As more people muse about connected and autonomous vehicles, what impact could it have on your facilities?
By the early 2020s, OEMs could earn as much on connected vehicle data as they do on new car sales.
Also, by the early 2020s, the connected vehicles that provide all that data could reduce top line revenue from service bays by as much as 90%, make many more households become one vehicle households and accelerate the trend of carless living.
If the above paragraph has you considering turning your facility in a micro-brewery, I would ask you to read on.
First we need to define what I’m talking about here. Connected cars are not necessarily autonomous ones. An autonomous vehicle can function without an operator.
A connected car is a vehicle that collects data as it operates and transmits that data to servers. This can be accomplished over the air over mobile networks or with intermittent syncing. In addition, connected vehicles can receive data from servers and other vehicles as well.
It is clear that connected vehicles are going to change the business. And most of these predictions focus on the Tesla model as the prototype. It’s fairly simple to see how the OEMs are going to profit. Many are pessimistic about the traditional facilities prospects in light of this.
I’m an optimist. Dealer facilities have appeared threatened for at least 20 years. And yet, they are more valuable than ever. I believe your next facility will have more racks of servers than service bays — and it will play an exponentially longer, larger role throughout vehicle life cycle, and at all phases of the customer journey.
Here’s a quick list of possibilities for dealerships in the connected vehicle age:
1. The last six feet:
A connected vehicle operating normally for an hour might produce 4,000 times as much data as the average mobile user consumes today. Vehicles will need to store much of that data until it can be synced through a reliable wired connection. Your facility already does this with OBD. Prepare to do it more, and more often.
2. Extending the warranty window:
OEMs and dealers will need to work together to keep off-warranty vehicles in the network. By allowing over the air updates of software and real time monitoring of mechanicals, keeping owners in the dealership repair pool long after their warranty has expired will not only be a best case scenario, it will be expected.
3. The dealership as auto library:
Dealers hold in their hands a great deal of customer data that will allow them to work with OEMs to use lifestyle milestones to market with and communicate to drivers. Working within the consumer information regulatory context, they may be able to anticipate needs and deliver on them — whether that means for the next purchase or as part of a subscription service. Local knowledge, syncing with individuals calendars and understanding the ebb and flow of community events are simple things dealers can do right now to better serve their customers in this way.
4. Light commercial vehicles are key:
OEMs have already done the math on this segment. With almost 20 million units a year in sales worldwide, these vehicles have scale. Also, they are not well-suited to subscription models as they often carry specialized equipment and branding. And as more and more businesses concentrate on a mobile business model, more and more LCVs are going to be hitting the road. In short, businesses built on LCVs need dealerships to stay in business. Whether it means traditional sales and service or more customization and specialized equipment focus, LCVs
are a segment to watch.
5. OEM incentives and rewriting the rules:
Dealer incentives have worked well in the areas of traditional sales and financing incentives. With connected vehicles, dealership organizations may have access to OEM connectivity programs.
Preparing for and adapting to connected vehicle technology will be an integral part of the operator’s continuous presence in the value chain.
