AAA estimates that it costs $900 a year for the average consumer to maintain her car. If an automaker has 20 million vehicles in its fleet, the parts and services revenue could be $18 billion. But only 36% of an automaker’s customer base goes to a brand-certified service center today. With 36%, the automaker generates under $8B in parts and services revenue.
Why isn’t it higher?
The reason is that connected customers and unconnected customers are different. Connected customers are 4X more loyal, go to a brand’s certified service center twice as often, and are more satisfied with the brand. Unfortunately for automakers, only about 10% of their customers are connected.
How important is it for automakers to connect the other 90%?
To help put this question in context, we dug into the numbers for parts and services revenue. We wanted to understand the revenue impact of connecting the unconnected.
But to do this, you have to understand how automakers can connect unconnected customers. The way auto insurers have been connecting customers for years has been with telematics-powered apps. The challenge is that only 3% of an automaker’s unconnected customers have their vehicle’s app today.
The good news is that 56% of consumers would download their vehicle’s app to get car crash detection and emergency response. With this technology, the app detects a car crash and sends emergency services to the crash scene. Crash detection provides peace of mind and saves lives on the road.
If an automaker can increase its unconnected app users from 3% to 56% of its customer base, it creates massive opportunities. 68% of app customers go to certified service centers, compared to 35% of unconnected customers.
For an automaker with 20 million vehicles in its fleet, getting 56% of its customer base to go to branded certified service centers is an $11.2 billion parts and services revenue opportunity. This is a $3.3 billion increase over the pure connected car strategy.
The infographic below helps visualize the opportunity for automakers. We break down the parts and services revenue for connected, unconnected, and app customers. We compare the parts and services revenue of an automaker with a connected car strategy versus one with both connected car and mobile app strategies. We show the impact of adopting a mobile app strategy on the entire customer base, from connected customers, to customers who go to certified service centers, to overall app adoption. We also drill into the numbers driving the changes. For example, we estimate that 90% of customers are unconnected, 3% of unconnected customers have their vehicle’s app, and that 56% of customers would download their vehicle’s app to get crash detection and emergency response.
Check out the full infographic below. If you’d like a customized parts and services calculator for your brand, please contact us.
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