Number of plug-in telematics solutions increasing, but access to OEM data remains the Holy Grail

Remote diagnostics via telematics systems remains a hot topic in the aftermarket, with more third-party solution providers emerging and more OEMs offering enhanced "connected vehicle" services to their customers.

Where aftermarket telematics are concerned, the industry still wants OEMs to give up some of the advantage created by embedded solutions that tie drivers directly back to the dealership for service.

"Our association's main goal is to open up that OEM access," says Aaron Lowe, senior vice president for regulatory and government affairs at the Auto Care Association. "Similar to our efforts on the Right to Repair Act, we are trying to move the manufacturers to pen up access so everyone has the same ability to use the information being transmitted from those vehicles."

Exactly how to take full advantage of that data, however, is something that even the automakers have yet to completely get their arms around.

"The OEs have us locked out, but industry organizations are working together to clear that up and get the aftermarket on the table," says Jim Dykstra, founder and president of Aftermarket Telematics Technologies (ATT). "But the reality is, even if GM and the others said they were going to share that data, what then? How will we interact with that data, and the data coming from the plug-and-play devices? How do you route that data to the shops and bring value to it?"

According to Greg Potter, executive manager of the Equipment and Tool Institute, commercial applications have been the primary hot spots for telematics so far. "I would say the largest focus so far has been in the fleet tracking and maintenance field where fleet managers see the value and have been willing to pay for these services," Potter says. "As with the somewhat slow take-up with On-Star, many individual customers have been reluctant to pay for the services being offered to this point."

ABI Research says commercial telematics systems will be installed in more than 73 million vehicles by 2020. Revenue will grow from $20.02 billion in 2015 to $47.58 billion by 2020, a CAGR of 18.9 percent.

Frost & Sullivan expects just the OBD-II-based telematics market to hit $1 billion by 2020, while research firm Berg Insight estimates that nearly 12 percent of all cars sold worldwide in 2013 were equipped with an OEM embedded telematics system. The embedded market is expected to reach 54.5 million units in 2020.

OEMs and other companies continue to expand their telematics offerings. Lexus, for example, announced a new service through its Enform platform that automatically alerts drivers about impending maintenance issues. It will be available on 2016 models. Dealers can access vehicle history by typing a VIN into the Lexus Service Connect system.

In the aftermarket, Verizon Telematics introduced hum, which provides diagnostic information, roadside assistance features, stolen vehicle and parking location features, and live consultations with ASE-certified mechanics and emergency personnel via a smartphone app.

The consumer telematics market is almost entirely driven by usage-based insurance (UBI) applications at this point, according to Frost & Sullivan. For parts distributors and service providers, OBD-II solutions can provide a platform to build maintenance and repair networks to compete against franchised dealers

Aftermarket-based telematics solutions are now available from a wide variety of companies, although getting repairers connected to that data is still a nascent area. There is potential there, however, to use remote connectivity to enhance customer loyalty.

"The repair industry has always been plagued with trust issues," says Mike Simmons, head of business development at connected car solution provider Automatic Labs. "If the data is coming directly from the car, drivers have that additional layer of certainty about what the problem is, and it creates a whole new level of trust between the service provider and customer."

Remote access via OEM systems is the future of aftermarket telematics. The Aftermarket Telematics Task Force (which includes a variety of industry associations and other stakeholders) is working with SAE and ISO to create open standards for telematics technology. "Because of Right to Repair, we have the manufacturers' attention," Lowe says. "The big question will be whether they move that way voluntarily or if it will require legislation."

"Working out a viable solution for remote standardized access to vehicle information via a secure gateway will be mandatory for the aftermarket service providers to be able to compete on a level field and offer vehicle owners expanded choices for their car care needs," Potter says.

Using telematics data

The plug-in telematics solutions now available, when they provide connectivity back to repair shops, can potentially generate new revenue for shops, reduce costs, and streamline the parts ordering process. "You have the right part for the right vehicle when you need it," says Behzad Rassuli, vice president of market intelligence at the Auto Care Association. "Additionally, companies are seeing improvements in customer relationships and satisfaction by communicating more accurately and more immediately."


Because the aftermarket can't control what devices go into the vehicles, the business model has to build on relationships between hardware providers, software providers, fleet telematics companies and repairers. "There's no reason that the aftermarket can't work with the fleet and retail providers," Dykstra says. "That takes time, and there has to be device penetration for it to make major strides."

