Automakers, shops are natural industry allies with common business challenges. Improving communication and data delivery can help strengthen this alliance and move the industry forward
By 3NG Consulting
History shows that automakers and shops working together can accomplish great things. And dealers, shops and automakers are natural allies with common customers and challenges. Unfortunately, this natural alliance has been hindered by ongoing disputes over repair data. Diffusing that battle is beneficial for all parties and can help move the industry forward.
Increased vehicle complexity has created an ongoing outcry for part catalog and repair data. The challenges automakers faced in providing data in a common format at a pace that works for the industry resulted in legislative mandates. And while it provided what the shops needed, it damaged of one of the most potentially effective alliances in American business. And although the frustrations faced by the industry are real, the automakers are friends to the industry in many ways.
While working for an automaker, I had an annual budget of nearly half a million dollars for distilling and communicating information to body shops. And in spite of our significant marketing efforts, shops were often unaware that data was available. It took several years and the engagement of third-party data companies before body shops became familiar with the available data.
Industry Benefits
Everyone benefits when the supply of accurate and complete data is used to diagnose, locate parts, and repair a vehicle. And automakers and dealerships typically benefit the most, both in terms of improved customer satisfaction and increased part sales.
The industry works best when dealers and independent shops compete and coexist in the market. Exaggerated competitive saber rattling between dealers and shops over the service business creates unnecessary market friction. And while some competition for repair business is natural, punitive measures between dealers and shops are a rather ineffective retention strategy and should be abandoned.
In fact, the data show that customers seek services from independent shops and dealers at consistent points in the ownership lifecycle. And data show there is little difference in service drive retention between dealers who offer wholesale support to independent shops and those who shut them out.
The bottom line—shops are important to the ownership lifecycle and have an unmistakable impact on customer brand satisfaction. So, shop usage of OE part data, repair information and OEM parts can help automakers sell more vehicles, satisfy more customers, and improve the overall industry.
But shops also need to take ownership of their success and take the initiative to find and use the OE data that’s available. Gaining access to the data was only the start for the shops. They now need to use the data that are available to them.
Improvements to data access can both improve repair quality and reduce overall industry costs. And while occasionally necessary, political activity can impede this progress. And lobbying activity is expensive and generally unnecessary when open communication exists.
Industry Risks
OE Data are valuable because they’re complete, accurate and high quality. Not protecting the value creates industry risk. The best method of reducing that risk is by ensuring data are controlled by automakers and delivered in a managed process. Automakers currently provide these services directly and through third parties. This is a great approach since third-party providers can help expand usage and reduce risk.
Data Loss
Some automakers have withheld part number information to discourage backward engineering. However, the aftermarket already has over 80% of the mechanical parts business. And providing catalog data to support commerce has proven to be quite beneficial, with some automakers seeing up to 45% sales increases from factory-driven parts ordering systems.
Third-party data delivery has also proven quite beneficial to dealers and automakers. And while there are numerous examples, e-commerce is the most obvious model, where third-party data helps dealers sell over $1B per year through DIY e-commerce websites.
And the benefits do not stop with sales increases. Some dealers report return rate declines of 30-50% when factory data are incorporated into their parts ordering systems. And even more interesting, many dealers report a 10% to 20% reduction in re-ordering. So, the net impact to the dealer has been new sales opportunities and significant reductions in operating costs. Since dealers are at the end of automaker supply chains, operational improvements also reduce automaker costs.
Data Piracy
Data piracy used to be a huge risk in releasing data. The advent of data APIs, advanced security monitoring and controlled data environments has greatly reduced this risk. Companies such as MOTOR Information Systems have advanced tools for monitoring data spikes and preventing data harvesting. And with extensive sales, installation and feedback networks, MOTOR is able to increase the reach and impact of OE data in the marketplace while simultaneously reducing risk.
Inaccurate Data Presentation
Automakers can actually face liability if errors are introduced to the factory data. This was a significant problem when the only method of delivering information was raw data delivery. However, the use of data APIs can control the data presented, ensuring a consistent delivery of accurate information. This helps ensure accurate data delivery, supports rapid data updates, and reduces the risk to automakers and the industry.
