When visiting Shanghai a couple months ago I was struck by the fact that multiple auto dealers visited during my stay did not have cars available with activated telematics systems.  This meant that the dealer was not able to demonstrate the technology to customers virtually guaranteeing consumer apathy.

This past week I was visiting car dealers in Italy and discovered a new barrier to consumer adoption, cars without power in the showroom.  Now I am the first person to acknowledge that consumers put a greater emphasis on style, drive and price than they do on infotainment and telematics (see attached slide), but cars without power in showrooms seems absurd in an age when the electronic and software content in cars is on a steep rise relative to the value of the vehicle.

These incidents were shocking to me because I experienced the telematics disconnect in multiple dealers in China (FAW Toyota, Nissan, BMW) and the power failure in multiple dealers in Italy (Fiat, Volkswagen, Hyundai).  The Chinese experience was exceptional because in the past I have had successful telematics demonstrations at Buick, Cadillac, Toyota, Lexus and Roewe dealers.

At the time of my visit to Shanghai, the dealer said that there was only one BMW in all of Shanghai that had telematics service provisioned for the purpose of providing a customer demonstration, but that vehicle was located on the opposite side of town.  The Nissan and FAW Toyota dealers simply had not activated any of their cars.  The only similar experience from my past was with Roewe’s Inkanet-equipped 350 which was most often lacking power on the dealer floor because the Android-based infotainment system had drained the battery.  (Roewe eventually installed Inkanet demonstration kiosks with their own power.)

The experience in Italy was surprising for the manner in which it was discovered.  The hatchbacks of many of the cars – which close electronically – were all ajar, not completely shut.  The natural instinct when one sees a door that is not fully closed is to give it an added shove or open and close it again.

Attempts to close these hatchbacks brought either a panicked or slightly amused response from the dealer sales person who had to explain that the hatch was powered and, when left on, tended to drain the battery in the showroom rendering the feature useless and the hatch not “closable.”  Usually the dealer had taken the added measure of wrapping paper or cardboard around the latch to prevent damage from customers trying to slam the hatches shut.

Is this problem emerging because cars are sitting too long in showrooms unsold?  Are dealers trying to avoid paying steep electric bills?  Not likely.

What is more likely is that dealers simply consider the electronics in the car to be a low priority, a fact that is borne out by Strategy Analytics research (http://bit.ly/XLOWpJ - Vehicle Purchase Behavior and Priorities of Chinese Consumers).  They have either reached this conclusion on their own in reaction to customer behavior or they are responding to a lack of auto supplier focus on selling sophisticated infotainment systems.  The danger, of course, is that dealers are following the lead of the factory.  If OEMs are not making a priority of infotainment systems then low attach rates and low customer satisfaction scores will result - ie. a self-fulfiling prophecy.

It may also be that dealers don’t want to engage in resolving consumer confusion regarding smartphone connections, voice recognition, navigation systems and apps.  Years ago Fiat was touting Blue&Me with point-of-purchase materials throughout much of Europe, but Blue&Me signs are no longer present in Fiat dealerships in Italy.

The picture is even more complex for Fiat, given the presence of Garmin, TomTom, and Magneti Marelli/Wind River navigation system options on its cars.  But Volkswagen has a growing range of infotainment options, as well, none of which could be demonstrated at the dealer visited in Italy.

The one exception encountered during this brief dealer tour was Hyundai.  Hyundai had a large sign touting the special edition of its i20 with a Pioneer infotainment system (the Aha Radio) enabling connection to a customer’s iPhone to access content and applications.  The dealer opened the hood to engage the battery to enable the demo, which amounted to a self-demo of the system which paired quickly and streamed audio via the supplied cable.

The sad reality is that solutions exist for both the telematics system provisioning problem in China and the power failure in Italy.  But the message is clear.  Selling infotainment and telematics systems introduces a new challenge to the process of selling cars – calling attention to power requirements, user interfaces, smartphone connections and apps.

Car makers from Ford and GM to BMW and Hyundai have introduce special dealer training programs and even Apple-like genius bars to bring customers – and dealers – along on the technological journey.  Clearly more guidance and support are needed if the industry is to achieve success with connected cars.  But making sure cars in showrooms are powered and that embedded telematics systems are provisioned seems like pretty basic stuff at this stage.

Tweddle set out more than five years ago to shift its printed manual business into the digital world.  That step has led the company to the development of vehicle relationship management solutions, a content and application delivery platform and, most recently, the ability to handle software over-the-air updates to cars.

Tweddle has learned quickly that vehicle connectivity is an all-in proposition.  Once connected to the car, either via an embedded modem or interfaced smartphone, the owner, dealer and car maker relationship to the vehicle is permanently altered.

Enabling a digital manual experience in the car – including static images and video of vehicle systems – not only needs to be VIN (vehicle identification number) specific, it also needs to be kept up to date.  It also means that the dealer and the OEM need access to that VIN-specific vehicle information.

This means that the VIN specific information must be accessible and updatable, which means it must be stored on an off-board server.  And it means that there must be a capacity for synchronizing on-board and off-board information.

But understanding these needs and realizing them in an implemented solution in a production vehicle are two very different things.  Achieving that objective has brought Tweddle into the fully connected vehicle world where the company is now processing streaming audio, delivering apps and software updates, and exchanging vehicle data.

