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Telematics Could Be A Game Changer

Twenty years ago if an auto recycler was asked what the future of the industry would look like, the answer might have been very different if he or she was asked today. Who could know in 1996 how much we would rely on the Internet today and also the to connect 24/7 from anywhere?

In 1996 Greg Freeman, who was on the first Locator UpFront cover, recognized that the future of auto recycling included the importance of technology. He noted that auto recyclers would need to embrace it to survive in the industry. Back then the height of technology was the Internet and using it to communicate with customers. Today, the sky is the limit for what advancements the next 20 years could bring. Telematics is just one of those advancements that automakers are already building into vehicles.

The Telematics West Coast 2015 conference was recently held on October 26 - 27, 2015 in San Diego, Calif. The conference was attended by collision repairers, automotive suppliers, technology companies and representatives from the insurance industry. The conference looked at how telematics are poised to make dramatic changes to all of these groups.

By 2025, 104 million new cars are expected to have some form of connectivity, according to a report on telematics by Ernst & Young. Telematics and / or connected cars include technology that enhances the driver experience. This can include apps that enable location-based services, advanced safety features and vehicle maintenance. While telematics aren’t necessarily new, General Motors launched OnStar 20 years ago, they are evolving to become more than an emergency or navigation service.

Auto Manufacturer Uses

In a world of Uber and other alternative transportation options, where the millennials can track just how much they spend per mile, automakers are looking at integrating telematics that can do things a smart phone cannot. This includes apps that give the driver specific diagnostic information and alerts the dealership for maintenance.

Toyota is moving fast ahead with connected vehicles and telematics systems. It has its own research institute, backed by a five-year commitment of $1 billion in funding. The company announced last fall that it has been testing an automated vehicle called the Highway Teammate and expect to launch self-driving cars by 2020.

In spring 2016 Ford will offer a built-in cellular-connected telematics system named SYNC. The program offers built-in connectivity and will allow drivers to locate their vehicle, lock or unlock the doors or start it from their smartphone.

Telematics For The Insurance Industry

Insurance companies are also highly invested in telematics. According to the Claims Journal, www.claimsjournal.com, an enormous amount of data can be collected from cars. This includes acceleration, deceleration, braking patterns and location. This information is invaluable for insurance companies in terms of pricing and underwriting. An insurance company would know exactly when and how a vehicle was involved in an accident.

Insurance companies can use telematics information to track accidents, identify high-risk zip codes and programs to improve a driver’s safety score. Some insurance companies already use this type of telematics, it’s a usage based insurance (UBI) device. A survey by the Insurance Research Council showed drivers changed their driving habits after allowing insurance companies to install this technology.

Government Involvement

It’s not just automakers and insurers that are interested in telematics. With technology that could completely reduce accidents, the government wants to make sure new rules governing vehicle-to-vehicle (V2V) communications are already in place.

The National Highway Traffic Safety Administration (NHTSA) is working on a regulation establishing standards and preserving spectrum for wireless communication between vehicles. Nathaniel Beuse, the associate administrator for Vehicle Safety Research for the organization spoke before the House Committee on Oversight and Government Reform in mid-November 2015 about the “Internet of Cars.”

“NHTSA believes this era of innovation that we are entering holds great promise to help us address the approximately 94 percent of crashes that are due to driver error. New technologies such as vehicle-to-vehicle communications and automated vehicle technologies have the potential to dramatically change the safety picture in the United States by helping drivers avoid crashes in the first place,” he said.

Looking ahead, what does this mean for auto recyclers? Potentially, with the number of accidents greatly reduced, repair prices would go through the roof. And with a supply of vehicles no longer dependent on accidents, the parts to repair these vehicles would be in high demand. Freeman noted that auto recyclers would have to rely on stocking and replacing worn out parts, instead of crashed parts.

There could also be a shelf-life as to how long a vehicle could safely use new technology, like V2V, before it had to be replaced. Besides stocking engines and transmissions, a recycler’s shelves could be full of expensive computer systems. As these vehicles get even more complicated, independent repair shops would be forced to buy expensive equipment from dealerships. An “A” grade recycled part could be the answer. The next 20 years could be just as interesting.

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