Bertel Schmitt

If you ask yourself how automakers will monetize the data collected from their cars once they are connected, all you need to do is listen to Nissan’s global after-sales chief Kent O’Hara. Connectivity “will allow us to retain more service customers at our dealership network,” O’Hara said today in Yokohama. It is a well-kept secret in the automotive business that car service is a major profit source for automakers, and even more so for car dealers. Electronically connected with the customer through the life of the car, automakers plan to grab a much bigger share of that lucrative business, leading to disruption of independent service chains, and 3rd party parts suppliers.
 Together with Toyota and Volkswagen, Nissan is just one of a number of large automakers that announced aggressive connected car plans in recent weeks. Their strategy is similar: Give customers the Internet connectivity and apps they demand, and doing that, collect the data that drive a giant customer retention and after-sales marketing program, while making sure that no outsiders such as Google or Apple get their hands on the data.
 OEMs are salivating at the chance to finally stay in direct contact with the car owner throughout the car’s life-cycle. Service business generates big profits for automakers through high margin original parts sales. For most franchised dealers, service business generates the lion share of their profits.
 Up to now, the individual car owner is not known to the OEM in many markets, the dealer often controls that information. Customers tend to divorce themselves from franchised dealer shops once the warranty is over, and contact is lost irretrievably. When the car is sold after a few years, the used car customer usually frequents independent, or 3rd party chain shops. A system that identifies the customer, and signals when and where the car needs service, can be a goldmine for OEMs and their dealers, to the detriment of 3rd party providers.