Tweddle’s capabilities have somewhat outrun its client base as the company is prepared with solutions intended to stitch together the car, the customer, the dealer and the manufacturer, but the full circle experience has yet to be fully realized.  Closing the loop with drivers and dealers is essential for extracting the full value from vehicle connectivity which includes higher customer satisfaction scores, customer retention and additional vehicle sales.

The cornerstone of Tweddle’s value proposition – its intellectual property – is built around its foundational understanding of vehicle information enhanced with digital delivery and ubiquitous access.  Tweddle may have started years ago with manuals and dealer diagnostic systems, but the current solution has a wider scope.

Tweddle’s assets are currently embedded within many OEM engineering organizations in support of service and owner information development.  The company offers EDI integration with OEM manufacturing for access and analysis of vehicle build data and also enables management of OEM workflows in support of marketing, legal and engineering approval of content.

Nearly gone is the physical owner’s manual, to be replaced by on-board systems already in the market from Chrysler, GM, BMW, Tesla and others allowing consumers to access vehicle information directly on board or off-board from a call center.  Tweddle claims market leadership in developing, managing and delivering relevant information to owners via multiple media channels including print, Web, mobile and in the vehicle.

Much of Tweddle’s work is visible in Chrysler’s Uconnect and Toyota’s Entune connectivity systems.  But Tweddle is preparing for the next stage in its evolution by enhancing and deepening the connections between OEMs, dealers and customers.  By broadening access to vehicle information Tweddle is giving new life to owner's manuals even as it is rendering physical manuals unnecessary.

Best Buy is kicking its Commercial Division automotive aftermarket efforts into overdrive in 2013 with plans to more than double the number of major metro areas covered from 12 to 27.  For the past two years Best Buy has been working with AddOnAuto to build an auto dealer-focused program of vehicle upgrades around a cloud-based platform capable of matching any car with a nearly comprehensive catalog of compatible accessory gear including everything from mud flaps to navigation systems.

The program is unique for a variety of reasons including the fact that it encompasses most aftermarket stereo brands and integrates the installer capabilities of Best Buy’s own 3,000-strong Geek Squad.  Most notable is that the program only includes products that cannot be shopped in retail stores or online, which is one reason for Sony not being included since the company lacks a two-tier program.

The program is operated by Best Buy’s Commercial Division and targets fleet, insurance and car dealer markets.  But the insurance program, for replacing stolen or damaged equipment, is not yet up and running and the dealer program is by-far the largest business segment. 

Kicked off in Boise, ID, more than two years ago, Best Buy’s mobile electronics program for dealers provides a subscription-based, Web portal where dealers and their customers can browse for compatible aftermarket products and even see what a sample vehicle will look like following installation.  The subscription is $450/month.  The portal replaces physical catalogs or more generic online ordering systems that lacked the car-level detail and visualization tools.

The program is currently operating in Los Angeles, Phoenix, Atlanta, Miami and Minneapolis among other markets.  AddOnAuto is separately recruiting dealers with a less robust offering, but the company claims in its promotional materials that 9 out of 10 consumers buy accessories for their new cars; six out of 10 spend as much as $1,500 per car; but that auto dealers capture only 10% of this business, even though 75% of consumers tell AddOnAuto that they’d prefer to buy from their dealer.

Best Buy will also provide sales training, marketing support and sales tools along with free concierge pick-up and delivery, according to company literature.  The group was recruiting dealer participation at the recent National Automobile Dealer Association convention in Orlando with a discounted subscription offer of $149/month.  Aftermarket mobile electronics suppliers contacted by Strategy Analytics confirmed the success and high expectations for the program thus far.  Best Buy representatives declined to share program revenue information.

The U.S. National Transportation Safety Board (NTSB) released its 2013 “Most Wanted List” of solutions for transportation hazards including everything from enhanced pipeline safety to improved safety for airport surface operations. Near the bottom of the list were three items relevant to the automotive industry: reducing distracted driving in all environments, reducing impaired driving and mandating collision avoidance technologies.

The announcement from the NTSB is reminiscent of what Abraham Maslow said in 1966: “I suppose it is tempting, if the only tool you have is a hammer, to treat everything as if it were a nail.” I believe this statement accurately characterizes the NTSB’s position - replace "hammer" with "mandate" - but it only hints at the potential negative consequences from mandating safety technologies.

The concerns of the NTSB are significant and worthy of note.  While annual highway fatalities have been in a steady decline for the past decade, the U.S. still sees approximately 100 fatalities per day on its roads.  This is clearly not acceptable.  According to NTSB estimates 10,000 lives are lost annually to impaired drivers – the single greatest source of death and injury on the road. 

The National Highway Traffic Safety Administration (NHTSA) has developed a much quoted figure of 3,000 annual fatalities from distracted driving most often ascribed to the use of smartphones.  NHTSA representatives have stated publicly they are seeking better metrics for this phenomenon, but executives at the NTSB have already voiced their preference for a ban on mobile phones in cars – something which is opposed by the automotive industry and the Consumer Electronics Association among other interested parties.

The NTSB further estimates that run-off-road, rear-end, and lane change maneuvers account for 23%, 28%, and 9% of highway accidents, respectively. The agency says collision avoidance technologies can prevent these types of accidents - or 60% of the total.

