MACS Service Reports - 2016 - NOV7

Concepts and Services Consulting
Figure 5: Security is an omnipresent concern and will evolve to meet new challenges as they arrive. So expect encryption protocols and other security
measures to become the norm, from parts to tools to vehicle to the transportation systems they operate within.

Show Me the Money!

sales of multiple-make, multiple-model scan tools, J2534
reprogramming devices and other diagnostic equipment/
tools, the effects of which would cascade into other segments. ExVe could potentially enable automakers to absorb the aftermarket's entire scan tool business, let alone
other diagnostic elements.
* Parts manufacturers and resellers could be required to
build-in manufacturer-specific security key and seed protocols into replacement parts before the ExVe cloud connection "allows" the part to operate on the vehicle.
* Independent service and repair shops and their technicians may see competitiveness eroded, their cost of doing
business increase due to added ExVe fees and other impacts, such as new security-related PC requirements, shop
cybersecurity prerequisites, or other measures before getting ExVe access.
* Vocational schools, instructors and aftermarket trainers,
who already deal with constrained and meager resources,
could face increased costs for access to the essential resources and information needed to teach aspiring and upgrade current technicians' troubleshooting and diagnostic
competencies.
* Consumer's choice of service facility and repair affordability may be eroded. Many vehicles in operation now
are 11 to 12 years old, with each new model year bringing more electronics and software. ExVe standards do not
include any surety safeguards to prevent an automaker
arbitrarily discontinuing support for certain older vehicle
models, akin to computer companies that end support of
older operating systems. What assurance do consumers
have that their older vehicles will continue to be safely and
fully serviced?

November 2016

Huge revenue dollars are at stake. Controlling access to vehicle data via ExVe provides automakers with a means to gain
and monetize some of the aftermarket's traditional core business. A recent survey by the National Automobile Dealers Association (NADA) demonstrates this. NADA reported the total
value of the U.S. automotive service business is $310 billion annually -$84 billion provided by franchised dealerships and the
remaining $226 billion provided by the aftermarket or the do-ityourself crowd.
Studies by market research firms support the NADA statistics. First Research reports U.S. automotive maintenance services alone, performed by more than 160,000 establishments, generate annual revenue of $100 billion and gross profit margins in
the range of 25+ percent. Markets & Markets pegged the current
market value of the aftermarket scan tool business at more than
$1 billion annually, and projected it to reach $1.8 billion by 2018.
Potter also shared that when canvassed, several of ETI's largest
diagnostic tool manufacturers agreed with these valuations.
Capturing some (if not all) of the aftermarket's value generators represents a huge opportunity for automakers. Control of
access to data, software and other information via ExVe would
provide the potential for automakers to gain and monetize some
of the aftermarket's traditional core business. Clearly, the aftermarket doesn't find that appealing.

Collaboration, Regulation or Legislation -
Pick Any Two
History has shown us that collaboration between automakers
and the aftermarket has often been able to successfully resolve
conflicts and competitive differences to best serve consumers
and the public interest. But there have also been instances where

MACS Service Reports

Table of Contents for the Digital Edition of MACS Service Reports - 2016