government affairs blog
This will be the first of many blog posts that I, along with my colleagues from the AAIA government affairs team, will write regarding our views on legislative and regulatory initiatives impacting the aftermarket that happen here in Washington, D.C. and around the country. While most of these posts will focus on current or future events, I would like to focus my first blog post for 2013 on one of the most important events that occurred for the aftermarket in 2012.
Clearly, the victory in Massachusetts on Right to Repair was important to the future of our industry since it ensures cost-effective access to the sophisticated tools and information needed to work on late-model computer-controlled vehicles. Further, the success of Right to Repair was, in large part, due to the strong effort by the aftermarket in the commonwealth. Anyone who was closely involved in the Massachusetts Right to Repair battle recognizes the hard work by many individuals from industry that was required to obtain that win against a better funded opponent.
However, I hope that we will not forget what the Right to Repair battle was really about for the Massachusetts car owner: CHOICE. That’s right -- what voters told car companies and politicians by a wide margin, 85-15 percent, is that car owners want themselves, and not the manufacturers, to determine where their vehicle is serviced. I believe that the referendum not only resulted in the enactment of Right to Repair legislation, but also served as a major vote of confidence for the independent repair industry, reflecting on the high quality of service that our industry provides car owners on a day-to-day basis.
So as we look to the future, I hope that the victory in Massachusetts will send a message to the car companies that it is in their best interest to ensure that they are building vehicles that can be repaired and serviced wherever the owner wants. We further hope that car companies will hear this message and attempt to work with the aftermarket in developing peaceful solutions to issues involving car owner choice, such that their customers are not only happy when they leave the showroom, but in the driving experience for the life of that vehicle. I know it’s a long shot -- and we are ready to continue the war if necessary -- but let’s hope 2013 is the beginning of a new era in aftermarket-car company relations!
Much of the news out of the Consumer Electronics Show which took place in Las Vegas last week revolved around an agreement between several automakers and Google to provide telematic solutions for their motor vehicles.
As the Washington Post reported on Friday, Jan. 10, “The growing alliance between Silicon Valley and Detroit has executives in both places excited over the technological and money-making opportunities. But the fast-emerging trend also has raised questions about whether consumers will be able to control the massive trove of personal data that cars are expected to generate in the coming years.” The Post article, which, by the way, was on the front page, further stated: “U.S. laws are vague about who can harness all that information. Can law enforcement use the data to prove that a driver was speeding? Will hackers be able to get personal data from Web-connected cars? Can consumers stop Google from tracking them as it seeks to sell targeted ads?”
The good news is that the media is finally waking up to the fact that telematic systems poses important issues for car owners regarding how much control they have of the information being sent by their vehicle. AAIA and others have been concerned for some time that OE telematic systems will permit the car companies and their dealers to more directly communicate with motorists regarding the repair and maintenance needs of their motor vehicle. AAIA is further concerned that due to the direct contact that telematics provides, that car companies will use this connection to push motorists back to the dealer service bays long after the new car warranty expires. Further, these telematic systems will permit car companies to direct repair and diagnostic data from the vehicle to their dealer service bays before the vehicle has even entered the shop, allowing the dealer technician to better know what might be wrong with the car and order the repair information and parts they will need to fix the car faster and more efficiently than their independent counterparts?
AAIA has taken the position that the motorist needs to be better positioned to control the information being sent by vehicles. Do they want their information sent at all and if so, to the car dealer or the independent, or maybe both? As I have said in the past, there are two issues that are included in that question, one is policy the other is technical. Congress likely will need to look at the privacy issues on motor vehicle to decide how car owners should be empowered to control the information begin sent by their telematic systems; and second, if they choose to send their information to those outside of the car company sanctioned group, how technically can that happen?
AAIA and others in our industry are working on both a policy and a technical proposal that hopefully will ensure that the motorist can control access to their telematic systems and to ensure that entities outside of the car companies can have access to the vehicle’s telematic systems with permission by the car owner. You can read more about this effort in the latest issue of Insider. In the meantime, it is good news that the press is catching on that the new connected vehicle may have more implications than previously thought. Hopefully this attention will generate more discussion of this issue both in Congress and the state capitals over the coming year.
Last month I spent ten days in China. I spent a week in Shanghai attending the Automechanika show and meeting with international associations, AAIA member companies and market experts. I then visited Beijing to meet with U.S. Embassy staff to discuss opportunities in the Chinese market and how AAIA can work with the Embassy to help AAIA members take advantage of those opportunities. I also spent a day with the leaders from the China Automotive Maintenance and Repair Trade Association (CAMRTA) to understand their priorities and challenges in the market, and to determine whether they might be a good partner for any future AAIA China initiatives. Below are four things I learned during my trip.
1. Everything you’ve heard about the booming Chinese automotive market is true. The Chinese automotive market is booming. China’s automotive sector grew at a compound rate of 24 percent between 2005 and 2011 and, in 2010, overtook the United States as the largest single-country, new-car market. Growth is expected to slow down to an average of 8 percent between now and 2020, when sales are expected to reach $22 million, bigger than both the European and North American markets. New car sales in China are forecast to contribute to 35 percent of the world’s car-market growth through 2020. The people I spoke with on the ground report that car making joint ventures in China are concerned with insufficient capacity to meet demand.
2. Significant challenges remain. Market entry can be challenging, with rules and regulations that are difficult to identify and navigate, and which can often change. Intellectual property rights protection remains a very significant challenge to doing business in China, with counterfeiters becoming more sophisticated every day and with legal remedies difficult to enforce. Moreover, it can be difficult to identify reputable and legitimate business partners in China for joint ventures, agent representation, distribution or logistical and supply chain needs. Even in the association world, finding the right partners can be challenging as there are seemingly thousands of automotive “associations,” with very few being actual associations as we think of them.
3. There are many resources available to help overcome the challenges. Despite all of these challenges, many U.S. companies are on the ground and thriving in China. The U.S. Commercial Service in China offers valuable assistance to American businesses exporting goods and services to China. There are specialists focused on the automotive industry at each of the regional locations in China, including the U.S. Embassy in Beijing and four Consulates in Shanghai, Guangzhou, Chengdu and Shenyang. I met with the Beijing team and they are working to help identify trade opportunities and local potential trading partners within their perspective regions. They have developed a solid understanding of the opportunities and challenges in the automotive market and can help guide U.S. companies. Additionally, the U.S. embassy has another team of people focused on market access issues and helping bring down barriers to market entry. There are also many private sector resources available. For example, I met with an American attorney who has worked in Beijing for 20 years and specializes in helping U.S. companies overcome any regulatory hurdles to doing business in China.
4. The auto care industry in China is underdeveloped and not prepared for the aging car parc.The Chinese car parc is aging and the used-car market is growing, but there is currently no sophisticated infrastructure in place to service and repair these aging vehicles. China lacks sophisticated distribution networks for auto parts, as well as standards for cataloging and parts identification. There is also no organized consumer education effort, and there is very little preventative maintenance that is performed on cars in China. AAIA members can play a large role in helping overcome these challenges. Many large Chinese investors want to duplicate the U.S. auto care industry model and are looking for U.S. joint venture partners. There is also a large market for imports and American products are generally highly regarded in China.
AAIA is exploring areas where we can become more active in the Chinese market in order to better position AAIA members to be successful there. We welcome member input on the Chinese market and ways AAIA can be impactful in overcoming the many challenges that exist there.