NTSB cites data from the Insurance Institute for Highway Safety for its claims that mandating collision avoidance technologies will prevent crashes and save lives.  NTSB says the IIHS “estimates that forward collision warning can prevent 879 fatal crashes annually for passenger vehicles and 115 fatal crashes annually for large trucks. The (IIHS) estimates that lane departure warning can prevent 247 fatal crashes annually, and electronic stability control, 439 fatal crashes annually.

There are a host of issues raised by this call for a mandate and I have an alternative proposal.  First, the problems.

1)      The NTSB’s call to mandate collision avoidance technologies has immediately put automotive industry lobbyists on the defensive, although some have actually already gone into attack mode.  Unfortunately, the predictable path of resistance lies in decrying the high cost of fulfilling technology mandates, which will translate as more expensive vehicles.  The agency has responded that the industry cost estimates are too high and they will decline over time anyway.  The real problem here is that it puts the automotive industry in the awkward position of arguing indirectly or directly over the value of saved lives.  This is unproductive and corrosive to the regulatory process while introducing an undue level of emotion and exposing, inaccurately,  the auto industry as possessed of a callous disregard for human life.

2)      The IIHS as a source of statistical validation is hardly a disinterested party, funded as it is by the insurance industry.  In spite of the IIHS findings regarding the efficacy of certain safety systems, consumers have seen little reward from their insurers in the form of lower insurance rates for cars equipped with these systems.  And the IIHS was not nearly as sanguine as the NTSB regarding lane departure warning, which the IIHS said, earlier this year, can harm rather help avoid accidents, in the organizaton’s own words.

3)      The mandate process itself will require years of testing to determine the efficacy of these systems for preventing crashes and fatalities.  Even if the NTSB and the industry could agree that something should be done, each technology will require extensive testing and review virtually halting existing development in the industry - which is currently moving at a rapid pace - for fear of selecting the “wrong” solution.

4)      NHTSA has already set out a target of crash avoidance and is rewarding car makers with higher safety ratings.

Here are my modest proposals for resolving this scenario.  My ideas are market driven although they will benefit from

endorsement or implementation within the existing regulatory framework.

1)      Require insurers to offer discounts for vehicles equipped with the very safety systems for which the agency is seeking “robust” industry adoption.  It’s almost impossible – if not actually impossible – to find an insurer willing to offer a discount on a Volvo equipped with City Safety collision avoidance.  If this is a life-saving technology, it is time for the insurance industry to put its money on what its data has validated and it may also be time for the NTSB or some other regulator to compel such action.

2)      We are currently at the outset of the World Health Organization’s Decade of Action for Road Safety.  There couldn’t possibly be a better time for the NTSB, perhaps in concert with NHTSA, to set forth a set of targets along the lines of the Corporate Average Fuel Economy standard of 54.5 miles per gallon by 2025.  The automotive industry howled when the 54.5 mpg standard was first proposed, but has now agreed to go along.  Could the U.S. put together individual car maker targets for lives saved/deaths prevented?  Could the NTSB and or NHTSA build a database intended to identify best practices in vehicle safety system design?  Could auto makers be forced to take more responsibility for the actions and behaviors of their drivers?

3)      How about tax credits for new cars equipped with specific qualifying safety systems?

4)      It is worth noting that car makers are already bringing a wider portfolio of safety systems to more and more of their cars at lower price ranges.  Market conditions suggest that mandates at this time are almost completely unnecessary and, if anything, will only slow adoption and deployment.

There are a lot of ways to save lives and there are a lot of lives to be saved.  Mandates aren’t the only path to less motor vehicle bloodshed.  The government and insurers should recognize and reward those car makers that have made the greatest progress in ending highway mayhem.  And drivers, too, should be rewarded for choosing safety.

Why is Pohanka telling customers to come on in for service without an appointment? The first ads I noticed were for Chevrolet, but it soon became clear that Pohanka was making the same offer for all of the brands in its Portfolio including Honda, Toyota, Lexus and Acura. (The offer for Chevrolet is especially surprising given the OnStar Vehicle Diagnostics Report, which ought to allow dealers and consumers to anticipate needed service and schedule visits in a more predictable manner.)

The offer: “No Appointment Necessary” for service. Just drive in. In fact, Pohanka of Salisbury (http://youtu.be/GeVRCmH7bUE - Youtube) goes so far as to offer free Wi-Fi, shuttle service and refreshments.

On its face, the offer is a wonderful customer-friendly proposition. The message conveyed in the advertising: Bring your car in, regardless of what is wrong, and we will fit you in right away. You can then kick back, fire up your portable computer or tablet and set up your office in our waiting area while you have a coffee or soda or maybe even a snack. We will do our best to figure out what is wrong with your car and try to fix it on the spot.

There are so many things wrong with this proposition that it is hard to know where to start, but I’ll give it a try.

1.      Dealers need to manage their business.  The only thing worse than having idle service bays is having customers come in at unpredictable times with unpredictable vehicle problems.

2.      Dealers make money from service.  For most dealers, the service operation is the life blood of their viability.  It is where they make money.  Selling new cars is a more or less break even proposition.  For dealers to have to advertise to consumers to bring their cars in suggests a vision of a bunch of idle wrench twisters hopelessly looking for and pleading for something to do.  (Maybe the cars aren’t breaking down?  Yeah, right.)  Something must be very wrong for dealers to advertise in this way.