Path Forward
Better communication between automakers and the industry sounds great but getting there will take effort. And using the lessons learned from the collision industry provides a good example of how to proceed.
Automaker engagement with the collision industry reduced conflict and created active working relationships between the automakers and the collision repair community. In the late 1990s, trade meetings were often a discussion of how automakers were failing the industry. Today, automaker and shop trade associations work together to solve industry issues. And while it takes time to build trust, the process is just a few steps.
- Get connected
- Identify data delivery partners
- Respect each other’s businesses
- Tell the industry
- Provide data and create a feedback loop
Get Connected
Connecting starts by opening lines of communication. In the 1990s, automakers were conspicuous in their lack of direct engagement in the collision repair industry. Today, collision and automaker trade associations connect regularly to discuss legislative approaches.
Improving the collision industry required a lot of direct connection between the automakers and industry. The mechanical repair industry is larger and will likely require business or channel partners like MOTOR to expand the team that distributes information and collects industry feedback.
The simple act of opening up communication identifies common interests. And while parties won’t agree on everything, there will be common ground. It may not be possible to fix every issue but building communication bridges can lead to quality solutions.
Identify Data Delivery Partners
Even if automakers opt to have their own data delivery mechanisms, they should find business partners to extend their data distribution capabilities. Going with partnered delivery provides additional data reach and reduces risk. And the right business partners can reach the market quickly and collect necessary feedback. The best data providers should provide the following services.
- All-makes navigation that makes it easy for the industry to present and use information
- Data security to ensure bad actors don’t pirate and publish poor quality information
- Sales and support teams who reach more data wholesalers and speed data access
- IT infrastructure supporting the two-way collection and transmission of data
- Two-way communication channels between the industry and automakers
Respect Each Other’s Businesses
Shops have the specific need to fix customer vehicles correctly and cost effectively. Automakers need to consolidate complex data sets into digestible formats for the industry. These needs intersect at the point where data is delivered and used.
Sometimes it is difficult for automakers to deliver data in simple formats and shops have no frame of reference to understand the complexities of the OE data authoring process.
The automaker process requires the consolidation of engineering specifications, repair procedures, trouble codes and procurement data into digestible data formats. This is a very costly and complex process with real consequences if data errors are presented to the marketplace. And because of the effort required, automakers need to be paid for their data in order to fund ongoing data collection.
It is also important for the industry to respect automaker intellectual property. It is unreasonable for any company to be expected to share intellectual property that forms their business advantages. Expecting automakers to release part engineering design specifications is asking them to release trade secrets.
So, while it is perfectly reasonable for the industry to ask for repair information, automakers have a right to keep engineering data private. However, according to data collected by 3NG Consulting, less than 15% of the repairs and sell less than 20% of total part sales, it’s difficult to support the argument that suppressing data access is beneficial to OEs.
Tell the Industry
It is not enough to provide the data if the shops don’t know the data is available. And history has shown that automakers need help getting the message out. So, a lot of the communication effort falls on the dealers, trade associations and service providers to communicate with shops. And communication needs to happen early and often since shops are busy and focused on their day-to-day survival.
Provide Data and Create a Feedback Loop
As recent legislation and regulations to increase access to OE data indicate, industry communication and feedback needs some improvement. So, in addition to providing data, automakers should be seeking information feedback.
Reliable feedback networks are already in place. Great places to start are speaking with dealers, connecting with trade associations, and establishing regular meetings and feedback processes with third-party data providers. Each of these groups can provide information while it’s topical and support a market response before questions become frustrations.
There is a Bright Future
There is no arguing that data availability today is better than it ever has been. Parts data flows much more freely, service data is available in multiple formats and diagnostic data is available in easily accessible and affordable systems.
But what is most exciting is that the industry is starting to engage more with the automakers and the automakers are starting to find ways to release their data to the industry in ways that benefit the independent shops, the automakers, and the dealers. And in-house and third-party delivery are more reliable and of higher quality than ever before.
Read the second installment of the series: Moving Forward from Data Access Mandates
About the Authors
3NG Consulting is a Fixed Ops dedicated consulting owned and managed by Automaker alumni. Click here to learn more about their data management services.
Learn more about how MOTOR works with OEMs.