Telematics and dealerships: How to connect dealers to connected cars

There is still low hanging fruit in the auto telematics industry, experts say, and some of it may be dangling in front of car dealerships. There are few, if any, technical barriers, to linking connected cars to dealerships but business models and value chains are not quite in place yet, making this an interesting inflection point with plenty of room for innovation.

“Most of the value to the dealer and their margin is that after-purchase servicing,” says Mary Cronin, professor of information systems in the Carroll School of Management at Boston College and author of Smart Products, Smarter Services: Strategies for Embedded Control. “They often lose customers because they don’t have good incentives at the point of need.”

Drivers have the option of going to a local service station when the inspection sticker is expiring or the car needs an oil change, for example. If a dealer could push a reminder to the customer right before servicing is due—along with an incentive such as a coupon or an enhanced service—drivers would be much more likely to pull into the dealer’s service bay, Cronin argues.

The telematics opportunity

There already are several companies providing ‘instant repo’ services that let dealers immobilize cars, motorcycles, and other vehicles when the buyer gets behind on payments, even if these are not being exploited fully by dealers. Pay Technologies offers a GPS and Starter Interrupt device marketed to dealers for use in the case of customers whose credit ratings cause concern. The system is also a model for an enhanced dealer communications network, according to Jim Krueger, president of the company, since Pay Technologies’ system also coordinates with finance companies. “If they were buying the paperwork from a car dealer, the dealer can transfer the paperwork in a matter of seconds on the control itself,” Krueger says. “An information package is sent to the finance company, and they can accept or deny it.”

Dealers using the system already have the ability to send customized emails to their customers as well as to set up automatic messages. “People initially were not big users, but they’re beginning to use it,” Krueger observes. He adds that a service that will let dealers automatically ping customers when their vehicles are due for a checkup is definitely in the cards, and he thinks the sharper dealers will capitalize on it.

More than just an oil change

Steve Pazol, president of nPhase, says his company began discussing these opportunities with dealers and auto manufacturers years ago. NPhase is a joint venture between Qualcomm and Verizon that provides a single interface to connect any device to any back-office application, infrastructure, or field service operation.

Today’s connected cars with their colored touch screens, Bluetooth connections to smartphones, embedded modems, and networked diagnostics provide even more opportunities. “If I have the person’s cell number, I can text them: ‘Here’s a coupon, here’s the nearest station,’” Pazol says. “You could push a map or a graphic or have something that pops up and says, ‘Click here to schedule service at the dealership.’ It’s a way to continue to drive the relationship between the dealer and the customer.”

Cronin foresees the possibility of selling ads and sponsorships, either to dealers or on their behalf. (For more on telematics and ads, see ‘Can telematics make ads profitable in cars? ’.) “Think about the money and effort being spent to sell consumers things through home platforms, embedded advertising in games and smartphones, or interactive TV,” she says. “The car is such a universal and appropriate platform, and it provides a captive audience where different types of services could be sold.”

Susan Kuchinskas is a regular contributor to TU.

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