3.      My dentist makes me wait.  My accountant makes me wait.  Everyone makes me wait.  My dealer used to make me wait.  What’s changed?  The service cycles for preventative maintenance are growing, so it is true that consumers have less reason to pay frequent visits to dealers.  But, at the same time, cars are lasting longer and consumers are holding on to them longer, according to R.L.Polk (http://bit.ly/Z9VKgQ - Length of Vehicle Ownership Hits Record High).  This means that consumers are likely shifting their vehicle servicing to independents (a fact borne out by studies from the Automotive Aftermarket Industry Association) and/or deferring service.

A couple of things could be happening at Pohanka dealerships.  Perhaps the company has decided to up its game by changing the message from one of playing hard to get (“We can see you next week.”) to an open door (“Come on in!”).  I actually welcome that message as a vehicle owner with not infrequent needs for vehicle service.  And I DO respect and appreciate the offer of Wi-Fi access and snacks, though I’d prefer a loaner car to get back to my own office.

I am concerned, though, that the offer actually reflects what is wrong with the automotive industry and something that is putting the health of 30,000+ new car retailers at risk.   With no direct connection, via OEM telematics systems or connected smartphones, to their customers, dealers are forced to take a blunderbuss approach to marketing.

New car owners in the U.S. are familiar with the post card marketing used by most dealers targeted at scheduled service benchmarks normally based on estimated vehicle usage.  GM, BMW and Mercedes have taken the first tentative steps to allow dealers to be notified of mileage thresholds triggering scheduled maintenance.

A new solution based on connectivity and tied to interpreting vehicle data is required.  Dealers shouldn’t have to resort to the equivalent of hitching up their skirts by the side of the road.  Dealers need a more scientific and targeted model built around vehicle connectivity.

Vehicles throwing off error or failure codes should be communicating those codes to OEMs, dealers AND the consumer.  In fact, on-board service scheduling like that enabled by xtime on BlueLink-equipped Hyundai vehicles is the new benchmark for customer integration.

In the future, connected cars will enable connected dealers to plan their marketing campaigns around the status of their “fleet” of connected cars.  This kind of planning will enable more efficient use of fixed assets – those service bays – and timely ordering of the necessary parts.  Dealers will also be better able to go after deferred maintenance opportunities.

At the recent SEMA/AAPEX gathering in Las Vegas multiple aftermarket players showed smartphone- and OBDII-based systems for interpreting vehicle diagnostic codes for the purpose of capturing service opportunities.  (http://bit.ly/RNpYne - AAPEX Seminar: Telematics presents the automotive aftermarket new challenges and opportunities)  OEMs may be making progress, but the aftermarket is not sitting idly by.

It’s still early days for bringing dealers into tighter communication with their customers.  But this Pohanka come-on-down offer is a sign of the coming apocalypse for any OEM that is not working to better connect the dealer to the customer and the car, or any dealer that is not investigating aftermarket customer connectivity propositions.  Until this problem is solved, I’ll be popping in to my Pohanka dealer without bothering to call, sucking down a few sodas and soaking up the free Wi-Fi.  But as an industry, we can do better.

Ten years into the current smartphone revolution some people and organizations still do not realize what is happening. Nowhere is this more apparent than in the automotive industry where regulators and industry associations continue to take a top down approach trying to build consensus and promote mandates in a market in the throes of being recreated from the bottom up by massive mobile device disruption.

Disruptive change is coming from the radiating ripple effect of global smartphone adoption transforming consumer behavior and content and application consumption patterns.  For the automotive industry, the latest twist on this disruption is the rapid proliferation of Wi-Fi and Bluetooth technologies on mobile devices.

Wi-Fi and Bluetooth wireless technologies are disrupting everything from traffic data gathering to content consumption and, most recently, safety.  Smartphone users have seen their use of mobile phones in cars changed by Bluetooth hands-free interfaces (HFI) and have tapped audio streams through their car stereos with Bluetooth’s advanced audio distribution profile (A2DP),.   Now Wi-Fi Direct has emerged to change safety.

And GM has emerged as the Pied Piper of Wi-Fi Direct after revealing its own internal studies demonstrating how Wi-Fi Direct technology in cars might be used to detect the presence of pedestrians’ smartphones by detecting their Wi-Fi signals.  (http://bit.ly/MM47w9 -How Your Smartphone Could Stop a Car From Running You Over)  In this way, Wi-Fi Direct could be used as an enhancement to existing sensor-based safety systems to help drivers avoid pedestrians – or to at least be alerted to their presence – in a low-latency sub-second manner – without connecting to a wireless cellular network.

V2X via smartphone integration

The announcement of GM's new findings follows a presentation at Telematics Update V2X for Auto Safety and Mobility 2012 in Novi, Mich., where GM engineer Donald Grimm presented a vision of V2X technology deployment via aftermarket devices and smartphones.  The new Wi-Fi Direct concept from GM published last week solves a problem raised by attendees of the TU event, regarding the detection of pedestrians in a V2X-enhanced world built around Digital Short Range Communication technology – the 802;11p-based technology upon which V2X is being defined.

DSRC-equipped cars will have no way of detecting pedestrians.  But Wi-Fi Direct-enhanced cars will have this ability and in fact could deliver this technology today.

