The news that car repair online marketplace Openbay has announced the launch of an app might not sound like much. There are new apps all the time, aren’t there?
This one might turn out to have important and interesting implications that are bigger than most, though. Openbay is a marketplace (like Ebay – get it?) for auto repairs and servicing. It brings the world of the social web, especially customer review and reputation, to a domain where it sometimes feels that providers don’t care much about the customer experience.
With Openbay users can get quotes, look at reviews, and then book and pay for a repair, via the Openbay website and now via its app. Openbay and has a smart interface for the garages so that they can easily enter its marketplace.
It’s worth saying, though, that Openbay is not the only game in town and is likely to face competition from others. Carama, backed by Castrol Innoventures, does much the same thing in a rather select group of national markets (thus far only Malaysia, Spain and Turkey), and has recently joined up with Zubie, a provider of after-market telematics via a cloud services and OBD2 hardware. Springworks’ OBD2 white label offering, aimed at telecom operators and already picked up by Telia in Sweden, also offers a repair shop service within its driver application.
Why is this important? Despite all the excitement about driverless cars, actually buying, owning and maintaining a car in the early 21st century is still a very analogue process. The web is full of articles, and reports, and individual rants, about how awful car service and repair shops are. The internet may have disrupted and transformed some markets very thoroughly, but its impact on automotive has thus far been very limited.
The automotive OEMs (original equipment manufacturers) have made some efforts to change this. Most built-in vehicle platforms include the ability to schedule service visits with the carmaker’s network of approved service centres. Some incorporate this with vehicle diagnostics, so that the car ‘knows’ when a part or sub-system will soon need replacing and prompts the owner to book a service.
Of course the motivation for this is not purely altruistic. After sales service, repairs and spare parts are a valuable business for the carmakers; for some manufacturers it is probably a more valuable business than building and selling cars.
Systems integrator CSC claims that in Europe 60 percent of new cars are sold at a loss. In 2015 the global aftersales market was worth $718bn, but only half of this market belonged to the car manufacturers and their tied dealers. In Germany this share is already as low as 35 percent, and the trend is for it to fall by five percent annually. What’s more, the OEMs lose 80 percent of customers within three years of the end of the warranty period.
This is actually quite shocking. Carmakers, with all of the effort that goes into advertising and brand building, are competing against uncertified, unbranded local garages with limited access to finance who market themselves primarily by word of mouth – and losing. Those services that aim to literally steer customers towards the carmakers' own dealers and authorised repair centres must be seen in this context.
These online marketplaces like Openbay and Carama push back in the opposite direction. They are certainly customer-friendly, providing better information, more choice and a more competitive market than either tied service centres or word of mouth.
Whether they turn out to be more friendly to the independent garages, or whether they push them into an Uberised race to the bottom, remains to be seen. If they turn out to be successful, though, then we can look forward to seeing another prop kicked out from under the automotive OEM’s business model.
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