2013 AASA Telematics ‘Hot Topic’ Survey June 2013 1 AASA Telematics ‘Hot Topic’ Survey Results June 2013

2013 AASA Telematics ‘Hot Topic’ SurveyJune 2013

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AASA Telematics ‘Hot Topic’ Survey Results

June 2013

2013 AASA Telematics ‘Hot Topic’ Survey

Contents

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Page Number

Executive Summary 3

Detailed Results 5

Appendix A: Full Results to Selected Questions

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Appendix B: Methodology and Contact Information

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Executive Summary

3


Executive Summary

4

Key Takeaways

• Majority (61%) feel that telematics will have a positive impact on their aftermarket business

• Many respondents believe that telematics will have tremendous appeal to the end consumer or the technology evolved

• Respondents indicated that product categories most likely to be impacted by telematics were “Exhaust & Emissions Control” and “Diagnostics Equipment; many categories had a surprising high rating for impact

• However, respondents expect telematics to result in the loss of ~3 points in market share for the independent aftermarket

• Despite decrease in IAM Share, respondents remain optimistic regarding telematics because of its potential to decrease deferred maintenance

• Most agree “embracing telematics” is the only way forward; however, there is some uncertainty on what that means for suppliers and what actions suppliers need to take


Detailed Results

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Majority (61%) feel that telematics will have a positive impact on their aftermarket business

However, over one quarter of respondents indicate a potential negative impact

6n = 56


Many respondents think telematics will create “meaningful dialogue” and that those who best connect with customers will ultimately “win”That dialogue is between technicians and consumers, but also creates opportunities for new

communication between suppliers and technicians and even suppliers and consumers

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Over the next 5 - 10 years, how do you think increased telematics will REALLY affect the way consumers repair or maintain their vehicles

and/or consumers' relationships with professional technicians?

“Shops have to change their business models to become more service oriented and offer quick diagnostic capabilities -- like an InfoMobility fast lane where

consumers can bring their car in and have the shops immediately diagnose and troubleshoot problems, then

schedule repairs. Shops need to think of future vehicles like cell phones -- where consumers take their phones in for repairs and upgrades. Those

shops who best respond to consumer habits such as this will win in the end.”

“I think technology will eat into deferred maintenance providing tailwinds that will enable the aftermarket as a whole to rise. I do believe however that there

will be a more pronounced shift to more technologically sophisticated professional installers. What this means is that the strong will get stronger and larger, whether dealer or independent, and take share

from the little guys.”

“Better relationships and potentially increase in DIY activity”

“Telematics will have a significant impact on the relationship. Through maintenance reminders and "push

alerts" for repairs, a meaningful dialog between the installers and consumers is enabled and encouraged.”

“I personally rely on my professional installer to consult me which this will save me time from calling back and forth. He can proactively contact me with suggested

service and timing.”

For full results, see Appendix


Other respondents fear that dealerships might win over more consumersTelematics could potentially allow dealerships to be with a consumer from “cradle to grave”,

watching over their car until they are ready to upgrade

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“Consumers will not have a choice but be forced to go to dealerships due to higher technology.”

“If telematics drives the consumer back to the dealer to have the repairs done, or more importantly, the

independent technician is blocked out of having the necessary information to diagnose and repair the vehicles, this will be a huge turning point for

the independent aftermarket.”

“If the OEMs give it away free, it might impact an increase in their business by 2-5%”

“It will give dealerships more credibility”

“It will either establish a great relationship between buyer and the dealer, or cause substantial issues due

to annoyance. I am on the fence.”



Many respondents believe that telematics will have tremendous appeal to the end consumer

A few indicated that this relationship either with independent or the dealer could prove to be too “big brother” for consumers

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Appeal to the End Consumer

“Consumers are becoming conditioned to purchase and schedule everything via the web.

They will migrate to what is easiest and most convenient.”

“Consumer will be informed when maintenance will be needed, before a more serious issue

occurs.”

“Customers will see even faster and more accurate diagnosis.”

Too “Big Brother” for End Consumer

“I think most motorists want to maintain their vehicle as little as possible and many don't

want to think that someone is "watching them." If my dentist offered a toothbrush with a camera inside it that enabled his office to see

inside my mouth whenever they wanted, I'd see at as a money grab, an intrusion, and I'd decline. A small percentage of consumers will embrace telematics, seeing it as an opportunity to make

their car last forever and never break down. Ironically, however, this will likely be the same

group with the income that allows them to trade in every few years. Overall, I think telematics will have little affect on overall spending, or

shift of market share between dealership and independent shops.”