The key challenge is routing the data securely to the right companies that can bring value to end users. Dykstra's company, ATT, is working with Delphi and other companies to route telematics data to shops. "It's not cost effective to go to each installer," Dykstra says. "We have a Web portal they can go into and access the data. They don't see any personal driver information. Then they can contact the customer. If there's a service issue, the shop is notified."

For these types of systems to work, a subscription model that doesn't require the repair shops to invest in hardware and software is the most cost effective way to get onboard. An alert-based system also saves shops the hassle of having a dedicated staff member monitoring the customer base.

Telematics/diagnostics is just one part of the OBD-II-based connected vehicle solution market, which provides other type of features like smartphone integration, connections to Pandora and other online music services, navigation, fuel card reporting, and infotainment applications. At Automatic Labs, the company has launched an API as well as an app store environment to expand the application suite.

"We've spent the last year building out the app ecosystem, the API platform, and taking the pain away around security and connectivity so our users can focus on the software experience," Simmons says. Those developers include a number of aftermarket repair and diagnostic applications.

For the aftermarket, one of the biggest challenges will be keeping up with the technology. "Providing that education and enabling aftermarket companies to create those strategic business plans is critical," says
Taylor Mitchell, senior director, technology standards and solutions. "There also needs to be education on the customer side to raise their awareness of that data and what it means to have access, along with aftermarket alternatives to the OEM-centric offerings."

Plug-in market may go away

But growth in plug-in solutions is expected to erode as more cars have embedded telematics as a standard option. That's why the Auto Care Association and other industry groups are focusing on gaining access to OEM telematics data.

Plug-in solutions will remain viable for many years; however, especially as the average vehicle age continues to stretch out past 12 years. "If you do the math, it takes a long time for anything to get built into the vehicles and then penetrate the market," Simmons says. "We have 300 million or so cars on the road with the kind of OBD-II connectivity you can create these experiences with. It will be decades before that built-in connectivity is ubiquitous. The technology turns at a faster pace than the automotive development cycle."

Consumer uptake on OEM systems after the free trial period is over has never been very good. In response, though, automakers have simply extended the free period because they see the data as such a valuable asset. "I think manufacturers are learning just how much data they can mine from these systems," Lowe says. "Using telematics to benefit the business is critical. Even if the aftermarket gets access to the data, if we aren't able to compete with the OEs in the way we use that data, we'll still be at a competitive disadvantage."

According to Potter, how the embedded market affects the plug-in market will depend on how good and expensive the OEM solutions are, whether the OEMs provide aftermarket access to their solutions, and whether automakers restrict access through the OBD-II port.

"My predictions are that the OEM’s in time will figure out what the vehicle owners want and are willing to pay for and have some good offerings," Potter says. "I also feel that many OEM’s will offer limited access to their factory installed hardware and the aftermarket will respond with some good offerings as well. The last question is the big one. I feel that the OEM’s will aggressively move to limit current access that the aftermarket has through the diagnostic connector in an effort to prevent hacking and what they consider unauthorized access to their in vehicle networks."

The Auto Care Association agrees that plug-in systems will eventually go away, and expects OEMs to lock up access to the OBD-II ports to protect security and block potential competitors.

That's why they are laser-focused on accessing OEM solutions. "It's similar to Right to Repair," Dykstra says. "We need the industry to really push and make their voices heard. If the OEs keep this to themselves, that is a market advantage the aftermarket does not have."

"Access to the OEM factory installed telematics systems is key," Potter adds. "As I mentioned previously the dongle is doomed, so for the aftermarket to survive in this arena remote access to the vehicle is essential."

Ultimately it may be consumer pressure that brings the OEMs around, as drivers demand the ability to use third-party applications, smart home systems, and other solutions via the vehicle communication platform.

"Consumers want control over their vehicle, what types of services and apps they use, and who does the repairs," Lowe says. "The ability to provide access outside of the OEM is going to be huge. The manufacturers are not going to be able to do everything that motorists want to do with that connectivity."

The trick will be convincing the OEMs that what they lose in competitive advantage in diagnostics, they will more than make up for in the gains they seem from giving customers the ability to do more with the telematics system. Consumers, likewise, have to better understand the value of opening up access to the diagnostic data.

"We have to focus on open and equal access to the diagnostic information," Rassuli says. "This often gets blurred with other technology conversations about future capabilities like autonomous driving, but it has to be a distinct conversation. Telematics is a present issue, and it is paramount for our industry."

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