaxy S5 phone, maybe we should concentrate on using telematics to help us … build better cars, sell more cars, and fix cars more effectively.

Building Better Cars – The vehicles we manufacture are impressive engineering statements; they are reliable and robust. This is the result of years of R&D followed by intensive testing and data collection. Unfortunately, unexpected failures occur when the product enters the real world, due to driver error, poor maintenance and, yes, even design mishaps. However, a telematics data connection could turn every unit in operation into a live, real-world test rig to log and record data. In fact, the vehicle’s ECU already monitors numerous onboard vehicle sensors.

Imagine if data from vehicles in the U.S. were logged and pushed to the cloud regularly. Engineers could monitor real fuel efficiency, stress cycles, usage behavior, and failure rates as opposed to those predicted in a test environment. Further, the sample size would be enormous, due to large owner populations.

Selling More Cars – One can argue that infotainment and full connectivity will sell more cars. That may be true in the short term; however, people are already accustomed to such features in their day-to-day lives. We have Nest, LIFX, and even Egg Minder (a smart egg carton that lets you know how many eggs you have and how old each one is). Our smartphones fill all of our “digital lifestyle” needs with applications that are intuitive and backed by millions of dollars of development. In the future, this will not be a differentiator, especially as consumer electronics companies get more involved. What does matter most to a customer for a new car purchase? According to the NADA 2013 Survey, it’s Quality, Dependability, and Fuel Economy. In other words, building better cars will sell more cars.

Fix Cars More Effectively – Service departments generate the majority of profits for dealers, so how can we use telematics to fix cars more effectively? The answer is both simple and sophisticated. Instead of infotainment, telematics should be employed to send a massive amount of vehicle data to the cloud. OEMs already have access to repair order data across their dealer networks. Marrying these two data sets would create a very effective predictive analytics tool.

Just think: Op codes and repair order data could be mapped to driver usage and sensor readings. The OEM could use that data to identify trends that precede, say, an O2 sensor failure or the need for a brake job. When a vehicle is scheduled for service, the tech/dealership could check the database and learn that the vehicle has an 82% chance of an O2 failure, based on the historical trends for that model. This also ties into selling more cars. The 2014 Consumer Sentiment Survey indicates that customers who are “Very Satisfied” with their service experience are 21% more likely to repurchase a vehicle from that brand than customers who are just “Satisfied”.

The bandwidth requirements for such data flows are minimal and could easily be offered for free by an OEM (whereas multimedia, such as Pandora, requires significantly more bandwidth). The major hurdle will be enabling such data flows on a large number of vehicles. The path of least resistance is to place telematics systems in new vehicles. For existing vehicles, dealers could deploy Sim Card- enabled tools that fit into the existing OBD-II port.

Bottom Line: As an industry, we’ve become infatuated with the “Mobile Revolution” and the “Internet of Things”. We have taken a myopic view of telematics’ capabilities, focusing on how to entertain the customer. Instead, we should target our efforts at what really drives our customers’ purchasing behavior – high quality cars and high quality service. Our industry needs to stick to what it does best, and not try to design apps that predict our music preferences or suggest new blogs to read.

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