Technology will drive how suppliers react to telematicsMost plan to embrace the new trend, adapt their products to these advancements and work

with the technology industry to bring the aftermarket “up to speed” on this evolving trend

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What will your company do differently to address this technology shift and future telematics trends?

Embrace and Adapt to New Technology

“Develop more programs with clients so that they can help their customers (shops) be able to take more

advantage of this technology”

“We will have to adapt to the new technology, which could be disruptive, but might present some opportunities.”

“Our focus will continue in developing telematics solutions that integrate the right information at the right time to

support our business customers requirements and ultimately, the consumer.”

“Like mobile technology, placing your solutions at the intersection of that trend with need.”

“Improve the quality of our application data.”

“Seek to introduce products that will support telematics”


Take Action

“Adapt to the needs and market them to the OEMs.”

“Develop and/or align with aftermarket telematics solutions.”

“Develop products [that] need diagnostics.”

“Invest or acquire technology companies to be able to compete..”

“Provide the tools and telematics services for remote diagnostics.”

“We [have] organized a group around this topic specifically. We are just now starting to determine how

we can play in this market.”


Respondents indicated that product categories most likely to be impacted by telematics were “Exhaust & Emissions Control” and

“Diagnostics Equipment”

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Note: Overall 20 product categories were asked; the bottom 10 are shown on the next slideScale is from 1 to 5 where 1 is “Little effect” and 5 is “Large effect”


Product categories judged least likely to be affected by an increase in telematics were “Performance Chemicals”, “Wipers & Wiper

Components” and “Appearance”

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Note: Overall 20 product categories were asked; the top 10 are shown on the previous slideScale is from 1 to 5 where 1 is “Little effect” and 5 is “Large effect”


However, respondents expect telematics to result in the loss of ~3 points in market share for the independent aftermarket

60% expect declines in share for IAM

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Average Market Share Change:

-2.8%

60%

n = 54


Despite decrease in IAM Share, respondents remain optimistic regarding telematics because of the potential decrease in deferred

maintenance and opportunities to sell to the OES

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Decrease in Deferred Maintenance

“I think technology will eat into deferred maintenance providing tailwinds that will enable the aftermarket as a whole to rise.”

“Consumers will get feedback from their vehicle’s system prompting them to pay closer attention to required maintenance or repairs.”

“…If successful, yes I believe it could drive consumers to have maintenance

performed.”

“Hopefully it will reduce unperformed maintenance…”

“Improve the way consumers maintain their vehicles.”

“Telematics will create more preventative maintenance and customer visits to the repair

facilities.”

Sell to OES

“Adapt the needs and market to the OEMs.”

“Maintain strong OEM position and corresponding OES business…”

“This will not create a significant change in our strategy since we have a focus on OE/OES channel and investment in future technology

development.”

“Try and grow our OES business if dealer demands go up.”


Most agree “embracing telematics” is the only way forwardOnly by accepting the trend can suppliers begin to fully leverage the potential

opportunity that telematics can bring to the aftermarket

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What do you think aftermarket suppliers could or should do to turn the future telematics trend to their advantage?

“Embrace it.”

“A customer-friendly alternative without the constant over-aggressive sell sell

sell put on by the OE dealers.”

“Be supportive of the technology early on. This is coming regardless of what an aftermarket

supplier believes. If you are involved early you can help shape the way the systems are used to

drive repairs and repair locations.”

“Develop diagnostics for their products, be part of telematics

discussion for IAM”

“There are aftermarket solutions being proposed by several companies. Becoming involved with one of

the solutions could help give an advantage to anyone in the distribution stream. Additionally,

understanding and becoming involved in the dialog at events like GAAS and eForum is helpful.”

“Invest in understanding telematics capabilities and adopt product

compatibility strategies”



Appendix A: Full Results to Selected Questions

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Over the next 5 - 10 years, how do you think increased telematics will REALLY affect the way consumers repair or maintain their vehicles and/or consumers' relationships with professional technicians? (1/4)

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“A short term (1-3 years) shift of service work to the VMS dealer in the first 4 years of car life, and a shift back once independent installers create network solutions.”“Absolutely...consumers are becoming conditioned to purchase and schedule everything via the web. They will migrate to what is easiest and most convenient. Key also is the coming generation of drivers and establishing the relationship with them.”“Better relationships and potentially increase in DIY activity”“Consumer will be informed when maintenance will be needed, before a more serious issue occurs.”“Consumers will get feedback from their vehicle's system prompting them to pay closer attention to required maintenance or repairs”“Consumers will have deeper and more detailed access to vehicle information. OEM factory-based infotainment systems with greater telematics integration with smartphones and online channels will strengthen the dealer-consumer relationship. This poses a threat to the independent service/repair aftermarket unless equal access is provided to this channel.”“Consumers will have more information as to what their car will need regarding service and the telematics system (via 4G) will also rate service providers.”