By swapping DSRC technology for Wi-Fi Direct, GM is highlighting the shortcomings of DSRC technology, the adoption of which has created a chicken and egg scenario.  DSRC technology will work best once all cars equipped with the technology to enable enhanced traffic and collision avoidance applications.

But DSRC technology has no subscription or revenue component, making it an expensive vehicle enhancement requiring additional hardware, software and enabling infrastructure. To succeed, DSRC is ikely to require a top down government mandate and a homogenization of global standards to take hold.  GM is pointing the way toward a life-saving technology already widely distributed among consumers on their mobile devices.

In the presentation given at the TU event earlier this year, the GM engineer suggested the possibility of DSRC technology being built into smartphones – a clever but expensive and pointless exercise, particular in light of Wi-Fi Direct’s availability.  Further impairing the vision of smartphone deployment of DSRC are issues of power consumption and in-vehicle docking of the device.

The beauty of the new GM proposition is its use of existing devices – smartphones – and existing standards-based technology – Wi-Fi Direct – to save lives without the creation of new standards, new hardware or new mandates.  Bike messengers and pedestrians wanting to take advantage of the new technology might be able to install an app to enhance the sensing process.

Implications

The rapid adoption of Wi-Fi Direct will get far greater impetus in a competitive environment, such as that implied by GM’s research and potential implementation, than by a collaborative standards-setting activity such as that associated with the ongoing V2X activities or the mandate approach characterized by Europe’s ill-conceived eCall initiative.  GM researchers are proposing that cars simply tap into the surrounding wireless signaling environment to help avoid collisions.

In a similar way, roadside Bluetooth sensors are increasingly being deployed by organizations such as TrafficCast, Siemens and others to glean highly accurate insights regarding traffic flow from passing motorists and their Bluetooth-equipped smartphones.  There are wider implications and a growing roster of new applications enabled by this ad hoc sensing process.

The most important takeaway of all, of course, is the critical role of the smartphone as a self-contained safety system in the car.  A Bluetooth- and Wi-Fi Direct-enhanced device is capable wirelessly communicating its location up to 600 feet away as well as sensing nearby devices.

This sensing and contextual awareness has life-saving implications for drivers and pedestrians and the differentiating market development opportunities are emerging faster than an application download.  It is for this very reason that open application platforms in cars in the form of smartphone interfaces are so important.

In an ironic twist, the deployment of safety systems taking advantage of Wi-Fi Direct signaling are likely to benefit from existing research into DSRC signal propagation and interpretation.  So all that DSRC work won’t be going to waste.

The scanning for the presence of pedestrians is clearly a local, on-board application in the car, but there will be opportunities to process the sensor inputs in a cloud platform for added value insights.  And it is likely that such a system will need upgrades or updates on a regular basis as enhancements to the detection algorithms are discovered.

It’s just another way smartphones are driving live-saving changes from the bottom up, rather than from the top down.  Wi-Fi Direct can save lives, but not if smartphones are banned or their functionality is compromised.

Embedded telematics systems like OnStar ought to act as the car maker’s wingman, which is defined by Wikipedia as “a pilot who supports another in a potentially dangerous flying environment.” The wingman is most familiar from formations of jet pilots where a second, support flyer flies his plane beside and slightly behind a lead flyer to “watch his back.”

Telematics technology has the ability to fulfill that function, but it isn’t happening yet.

The GM Authority newsletter reports today that General Motors has issued a recall for more than 4,000 2012 Chevy Sonics that have rolled out of the company’s Orion Township assembly plant missing either an inner or outer front brake pad.  The newsletter reports that new Sonic owners can expect a letter in the mail beginning January 14, 2012, which will instruct them to take their Sonic to the nearest Chevy dealer for inspection for missing components.

How GM can have this happen when its cars come equipped with Bluetooth and embedded modems is beyond comprehension.  With the existing on-board technology, GM ought to be able to enable vehicle diagnostics capabilities during, or at least at the conclusion of, the production process to ensure the existence and proper functioning of all on-board systems.

GM probably does not want to provision the on-board modem at the factory and Bluetooth may not be considered sufficiently secure for extracting sensitive and vulnerable vehicle data.  But the value of this information and the service it provides to customers, dealers and management is great enough to justify the added cost of provisioning the modem during production and/or hooking up the Bluetooth to the CAN bus.

The unfortunate truth is that architecturally speaking embedded telematics systems have for the most part been segregated from Bluetooth connectivity systems.  In fact, at GM, the teams responsible for these two connectivity propositions are working in parallel and not entirely in cooperation.

This is why this analyst made a plea earlier this year for a “C-level” executive at every auto maker to act as Chief Connectivity Officer.  (http://bit.ly/fXV0r1 - Vehicle Connectivity as a C-Level Responsibility – Insight – 3-2011)  The responsibilities of this executive will include embedding connectivity into all systems of the car and all aspects of the organization.

From production, to dealer delivery, to sale, telematics systems ought to be part of the entire car making, selling and owning experience.  This philosophical approach means the telematics system is live as early in the vehicle production process as possible (with GM in the forefront having made OnStar standard on most models).  Plant managers receive OnStar reports throughout the day regarding the status of on-board systems for cars rolling off the line – and managers and developers see the same reports.

The trucks delivering the cars have a wirelessly updated manifest of all the cars they are delivering.  The dealer uses the telematics system as part of his inventory management system and, after the sales of the vehicle, as part of his customer relationship management system.

