What Is Telematics? How Will It Affect My Business?

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What Is Telematics? How Will It Affect My Business?

Posted 8/1/2008

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Is it a dark cloud over the industry or a light leading to new business?

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Editor's Note: Portions of this article are taken from the Automotive Service Association's report, "Telematics: Past, Present and Future," and a press release announcing the publication of the report.

In May, the Automotive Service Association released a 20-page report on the potential effects that telematics may have on automotive service and repair businesses, including remote diagnostics.

What is telematics? Despite the popularity of the topic in various trade publications and the industry in general, there are many automotive service and collision repair professionals who may not be familiar with the term "telematics" and what it is.

To understand the term, it's important to understand its close tie to global positioning systems. GPS technology enables computers and receivers to determine the latitude and longitude of a receiver on Earth by calculating the time difference for signals from different satellites to reach the receiver. A GPS receiver calculates its position by measuring the distance between itself and three or more GPS satellites.
There are several different definitions of telematics but a simple one is telematics is the transmission of useful information to and from a vehicle.

Telematics defined -

The term telematics is used in a number of ways:

• The integrated use of telecommunications and informatics, also known as Information and Communications Technology (ICT). More specifically, it is the science of sending, receiving and storing information via telecommunication devices.

• More commonly, telematics has been applied specifically to the use of Global Positioning System technology integrated with computers and mobile communications technology in automotive navigation systems.

• Most narrowly, the term has evolved to refer to the use of such systems within road vehicles, in which case the term vehicle telematics may be used.

– From Wikipedia, the free encyclopedia

"Telematics is not a new technology but it has gained momentum in the past few years. It could become the new challenge for independents," said Robbie Addison, manager of ASA's Mechanical Division. The Mechanical Division spent almost two years researching telematics and its potential impact on ASA member shops so they could be better prepared.

Addison adds, "The one item that seems to be of most concern to ASA members is remote diagnostics, which allows a vehicle's built-in systems to identify a mechanical or electrical problem and make the information known to the vehicle manufacturers. This provides an opportunity to direct the customer back to the dealership for service."

The Mechanical Division Operations Committee created the telematics report with the ASA member in mind. There may be fears or misinformation associated with telematics as some believe it may take business away from independent shops.

Here's an important point. At the same time the manufacturer is notified, the vehicle owner receives a communication either by e-mail, voice or text message regarding the problem or service.

"For example, the customer may bring communication from the manufacturer showing the results of a routine system check," said Addison. "This would be a good thing. Use this information with your own diagnostics to determine the right repair for your customer's vehicle."

It is important to begin now to educate your customers and consumers in general that independents can service their vehicles and encourage them to bring any communications they receive from the manufacturer to your attention.

Inside a Telematics System

How does a telematics system work?

Hardware suppliers provide the devices that send and receive wireless signals. The in-car hardware usually consists of the infamous "black box" module mounted behind the dashboard that integrates a phone, GPS receiver, digital signal processor and microphone for voice recognition. It also taps into the vehicle's electronic bus to gather diagnostic information from sensors.

Another key piece is the back-end server, which operates like those used to power the Internet. It handles all the applications that require lots of power (for example, analyzing engine diagnostic data) so the on-board modules can be simpler and less expensive. Because back-end servers don't have to meet the same temperature and vibration testing required for on-board automotive electronics, servers can stay on the leading edge of processor speed.

Software suppliers would provide the infrastructure and/or specialized applications. Applications are developed by companies ranging from module suppliers to component suppliers to smaller software companies that specialize in a particular telematics function.

The operating system is the basic piece of software infrastructure for automotive telematics and requires stability. Developers recently have been adding functions such as Bluetooth and voice recognition to reduce the customer application that makers have to undertake. On the server side, infrastructure software is needed to make the secure "handshake" connection between the car and the back end.

– Excerpted from "Telematics: Past, Present and Future"

Industry experts see a definite need and place for the aftermarket in the telematics segments, especially as hardware and services become more cost-effective and new products demand quicker product development cycles, something the original equipment manufacturers (OEMs) often can't accommodate.

So, it appears that telematics will have an impact on the independent automotive service and repair industry. However, it's difficult to predict how large an impact. Currently, enough data exists to support the fact that the dealerships will not be able to service every vehicle on the road. But, reality is that OEMs will continue to produce vehicles with telematics capabilities.

The popularity of telematics will continue to depend on the consumer. The OEMs will have to find the right fit at the right price to increase the demand. To ensure that an OEM gets a return on its investment, it appears that telematics must become standard equipment on all vehicles.

Independent repairers have faced many challenges over the years and have survived. Telematics is another hurdle that the independent repairer will have to address. Just like computers, cell phones and the Internet - which were once new technologies - telematics will also become integrated into our daily lives. It is necessary for the independent automotive service and repair sector to explore and be open to ways on how telematics can benefit their businesses.

Stay Positive About the Telematics Challenge

Despite the challenge that remote diagnostics may present to ASA shops, independent repairers must think outside the box and beyond the usual way of doing business when dealing with telematics issues, advises Robbie Addison, manager of ASA's Mechanical Division. It's a new world, which requires a dynamic way of thinking with new solutions. Keep these positives in mind as they relate to how telematics technology is going to affect independent shops:

• The vast majority of vehicle owners do not return to the dealerships after the warranty period, leaving a great opportunity for independents to gain their business.

• Technological advances are not a guarantee of customer loyalty. Customers demand good customer service - if a shop can do this one thing well, they will win a loyal customer. ASA members, especially, are the "cream of the crop" and one of their areas of distinction is that they offer great customer service.

• Many consumers like their privacy and don't like to be told what to do and where to go when it comes to repairing their vehicles. The Automotive Service Association will continue to work on behalf of its members to ensure a level playing field exists and that consumers keep their right to choose where to have their vehicles repaired.

Some independent repairers may fear telematics and envision it as a dark cloud over the industry. Others will see it as a light leading to new business opportunities. Every problem has a solution. Various solutions need to be explored that can benefit the independent automotive service and repair professional. Facing the challenge, accepting it and educating yourself and your customers about telematics can move the industry forward.

To download a free copy of the complete, 20-page telematics report, please visit www.ASAshop.org, click on "ASA News" and then select "More ASA Resources."

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