“Consumers will not have a choice but be forced to go to dealerships due to higher technology.”“Consumers will still go to the workshops they trust. Will NOT flock to the dealer due to cost and convenience factors. Will not know if repair is "too complicated" because consumers only know symptoms, not what is required to repair. Still OEM's will regain some share to compensate for share losses in last 4 years.”“Electronic relationship with Aftermarket Repair Shops, Insurers, and Social Media”“For sure! The aftermarket must keep pace or lose share.”“Highly dependent on the aftermarket version or solution to telematics driving scheduled maintenance and repairs. If successful, yes I believe it could drive consumers to have maintenance performed.”“Hopefully it will reduce unperformed maintenance, and if done properly will solidify relationships with service providers.”“HUGE impact - given that vehicle diagnostic reports can be sent directly to the vehicle owner will bring more people in touch with their vehicle needs...”



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“I believe that much depends on the nature of the 'relationship' established using telematics. No one customer wants to be exclusively tied to a service dealer without a high degree of confidence and trust. Telematics has to become an 'empowering technology' for the customer, and an 'enabling technology' for the service shop.”“I don't think the average consumer cares. They just care if their technician can diagnose and repair”“I expect that there will be a shift with new vehicles and the overall effect will build as the connection from telematics reaches critical mass.”“I personally rely on my professional installer to consult me which this will save me time from calling back and forth. He can proactively contact me with suggested service and timing.”

“I think most motorists want to maintain their vehicle as little as possible and many don't want to think that someone is "watching them." If my dentist offered a toothbrush with a camera inside it that enabled his office to see inside my mouth whenever they wanted, I'd see at as a money grab, an intrusion, and I'd decline. A small percentage of consumers will embrace telematics, seeing it as an opportunity to make their car last forever and never break down. Ironically, however, this will likely be the same group with the income that allows them to trade in every few years. Overall, I think telematics will have little affect on overall spending, or shift of market share between dealership and independent shops.”“I think technology will eat into deferred maintenance providing tailwinds that will enable the aftermarket as a whole to rise. I do believe however that there will be a more pronounced shift to more technologically sophisticated professional installers. What this means is that the strong will get stronger and larger, whether dealer or independent, and take share from the little guys.”“I think that the time frame is short enough that there will not be a major impact. I think the impact will come in 15 - 20 years, after widespread deployment of telematics”



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“I think this change is coming but it will take time. The technologies that will significantly impact our are not yet operational. This will happen in the next 5 years after which the impacts will be felt.”“If it links the consumer to a repair facility and the easier it will be for the consumer to go back to the dealer”“If telematics drives the consumer back to the dealer to have the repairs done, or more importantly, the independent technician is blocked out of having the necessary information to diagnose and repair the vehicles, this will be a huge turning point for the independent aftermarket.”“If the IAM can have telematics communicate to their shops, the IAM sales will not be decline and in fact continue to increase share over the dealers and automakers”“If the OEM's give it away free, it might impact an increase in their business by 2-5%”“Improve the way consumers maintain their vehicles. OEM's, distributors and professional installers will have to be very careful to build a relationship with the consumer, not alienate them via messaging.”

“Increased OEM telematics are, in part, designed to make the vehicle owner dependent on the OE dealer for effective repairs of complex performance issues. If the need to repair message comes from the OEM dealer the vehicle owner will transition to a more dependent relationship with the OEM dealer.”“Increased remote diagnostics from dealerships as well as self diagnostics apps syncing smartphones to the vehicle will allow advanced diagnostics and preemptive maintenance”“It will either establish a great relationship between buyer and the dealer, or cause substantial issues due to annoyance. I am on the fence.”“It will give dealerships more credibility”“More going to the dealers”“More timely repair. Price comparisons / offers will be easier”“No Change”“Provided that the IAM dealers/installers get on top of the tools, overall maintenance patterns should improve, to the benefit of the Aftermarket overall. Those who do use telematics aimed at service issues and do it wisely, will further firm up the loyalty of existing customers.”



