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Plugging in to the telematics opportunity

Insurance companies and OEMs are expanding their telematics deployments. How can shops benefit?
Tuesday, September 10, 2013 - 07:01
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The idea of the "connected car" has received significant buzz in the automotive industry, with OEMs and technology vendors touting the benefits of turning a vehicle into a network node that can seamlessly connect drivers' smartphones, iPods, tablets and other devices. In the auto repair space, though, telematics technology (which is intrinsically linked to this connected vehicle functionality) holds the most promise for the industry.

A variety of OEMs, insurers, parts suppliers, fleet services companies and technology startups now offer telematics solutions that can do everything from tracking vehicle location to monitoring driver behavior and accessing diagnostic information, and the availability of these systems continues to expand. According to Frost & Sullivan, OEMs are increasingly making telematics systems a standard feature in vehicles and signing up users for connected service for multiple years at a time, rather than asking for monthly subscription fees. According to ABI Research, the number of telematics users is expected to increase from 72 million to more than 300 million by 2018.

Toyota has one of the most advanced systems, providing a social network of customers, dealers and OEMs to provide service alerts. Hyundai's Bluelink, meanwhile, is free for three years in some vehicles and is tied to roadside assistance and warranty offerings. It also provides in-vehicle service scheduling and an in-vehicle recall advisor.

But apart from the OEMs, insurance companies have been the most aggressive proponents of telematics solutions. Progressive, State Farm, Allstate and others have deployed "usage based insurance" (UBI) products that use telematics hardware to monitor driver behavior and reward "good" drivers with lower premiums. Aftermarket telematics solutions are also emerging, and may present an opportunity for non-dealer repair shops to take advantage of these systems.

Theoretically, a telematics device with access to diagnostic codes and vehicle data (like miles driven) could send alerts to a driver's smartphone indicating that it was time for an oil change or provide trouble code details when the check engine light comes on. If the driver has established a relationship with a repair shop, that information could also be sent to the repairer to prompt a callback, schedule an appointment or even initiate a parts order. Using location-based data, these systems could also point drivers to the location of the nearest repair shop or tow truck service in the event of an accident.

"By taking this data and sharing it with drivers in a more valuable form, they will reward you with more loyalty," says Blair Currie, vice president of marketing at Intelligent Mechatronic Systems (IMS), which offers a telematics solution that combines an OBD-II device and smartphone connectivity.

How all of this would work, however, is still unclear. "What is the business model?" says Chris Slesak, director of telematics at Delphi Automotive. "For fleet management and UBI, it's well known. For the independent aftermarket, it's not known right now."

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