Independent garages take non-warranty service from dealers

  • 17-Nov-2011 01:30 EST
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Graph shows decline in dealer share of non-warranty dealer service. (AAIA)

When the OBD II era began in 1996, the future for automotive aftermarket service seemed poor to many industry observers. Cars were close to being “electronically locked,” expensive special equipment would likely be needed to service them, and the OE technical service information was in many cases not available.

Car dealers had 33% of the non-warranty repair market, and a sharp upward line seemed inevitable. Instead, in the last 11 years, independent service shops have increased their market share from 67% to 72%, and although the trend has slowed, there is no sign of reversal. How could this happen?

Some observers might attribute the trend to the closing of car dealerships in the 2008-2011 period. However, a study by the Automotive Aftermarket Industry Association (AAIA) indicates otherwise, that we have a long-term movement. The report was presented by Scott Luckett, AAIA Vice President of Technology, at AAPEX (Automotive Aftermarket Parts Expo), a repair-oriented trade show that runs simultaneously with the SEMA (Specialty Equipment Market Association) convention and show in Las Vegas.

There are several reasons. Cars are more durable, and the average age of the on-the-road fleet (over 250 million for the 210.8 million licensed drivers) is 10.6 years, well past the new-car warranty period, Luckett noted. By that age, cars historically are patronizing the independent garage, where a family develops a relationship for an entire household fleet that likely includes vehicles of different makes. Any special single-make expertise of the car dealer usually isn’t enough of a counter-incentive. In fact, the independent typically is perceived to have better multimake experience than the dealer’s used-car department, along with a lower operating cost structure.

Access to OE websites

Independent service shops also have adapted to vehicle engineering changes surprisingly well. Trade associations and the U.S. EPA obtained agreements from the vehicle manufacturers to sell to independent garages the same technical service information and service tools they supply to their dealers, at the same time and at similar pricing. As a result, all the OE makers post their (late-model oriented) service information on special websites, usually with moderate-cost short-term access for independents. There remain some issues, such as with today’s complex anti-theft systems, but largely the playing field between dealers and independents, if not level, is competitive.

Many dealers feel the need to compete more aggressively, have opened “quick service” lanes, and try to promote multimake service by offering special pricing for older cars, plus evening and weekend hours. In some cases this works, but overall the independent’s advantages remain. In fact, most manufacturers heavily promote parts sales to aftermarket shops, with several vehicle makers publishing advertorial magazines for distribution to them.

As a result, some dealers have decided it’s simpler to “join them” rather than fight, to sell more parts to independents with competitive pricing, and offer "trade discount" prices for reflashing modules, a service many independents still do not perform. There is generic reflashing equipment available to independents, based on SAE J2534, but the reflash software available to the aftermarket may apply only to powertrain modules. However, the decisions of "join them" dealers to work closely with independents seem to have solidified the independents’ ability to compete even when a high-tech problem occurs.

In addition, high-tech parts suppliers such as Delphi and Bosch have aftermarket training programs and supply lines that, although available to all, primarily help the independent shop. Delphi, for example, introduced at AAPEX a line of remanufactured hydraulic-electronic unit injectors for 1994-2003 Ford Super Duty 7.3-L Powerstroke V8 diesels. Those lower-cost alternatives to new injectors will help independent shops offer competitive pricing on diesel engine service.

The dedicated factory diagnostic tools do more on specific vehicle systems than the typical multimake aftermarket tools. And independents have complained that the Europeans embed much of the OE diagnostics in their tools, so that OE service information websites are less helpful. However, European makes represent lower volume than domestic and Asian makes. Result: independent garages often restrict their Euro-service menus, or become specialists, buying annual website subscriptions and factory diagnostic tools or an aftermarket equivalent, such as the Ross-Tech system for Volkswagen/Audi.

An independent shop owner who specializes in Volvo (80% of revenue) said his initial investment in Volvo OE information was over $7000 and requires annual updates at considerable additional cost, not including the price of reflash software. His competition, he explained, is the car dealer, not other independents. Shops with a more “generalist” approach often tell customers when they don’t have the needed tool and/or software, and if an aftermarket specialist isn’t available, send them to a dealer with whom they have a good relationship.

OE diagnostic tools are turning into PC software with pass-through modules to the vehicle and therefore are dropping in price. So access to OE diagnostics is likely to become more affordable to aftermarket shops.

Older-car confirmed fixes

The area that car dealers used to “own” was access to factory help for service problems. But with the factory service bulletins and other information now online, and the aging of the on-road vehicle fleet, it’s now advantage independent, as the most valuable real-world “fix” information applies to older cars. OE service engineers have little inside information for a 10-year-old car and typically monitor a popular independent source, IATN.net, the website of the International Automotive Technicians Network. The site stores millions of well-indexed, confirmed fixes and has a system for posting problems encountered by individual shops, who typically get answers within hours. The community spirit this engenders also leads dealer technicians to participate and offer their specialized expertise.

Further, the aftermarket service information systems are getting much better. Unlike the OE websites, which date to the start of OBD II in the mid-1990s, their data typically goes back almost 30 years. And although they don’t offer all the OE information of the automakers' websites on their own sites, they will fax whatever additional factory material a technician needs.

To date there have been just two primary aftermarket systems, AllData and Mitchell 1, that provide digests of data from the OE sites and pre-OBD II shop manuals. There’s now a new competitor, “Identifix Direct Hit with OEM Direct,” operated by Service Repair Solutions of St. Paul, MN.

Identifix Direct Hit has been an online diagnostic system that uses “fix” data from its long-established repair hotline. Access to hotline “hand-holding” by a team of technicians with specific make experience is an extra-cost offering. However, using only the online system, the independent garage enters the vehicle data and problem description and gets a list of confirmed fixes and shortcut test procedures. Last month, Identifix Direct Hit added the applicable OE information (“OEM Direct”) for diagnosis and repair, including bulletins and wiring diagrams. For openers, it covers only the Detroit three makers, plus Honda, Nissan, and Toyota, but will be adding Volkswagen/Audi next year. Although Service Repair Solutions also owns IATN, there are no current plans to integrate its database of “fixes” with the new system, according to Scott Brown, IATN President.

The addition of confirmed “fixes” is among upgrades being introduced by Mitchell 1, which has a “community forum” of technicians who have been exchanging information for several years. Mitchell’s “ProDemand” will provide a search capability of this forum as well as an improved format for asking and/or answering posted questions. Mitchell 1, which is owned by Snap-on, also has access to a “fix” database maintained by this tool manufacturer for use with its diagnostic equipment.

A similar expansion is under way at AllData, explained Ben Johnson, Product Marketing Manager. AllData has been building its “fix” database based on call-in questions from subscribing shops and with a sophisticated algorithm that tracks the online information that is sought at its website. AllData also has been participating in AAIA’s “Shop of Tomorrow,” an open-standards system that combines shop management, vehicle diagnostics, parts ordering, and repair information with telematics. iShop, as it is branded, will go into pilot testing next year, Luckett said. The telematics would obtain vehicle information in similar fashion to the OE version of OnStar, perhaps with a minimodule from Carma Systems, maker of telematics modules with diagnostic capability. The minimodule, plugged into the OBD II connector, would transmit data to a smartphone with a suitable app and from the phone to independent shops via a “cloud” server.

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