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“Shops have to change their business models to become more service oriented and offer quick diagnostic capabilities -- like an InfoMobility fast lane where consumers can bring their car in and have the shops immediately diagnose and troubleshoot problems, then schedule repairs. Shops need to think of future vehicles like cell phones -- where consumers take their phones in for repairs and upgrades. Those shops who best respond to consumer habits such as this will win in the end.”“Techs will have to add needed equipment to retain share. Customers will see even faster and more accurate diagnosis. While Dealers will have an edge, independents who invest will do very well!”“Telematics will create more preventative maintenance and customer visits to the repair facilities - Independents & Dealerships”“Telematics will have a significant impact on the relationship. Through maintenance reminders and "push alerts" for repairs, a meaningful dialog between the installers and consumers is enabled and encouraged.”“There is no question that the OEM dealerships will improve their position, driven by the technology connection to the vehicle. This will allow them to better target their marketing to consumers.”

“There should be a closer relationship between customers and preferred service provider, (dealer or independent)”“This will move to a more open solution.”“Those shops and their techs (NOT installers) using these tools wisely will be able to increase their customer relationships - especially with those under the age of 40”“Unless open protocols are forced onto OEMs, there is the potential for independent repair specialists to have their addressable market shrink. It will be interesting to see if consumers are given the access to the same basic information needed for routine service. If so this could be more about what engagement opportunity exists for the OES channel to technology savvy consumer.”“Yes, telematics invites for 2-way communication between the consumer and the OEM / OES channel more easily.”


What will your company do differently to address this technology shift and future telematics trends? (1/2)

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“Adapt to the needs and market to the OEMs.”“As we are on the periphery, in informatics, we will continue to evolve our products to help support the telematics infrastructure that establishes.”“Be aware and work with the IAM to insure access to telematics”“Be aware of what telematics can do and inform my customers that we can do everything the OES can do”“Buy more service from the dealers”“Can't say right now - we know - but we haven't released it publicly yet!!”“Continue to monitor and build applications in-house that enable us to take advantage of the evolving vehicle parc”“Develop and/or align with aftermarket telematics solutions”“Develop more programs with clients so that they can help their customers (shops) be able to take more advantage of this technology”“Develop products which need diagnostics”“Enhance credibility of our solution driven products.”“Focus on marketing telematics to the technician and WD”“Improve data on product life expectancy on all product applications in various environments. Work with vehicle manufacturers to assist in determining near replacement data.”“Improve the quality of our application data.”

“Improve use of technology”“Increase awareness of ESC (electronic stability control) that can make consumers aware of worn dampeners. Hopefully, in creasing the awareness to replace their shocks/struts”“Increase our web presence and content.”“Invest or acquire technology companies to be able to compete but the challenge will be embedded IC products.”“Like mobile technology, placing your solutions at the intersection of that trend with need.”“Maintain strong OEM position and corresponding OES business combined with aligning with the A/M providers.”“Make acquisitions”“More focus on consumers and technicians, relatively less focus on channel partners”“More training to the independent channel”“No idea”“Not sure yet”“Nothing”“Nothing other than fight for equal access to the information as the vehicle owner should have the right to take the vehicle where they want for repairs and to know their technician has access to the same information as the dealer network.”


What will your company do differently to address this technology shift and future telematics trends? (2/2)

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“Our company has committed considerable resources into developing solutions for the independent aftermarket that better link our customers (WDs, retailers and installers with their customers, end consumers.) Our company has developed a model that drives traffic into the workshop thus addressing the unperformed or underperformance vehicle maintenance in the market.”“Our focus will continue in developing telematics solutions that integrate the right information at the right time to support our business customers requirements and ultimately, the consumer.”“Participate in aftermarket efforts to make telematics available through aftermarket channels after the warranty period is over. As with pre-telematics we need to offer a low cost choice to the consumer”“Potentially”“Provide the tools and telematics services for remote diagnostics”“Products and advice to customers will need to encompass all new technologies.”“Provide recommended replacement intervals much like a new vehicles owner's manual does now.”

“Remain conscious and ensure that our products can help facilitate top notch supply-chain response to telematics business provocation.”“See how we can utilize the data.”“Seek to introduce products that will support telematics”“Support the technology”“This will not create a significant change in our strategy since we have a focus on the OE/OES channel and investment in future technology development.”“Try and grow our OES business if dealers demands go up.”“We are already in the business.”“We have organized a group around this topic specifically. We are just now starting to determine how we can play in this market.”“We will have to adapt to the new technology, which could be disruptive, but might present some opportunities.”“What is telematics anyway!”“Will need to find other, innovative ways to improve retention and marketing to consumers.”“Work closely with independent installer networks”


What do you think aftermarket suppliers could or should do to turn the future telematics trend to their advantage? (1/3)

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“A customer friendly alternative without the constant over aggressive sell sell sell put on by the OE dealers”“Advertising to vehicle owners that they don't have to go to the dealer; Training of independent techs.”“Be prepared with products that will be compatible with OE”“Be supportive of the technology early on. This is coming regardless of what an aftermarket supplier believes. If you are involved early you can help shape the way the systems are used to drive repairs and repair locations.”“Become more aware of how the systems work and utilize them towards promoting their products.”“Create industry standard maintenance intervals beyond warranty period to program aftermarket maintenance and drive consumers to independent repair facilities.”“Develop aftermarket solutions...industry must also guard against being shut out of the OEM solutions.”“Develop diagnostics for their products, be part of telematics discussion for IAM”“Do a QFD around the new application of technologies to their businesses.”“Embrace it because someone else will”“Embrace it.”