In the connected world just described, no GM customer is waiting two weeks for a letter to let him or her know there is a missing brake pad on their car.  The plant manager knows or, if he misses it, the truck driver knows or, if he misses it, the dealer knows right away something is wrong with the car.

In contrast, Ford won an award earlier in 2011 (http://bit.ly/rZEWhd) for its use of Wi-Fi on the production line to provision Sync and MyFord Touch system software and configurations.  This shows yet another innovative way that wireless technology can be used on the production line to save or avoid costs.  (No word on whether Ford is enabling the kind of wireless diagnostics I have described, but they can and should.)

This production line software provisioning, too, ought to be interesting to GM not only because the company has been flirting with adding Wi-Fi to more of its cars, but also because it is struggling with the timing of the launch of its MyLink (Chevrolet) and Intellilink (Buick) smartphone connectivity systems.  Wireless provisioning of these systems might enable GM to bring these solutions to market more swiftly and competitively.

Implications

The Chevy Sonic brake pad slip-up ought to have represented an opportunity for GM to show the power of OnStar’s diagnostics capabilities.  The existing OnStar diagnostic report may not detect the presence of a brake pad, although it does report on the status of the anti-lock brake and stability control systems among others. 

The typical OnStar subscriber will certainly want to know how much pad they have left on their brakes. OnStar ought to be adding detection of the brake pads and their status to the existing report.

The good news is that in a world where OnStar is no longer the only telematics player in town, the pressure is on like never before to innovate and leverage the existing (and future) telematics investment to ensure the organization is extracting all possible revenue opportunities and cost avoidance potential out of that embedded modem. 

Telematics ought to be acting as every car maker's wingman, watching for trouble and leaping into action at the first sign.  The potential remains to be tapped and there are riches to be had by those who choose to tap it.

The European Commission is targeting 2015 for final eCall implementation by car makers. Russia has set a firm December 2013 as the date for implementation of its own eCall system. The Russian system, though compatible with the European eCall mandate, adds an SMS backup capability to the data-over-voice transmission of the required minimum set of data along with a national call center for dispatching the calls to public service access points.

Car makers attending the recent Telematics Update event in Munich expressed some dismay at the speed at which they are expected to accommodate the Russian mandate.  OEMs are more accustomed to mandates such as the European Commission’s own eCall solution or even Brazil’s Contran 245 stolen vehicle tracking and immobilization initiative, both of which have seen serial delays. 

The postponement of mandates in the EU and Brazil has been driven by the foot-dragging of member states and interested parties (in Europe) and by a combination of OEM delaying tactics and technical issues (in Brazil).  In a bid to clear up any confusion and nail down a firm implementation date, the European Commission issued a directive for mobile network operators in Europe admonishing member states to ensure that MNOs implement the eCall flag.

The EU said that member states should require their public authorities to report measures taken in response to the EU recommendation by March 2012.  The expectation is that if member states show compliance with the recommendation by 2012, the EU will be satisfied that this step in the eCall implementation process has been taken.  If not, the Commission will immediately issue a directive or a regulation to force member states to comply by 2015 in order to match the timing of the in-vehicle deployments intended for 2015.

The EU’s challenge is bringing four major constituencies into alignment including member states, public service access points, car makers and network operators.  France and the United Kingdom are the two largest states that have chosen not to sign the eCall memorandum of understanding.  The UK has established its own national PSAP dispatch solution.

The EU is leading an effort to bring PSAP’s into compliance with the ability to receive eCall messages.  The success of the European eCall mandate will be measured by its ability to reduce accident response times by 40% and the anticipated saving of 2,500 lives per year.  A status report on the PSAP upgrade effort is expected early in 2012.

In Brazil, the Contran 245 mandate calls for the implementation of an interoperable SIM card in an embedded module which will allow for the tracking and immobilization of stolen vehicles.  This program is intended to reduce theft rates and insurance costs.  The mandated device, when it arrives in cars, will be the first interoperable SIM in the world. 

Beyond the Contran 245 legislation, the Brazilian government’s participation in the service will be limited to certifying hardware and service providers, maintaining a database of installed devices and the correlated service providers, and handling the provisioning of service including switching between service providers.  The Contran 245 standard is set to take effect at the end of 2011, but dozens of OEMs, hardware, software and service suppliers polled by Strategy Analytics after a recent industry gathering in Sao Paulo said they anticipate a further six-month delay will be announced (the eighth) at the end of 2011 meaning implementation will occur no sooner than June 2012.

Meanwhile, Russia has said December 2013 is the date that its mandate takes effect, period.  There is, for now, no sign of any delay, although there are issues for international service providers seeking to integrate the Russian system with existing telematics services.  Industry sources say Russian regulators are insisting that personal and vehicle information are not to leave Russia.  It is unclear how service providers will be able to comply with this requirement and/or whether it will lead to delays.  A representative of the government joint venture, NIS Glonass, reported at the Telematics Update event in Munich two weeks ago that 2012 is intended to be a period of pilot projects in Russian with implementation set for 2013.

While it will be refreshing to see a mandate actually keep to its deadline, the flexibility of Brazil and the European Commission reflect the challenges of bringing the automotive and mobile industries together to agree on and implement a single standard.  The Russian government’s controlling interest in public infrastructure enables a more rigid implementation timetable.  That scenario has implications for China and other similar political entities, where market conditions can be immediately and directly impacted by government fiat.

