February was not a good month for the AA. Following a 20th February announcement that the company was going all in on its vehicle diagnostic software, AA shares fell more than 25% on fears the profits this year would be lower as a result. Investors worried that the company would be putting too much money into the software and its associated mobile app to keep the profits rolling in for the remainder of the year.
The good news for the AA is that the company has since recovered. There is good news for drivers as well. AA’s commitment to their vehicle diagnostic software will mean members have yet another avenue of protection against breakdowns. The motoring company has also committed to increasing the number of emergency response vehicles travelling the nation’s roads.
What the Software Does
Key to the AA’s plans moving forward is an enterprise level software package that communicates with a car’s on-board diagnostic systems to monitor a full range of operations and functions. The software is capable of analysing vehicle performance and predicting when a breakdown may be imminent.
Roughly 35% of current AA members already use some version of the company’s mobile app. Now the AA wants to get more of them to also participate in the connected car programme. Success would make it easier for the AA to service customers by drawing their attention to potential problems before those problems lead to a need for roadside service.
A Serious Dilemma for Car Makers
What is really fascinating to us about the AA strategy is that it presents a serious dilemma for car makers. Do you remember the extensive media coverage surrounding Mercedes-Benz vehicle diagnostic software and privacy a couple of years or so ago? The German car company found itself in a position of having defend its decision to prevent car owners from accessing diagnostic systems.
The position taken by Mercedes-Benz was considered reasonable at the time. They believed it necessary to lock out everyone but certified technicians in order to protect the data generated by vehicle diagnostic systems. Mercedes owners today can still access diagnostic information, but they need expensive software to do so.
The dilemma for car companies is one of deciding whether to get more serious about locking down diagnostic systems or allow the AA and other organisations full access. We suspect they will choose the latter. It’s good for business to allow the AA’s vehicle diagnostic software to do what it does if, for no other reason, than to keep cars on the road with fewer breakdowns.
The AA has made it clear they are going all in with their vehicle diagnostic software. They are so serious about it that they are willing to forgo short-term profits to increase long-term gain.
Are you an AA customer? If so, do you have any plans to participate in the connected car programme? Whether you drive a Mercedes Benz or a Ford, allowing AA vehicle diagnostic software to monitor your car could make a difference.
Car Dealer Magazine – http://cardealermagazine.co.uk/publish/aa-shares-plummet-profit-warning/146545