“Establish legislation similar to right-to-repair act that allows the aftermarket to access the same level of information that OEM dealers have.”“Find a way to direct the customers to the WD's and jobber stores instead of the dealer.”“First, better understand telematics overall. Then, partnerships.”“Focus on back office solutions and offer the full package.”“Focus on educating consumers to make sure they understand that a telematics message from their vehicles doesn't mean the dealer is the only option.”“Get involved to make sure telematics are part of the IAM”“Heavy Education on new technologies and parts coming into the market”“Help improve the technical competency of shops and techs”“Help shops understand how to review telematics data, and locate information that will help them make additional sales.”“Help their customers understand how they can help their customers take advantage”“I don´t know”“Improve technology implementation”“Increased advertising that we provide products that are better than OE replacement at a better value”



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“Invest in understanding telematics capabilities and adopt product compatibility strategies”“Just like aftermarket scan tools - providing a high value "all makes, all models" solution”“Learn about the tools and services that will be available to improve their services to their customers”“Lobby for laws that will protect them and invest in technology products”“Make sure that they can get the signal data from the vehicle.”“Manufacturers must coalesce behind a Telematics Transmission Enabler (like a phone company or ISP) to create a Telematics Application Pool which can communicate with the vehicle.”“More trainings and new equipment”“Provide there own globally accessible device for all aftermarket AAIA members”“Quite simply - EMBRACE the technology. We have never seen anything like this before, so do not turn away from it.”“Sell only quality parts”“Support the industry by providing standardized tools & solutions for organized installer networks capable of providing member training.”

“Talk to their respective Congressional rep or Senator about access to the ECU information.”“Telematics should reduce "unperformed maintenance" which will help everyone. Suppliers must provide excellent product/application data and training to shops - more critical in Telematics environment.”“There are aftermarket solutions being proposed by several companies. Becoming involved with one of the solutions could help give an advantage to anyone in the distribution stream. Additionally, understanding and becoming involved in the dialog at events like GAAS and eForum is helpful.”“Tie into system for product offerings. Take advantage for more efficient supply chain/inventory”“Understand and embrace it soon!”“We need to find an industry or non-parts supplier mechanism to link consumers to providers in the aftermarket. Individual supplier solutions will not be adopted by consumers as they will be too narrow in focus.”“We should ensure that the data gathered by the telematics is the property of the car owner, and not the OE”



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“Work closely through the AASA and AAIA with the other segments of the supply chain to encourage and stay in tune with telematics capability from a non-OES perspective, to ensure that these benefits ensure to the Aftermarket and not just the OES-Dealer Channel.”“Work closely with all stakeholders to create a product/service strategy.”


Appendix B: Methodology and Contact Information

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AASA’s Telematics ‘Hot Topic” Survey Notes

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• The purpose of the survey is to provide members with general information on telematics in the automotive aftermarket. The information and opinions contained in this report are for general information purposes only.

• Participation is only available to AASA members. There were 56 survey responses.

• Comments are edited only for spelling and diction and may contain grammatical errors due to their verbatim nature.

• Responses to this survey are confidential. Therefore, only aggregated results will be reported. Individual responses will not be released and will be destroyed after results are compiled.

2013 AASA Telematics ‘Hot Topic’ Survey 28

Contact Information

AASA | Automotive Aftermarket Suppliers Association

10 Laboratory Drive | Research Triangle Park | NC | 27709 | USA

www.aftermarketsuppliers.org

Paul McCarthyVice President

Industry Analysis, Planning and Member ServicesOffice: +1 919.406.8812 | Mobile: +1 248.914.2567

Email: [email protected]

Bailey L. W. OvermanAnalyst/Coordinator

Industry Analysis and Member ServicesOffice: +1 919.406.8823

Email: [email protected]

Documents

2013 AASA Telematics ‘Hot Topic’ Survey June 2013 1 AASA Telematics ‘Hot Topic’ Survey Results June 2013