Implications

Technological decisions that are made based on competitive market forces are more reliable than government mandates in motivating organizations.  The Euro NCAP (New Car Assessment Program) is an example of a reward program intended to motivate car makers to enhance and more widely install advanced safety systems.

Given the infrastructure and hardware requirements of automatic crash notification, the European Commission may have been more successful in spurring innovation and competition by specifying the eCall program objectives without specifying the technology to be used.  In Brazil, where the government is wrestling with an intractable stolen vehicle problem, the need for a government-led solution was unique, but, again, might have been more effective by specifying the objective rather than the entire hardware solution.

The ambitious nature of both the Brazilian and European mandates has contributed to delays.  The shortcomings of the government driven approach in Brazil has had several negative impacts including:

1.      The expectation that car thieves will quickly reverse engineer and defeat the mandated module;

2.      The fact that suppliers have bid the price of the module down so far – in hopes of cashing in on the mandate by winning as much business as possible - as to make it an unattractive market opportunity;

3.      The lack of a competitive proposition that might guarantee a path to the future enhancement of the existing solution to accommodate new technological or market realities.

The positive aspects of the Brazilian solution, including the use of an interoperable SIM, outweigh the negative elements.  And given Brazil’s recent record of innovation in the area of wireless technologies in transit-related applications there is an expectation that Contran 245 will serve as a vehicle for the delivery of additional services and applications to cars.

As for Russia, only time will tell if the Russian Federation can show the world how to rigidly implement an automotive mandate.  But the moral of the story for decision makers considering future safety mandates is to enable competitive forces to drive innovation rather than narrowly defining technical solutions

http://bit.ly/uCNI4H - European eCall Mandate Aims Low, Falls Short - Lanctot - Automotive Multimedia & Communications

It’s important for one to know one’s place in the world. This is especially difficult given the fact that one’s place may change. When this happens there may be telltale signs, like emails or polite taps on the shoulder or a whisper in the ear. TomTom should consider this commentary a “heads up” – the kind of alert a friend gives another friend when a sharp or heavy object is flying toward someone’s head.

The heads up is that it is time for TomTom to take a one-two punch to its current strategy.

Punch One: Launch a white label fleet telematics program to enable faster growth of the business services group and capitalize on the fleet industry’s current movement toward consolidation.  Servicing the fleet industry is a critical global market differentiator for TomTom and it is not too late to take advantage.

Punch Two: Shift to Android as a more potent platform for enabling in-vehicle app distribution.  (More on Punch Two at a later date.)

One has to love this company which has parlayed some of the cleverest marketing and product innovation into traffic and portable navigation market leadership.  The problem for TomTom, sadly, is that the market has moved on.  This has never been clearer than in the latest earnings report.

It’s true the company was able to report growth in its automotive segment (43% to €59 million), content and services (19% to €107 million), licensing (27% to €36 million) and business solutions (33% to €17 million), but the largest business, consumer, plunged (23% to €225 million).  The decline in the consumer business of €68 million, more than offset the aggregate gains in the other segments of €30 million. 

What was unclear from the company’s financial release was whether – after “impairments” and restructuring charges the company was actually profitable.  Earnings per share for the most recent quarter were positive though the year-to-date-earnings remain negative.

Core business is down

TomTom acknowledges that much has changed in its core business of selling mobile navigation devices.  While the company still claims portable navigation market leadership in Europe and some market share gains in the U.S., this leadership is over a dwindling market.

TomTom reported a decline in the total European portable navigation market during the quarter to 3M units from 3.4M in the year-ago quarter, with the U.S. falling even more severely to 2.1M units from 2.9M.  The company further noted that the speed of the market decline may be contributing to an inventory hangover, something that has plagued the segment for more than a year. 

If you have any doubts regarding the state of the portable navigation industry, a visit to your local electronics retailer will reveal a category suffering arteriosclerosis.  Without sufficient demand, existing products are not selling through quickly enough to maintain innovation momentum.  The new stuff is backed up because the old stuff is not selling through.  And, as a result, the portable navigation department is usually a mess.

The speed of the decline is spurring a restructuring at TomTom intended to reduce expenses by €50 million and likely to include significant personnel reductions.  Similar reductions have been experienced elsewhere in the industry including Navteq’s layoffs in its Traffic.com group.

To its credit, TomTom has moved to pursue business services and fleet opportunities under the WebFleet and WorkSmart brands. Yet despite claiming to be the fastest growing fleet telematics service provider in Europe and posting €17 million in revenue in the current quarter, TomTom is not keeping pace with more focused competitors in the fleet space.

The messaging on TomTom’s Work Website is out of step with more focused fleet operators, all of whom are enhancing their existing solutions with traffic and routing capabilities competitive with TomTom’s.  As the new kid on the block, TomTom may be able to successfully fight the good fight and convince operators it has a more robust solution for tracking drivers and delivering competitive traffic and routing information.  Or maybe it makes more sense to be a white label provider to all players in the fleet market.

White label enables scalability

The importance of the fleet business to TomTom’s prospects cannot be overstated.  With sales of portable navigation devices evaporating and inventory backing up, it is critical for TomTom to find new sources of revenue.  While the portable business is not entirely disappearing, the company has long depended on robust sales of these devices to support the content and services business which includes traffic data.

