A Connected Perspective

How connected vehicles help OEMs win their war on warranty costs.

Vehicle connectivity has been around since the 90s, but the truth is far too little has been done with all that data to harness its real value for both consumers and OEMs. With the advent of better technologies coupled with the right data strategies, this landscape is changing fast, and it couldn’t be happening at a better time.

More specifically, connected vehicles are helping OEMs identify and address quality issues long before a model year hits the road, reducing potentially backbreaking warranty and recall costs—while increasing the customer satisfaction that is so vital to their long-term success.

Winning the war against warranty costs.
Make no mistake: Rising warranty and recall costs are waging a war on every OEM’s bottom line. In the 2017 model year, total global OEM warranty costs topped $48 billion, with another $22 billion lost to recalls. Software-related recalls alone were more than $500 million in the 2017 model year with another $4 billion attributed to prior model years. Rising costs are not stopping there, with the percentage of warranty and recall costs rooted in software projected to more than double in the next decade.

The right data strategy, one that extends beyond pre-production to manufacturing and post-production, is essential to enabling OEMs to remove this immense burden from their bottom lines. How? By providing the high-fidelity data insights that help them identify and address quality issues prior to production.

The ripple effect of this early intervention is as profitable as it is unstoppable. OEMs not only reduce once staggering warranty expenses by identifying and implementing fixes faster, they increase sales by using these data insights to deliver more relevant, robust next-gen features. This in turn improves the overall customer satisfaction that leads to increased brand loyalty and, in a marketing world increasingly ruled by social media, incredibly powerful word-of-mouth.

Reducing warranty and compliance costs even as software and system complexity goes through the roof might sound impossible, but it’s not, especially when you consider connected data’s ability to maintain and enhance quality well beyond the development and manufacturing stages. Armed with the data-enabled information and insights a superior connected data strategy provides, OEMs no longer have to wait for a new model year to address any quality issue or add new features to a vehicle. Both firmware and software updates can be delivered over the air, the same way consumers update their mobile phone.

Imagine this scenario: We all hate that moment the “check engine” light comes on in our car. Instead of prompting a nervous phone call from you to the dealership, imagine your car sending pertinent data about the issue to the OEM, helping the carmaker not just identify the root cause of the problem, but fix it over the air. For any issue that can’t be addressed with an OTA fix, this sort of real-time data exchange can help a car dealership more quickly and more affordably remedy the problem when you take it in, so you spend more time living your life, and less time thumbing through old magazines in a car dealership lobby.

See how OEMs leverage the capabilities of Aptiv Connect to reduce warranty costs and recalls:

Big or small, enhanced mobility experiences like the ones described above add up to stronger brand loyalty—and connected data is making it happen right now.

The tip of the iceberg.
Quality and product development are just one way OEMs can use connected data initiatives to drive value for their business. In our next post we’ll discuss the way data is transforming the fleet management industry.

These are the new business models that promise to deliver real value to consumers and car makers alike, resulting in warranty/recall savings, increased sales, reduced total cost of ownership and fleet downtime, and new value streams that firmly place OEMs on the open road to a bigger and brighter future.

Posted By
Bill Leisenring, CTO, Aptiv Connected Services

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