A diagnostic in the cloud

For most repair shops, calling customers can be a guessing game. Technicians have no way to see a vehicle's odometer or diagnostic codes until it comes rolling down the service lane, so an invitation to come in for service is a shot in the dark.

Motorcars Toyota in Cleveland Heights, Ohio, has embarked on an experiment to change that. Working with Zubie, a seller of a gadget that taps into a vehicle's OBD-II port, Motorcars Toyota is installing 500 of the devices for free in customers' vehicles -- with their permission, of course -- to remotely assess their service needs. Zubie devices usually retail for $100 apiece.

With profit margins on new-car sales so thin, and ever-improving quality cutting into repairs, the way dealerships make money is by cultivating loyal customers, Matt Gile, general manager of Motorcars Toyota, told Automotive News. He hopes data from Zubie devices will help the dealership deliver better service and boost retention rates.

"If a customer is on spring break with the kids and their check-engine light goes on, they won't have to worry that it's going to ruin their vacation," Gile said. "We'll be able to see it and give them some advice, to say, "You didn't tighten your gas cap right. Just make sure it's tight and you'll be ready to go.'"

The past several years have seen a proliferation of small devices called dongles that plug into the OBD-II port, beaming data from cars to the cloud. Zubie and rivals such as Automatic, Mojio and Vinli think consumer adoption would accelerate if key industry players such as dealerships, repair shops and insurers could tap into the data to deliver services their customers value.

Castrol InnoVentures, a technology division of the lubricants giant Castrol that was an early investor in Zubie, built a Web portal for Zubie allowing repair shops to see which customers have error codes that suggest their vehicles need maintenance.

Dealerships could use that information to offer an estimate and an appointment slot even before a customer contacted the shop to ask for help, said Prag Shah, COO of Zubie. The Charleston, S.C., company was formed in 2012 as a spinoff of retailer Best Buy.

"That's the ultimate in service," Shah said, "and it doesn't happen today."

Motorcars Toyota has tried plenty of old-school strategies for keeping customers in the fold.

The store stays open until 3 a.m. four days a week, and sells a service plan that includes oil changes for 10 years, plus free car washes and loaner cars.

Yet it has been difficult to move the needle. Motorcars Toyota increased its retention rate by 1.5 percent in 2015, Gile said, and that was considered a big achievement.

"Up until now, there hasn't been a technological answer for increasing retention," Gile said. "It's hard to get people here, because there's a lot of competition."

When Motorcars Toyota decided to test Zubie devices, the dealership designed an experiment.

Employees searched for customers with 3- to 8-year-old cars with 24,000 to 50,000 miles on the odometer. In theory, these customers come to the dealership by choice, rather than to take advantage of Toyota's three-year warranty or its factory maintenance program, ToyotaCare, which offers 24,000 miles of free service.

Motorcars Toyota, which sold 1,388 new and 1,033 used vehicles in 2015, wants to know whether customers with Zubie devices in their vehicles will become more likely to return for further service.

If so, the dealership will figure out how much the service adds to its bottom line, and build a plan for putting Zubie devices into more of its customers' vehicles. Gile thinks the benefits may even be worth subsidizing the devices.

The first device was installed in March. Installations should be complete within six months, roughly by September. The dealership expects to see the results of the experiment in late 2017.

"Retention is everything now," Gile said. "That's what the manufacturers track and it's what we track, down to a fraction of a percentage point. If this product can help us improve retention, that could be huge."