TomTom pioneered the use of probes in mobile devices to create traffic data which helps the company to deliver not only state-of-the-art traffic solutions but also for refining its industry leading routing engine.  So the success of content and services, best known for its traffic and routing offering, depends on the consumer mobile navigation business.

TomTom simply cannot afford to stand idly by while its portable navigation business shrinks taking its content and services business with it.  The fleet side of TomTom, however, holds the key to survival.  Fleets fitted with TomTom hardware or software are capable of taking up the slack from lost navigation device sales.

But TomTom needs to replace lost portable navigation nodes at a faster pace.  While the company noted an increased take rate for Live Services (which includes traffic data) for its mobile devices, the volume decline negated the increase in the take rate. 

By shifting to a white label service position in the fleet market TomTom can emphasize the fact that it has been a cloud service delivery player in the market since before the cloud was called the cloud.  TomTom was the first supplier to create an in dash app delivery platform for companies such as Toyota and Renault.  And the company’s routing, traffic and navigation tools are rock solid and ideally suited to the needs of the fleet industry.

Still, for some reason, TomTom clings to its brand position.  And while it clings, incumbent players in the fleet industry are adopting or partnering or creating their own traffic and routing solutions.  TomTom need look no further than ALK Technologies to find a company with a laser like focus on the needs of the trucking industry and a flexible business model to enable it to support customers branded or otherwise.  ALK’s flexibility has been rewarded with deals with Qualcomm and Xata among many others.

The point of a white lable initiative is to accelerate growth and rapidly scale.  Thirty-three percent growth, though impressive, won’t rescue our friends in Amsterdam.

Implications

The fleet market holds the key to TomTom’s revival and a white label strategy is the engine.  But let’s not stop there.  To keep driving its automotive business, where competition is keen and margins thin, TomTom ought to heave its brand ambitions overboard and slip into something unbranded to lubricate its Tier One relationships.

Automotive Tier Ones are looking for navigation partners with content and app delivery platforms.  TomTom still, to this day, offers the only effective in-dash app deliver platform, most recently adding TripAdvisor, Twitter and Expedia to the range of apps enabled for its mobile devices.

While auto makers and their suppliers are struggling with Bluetooth and USB connections, iPod Outs and MirrorLinks, TomTom has the slickest solution in the industry for delivering applications and content safely and securely into the dashboard.  C’mon TomTom, you don’t have to turn on the red light.  It’s time for the white label. 

Cross Country Automotive Services (CCAS) and AAA have almost simultaneously launched mobile EV charging programs in the U.S. CCAS described its program as “the nation’s first mobile charging warranty roadside assistance program." AAA announced in July its first roadside assistance truck with the capability to charge electric vehicles.  These programs are the precursors of ubiquitous mobile EV charging services, removing range anxiety from the psychological barriers to EV acceptance, but leaving sticker shock yet to be overcome.

Both programs are offered in a limited number of cities and are clearly targeting the earliest of adopters – ie. purchasers of Nissan’s Leaf EV – while anticipating the arrival of more Leaf-like vehicles.  The AAA program appears more forward looking than the CCAS program in that it offers two charging level options along with all of the usual roadside assistance services (tire replacement, battery charging, etc.) and, if all else fails, it can tow the customer’s vehicle.

CCAS says its mobile chargers may be mounted on small trailers and consist of 10 kWh propane-powered generators that charge the disabled electric vehicles. One of the AAA vehicles shown earlier this year features a removable lithium-ion battery pack for mobile charging.

AAA describes its program as a pilot via which the organization will evaluate the appropriateness of different technologies for use in different geographies around the U.S.  Other vehicles will be equipped with generators powered by alternative fuels and other power sources.

Both the CCAS and AAA programs offer emergency charging assistance – five or more miles of range for as little as 15 minutes of charge - to drivers whose EV batteries have been depleted.  Available to both service providers and dealerships, the CCAS chargers offer the capability to quickly and safely charge multiple vehicles concurrently through a Level 2 charging protocol, delivering consistent utility grade power. In addition, the charger is capable of back-to-back services without the need to recharge any onboard batteries.

AAA says its mobile EV charging roadside assistance vehicles can provide Level 3 (DC fast charging) and Level 2 (AC quick charging) to electric vehicles.

The seven initial markets for the CCAS program are: Los Angeles; Phoenix; Nashville (Tenn.); Portland; San Diego; San Francisco and Seattle. The company says the first mobile charge within the program was successfully completed on August 26 in Phoenix, taking only 15 minutes to provide driver with an additional 5 miles. Cross Country will be adding additional mobile charging units to other areas throughout its national service provider network across the country.

AAA announced it initially will deploy its trucks with mobile electric vehicle charging capability in six metropolitan areas across the U.S. as a pilot program, including Portland, Seattle, the San Francisco Bay area, Los Angeles, Knoxville (Tenn.) and the Tampa Bay area. The phased rollout will begin later this summer and continue into the fall. Let the charging begin.

Additional insight:

http://bit.ly/qlP7i1 - When is 54.5 mpg not 54.5 mpg? US CAFE Targets May Disillusion US Car Buyers - Insight - Ian Riches - Automotive Electronics Service