September 2016

I. About CECRA

CECRA is the European umbrella association of the motor trade and repair sector representing the interests of both, franchised car dealers as well as independent repairers. In Europe there is a total of 46,720 car dealers and 290,000 repairers. Those – predominantly small and medium-sized – companies employ approximately 2.9 million people being responsible for the sale of almost 16 million new cars a year as well as the repair and maintenance of the 228 million existing passenger cars and 38.5 million commercial vehicles. Thus it is ensured that car users in Europe can rely on a network of qualified experts for the purchase and maintenance of their cars.

Boulevard de la Woluwe 461200 Brussels / BruxellesBelgium / BelgiqueTel: +32 2 771 96 56Fax: +32 2 772 65 67

mail@cecra.euwww.cecra.eu

European Council for Motor Trades and RepairsConseil européen du Commerce et de la Réparation AutomobilesEuropäischer Verband des Kraftfahrzeuggewerbes

POSITION PAPER ON CONNECTIVITY

How to enable a fair and competitive vehicle service industry in the digital era ensuring freedom of choice for the European consumers?

II. Data: The basis of the dealers’ and repairers’ existence

Due to the fierce competition on the automotive market car dealers and repairers are obliged to constantly adapt to their customers’ requests and demands. Currently they are investing hundreds of millions of euros in order to meet the rising customer expectations which have changed not least because of the increasing digitalisation.

As for numerous other sectors digitalisation is becoming significantly important for the European motor trade and repair companies. The statement by Günther Oettinger, EU Commissioner for Digital Economy & Society: “Many European companies are highly competitive and world leaders in important sectors. However, Europe can only maintain this leading role, if companies open up to digitalisation successfully and rapidly.” proves the foresight of the European Commission and can only be underlined by the European motor trades and repair sector.

Car dealers and repairers are prepared for that! They are not only willing but as SME also flexible enough to develop innovative digital business models for the benefit of the consumer. In order to maintain this status in the future it has to be ensured that the necessary instruments are available which include qualified personnel, sufficient access to financial resources as well as, more than ever, access to data – the currency of the digital age. On the one hand, data disclosed by customers is relevant. But on the other hand, there is data generated by highly modern cars. Whilst the first-mentioned topics can basically be influenced by car dealers and repairers themselves, they have no influence on the access to car generated data. Up to now, this data is exclusively sent to car manufacturers who can then decide about the further use according to the customers’ requests. On a long-term basis, the present situation will restrict competition on the automotive market which is certainly not in the interest of car dealers and repairers, but neither for the benefit of the car user.

III. Data and telematics

The necessity of an exchange of data in electronic systems

Ever since the introduction of security relevant systems (such as ABS) it has been necessary to exchange data between different systems within the car. This data can be read in each workshop for repair purposes via a standardised, on-board diagnostic port (OBD port) by using a diagnostic tool; the following chart illustrates this process.

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Chart 1: Data transfer via an OBD port

Data exchange in times of increasing digitalisation

Digitalisation and the progressive development of new vehicle systems have massively changed the situation. Today, modern cars are able – also while driving – to process all kinds of data from different systems within the car and to send them afterwards “wireless” directly to the respective car manufacturer via internet. It goes without saying that it is also possible to receive data at any time. The following chart illustrates this additional option to exchange data with the respective car manufacturer.

Chart 2: Data exchange in a digital world

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Cable connected with an OBD port

Diagnosis SystemRepair and

maintenance in a workshop via a diagnostic tool

Cable

Diagnostic SystemRepair and

maintenance in a workshop via a diagnostic tool

Repair and maintenance of the

car by the car manufacturer via

internetCar Manufacturer

At any time the car can – also while driving – send

data only to / receive data only from the car

manufacturer

Present situation (Analogous world, repair and maintenance)

New situation (Digital world, e. g. remote diagnosis and maintenance)

Data is exchanged via a telematics system which has been installed in the car by the car manufacturer. This system makes a direct communication with the car user possible via the central information display of the car. The following process takes place inside the car in order to enable the telematics system to complete these and other tasks:

All systems in the car provide the telematics system with all measurement data generated in the car.

The data provided can now be processed in the car. The car manufacturer is informed about the technical condition of all his cars.

Measurement data which is generated in the car is combined with personal data – if there is a defect in the car – and sent exclusively to the respective car manufacturer. Example: John Smith (personal data), wear limit of brake pads has been reached (data generated in the car).

The car manufacturer uses his own software (app) which is installed in the telematics system to process and send data. Various services related to the car such as remote diagnosis and maintenance can be offered to the car owner via these apps which have previously been installed in the car by the car manufacturer. By doing this, the car manufacturer no longer acts as a car producer, but acts in his new role as a service provider who directly competes with other service providers such as workshops.

Given that the telematics system is developed and entirely controlled by the car manufacturer he solely decides which apps are being installed. Thus the user can basically choose only – although he is the car owner – from the car manufacturer’s apps. There are no equal options regarding the installation of apps for third parties. Consequently, the car manufacturer is able to influence the entire market related to the car.

In order to extend the car manufacturer’s digital service offer, the on-board telematics system has been connected with an external server. This server makes it possible for the car user to check certain conditions, such as the oil level or tyre pressure of his car, also from his living room at home. For this purpose, the car sends – according to a certain rhythm determined by the car manufacturer – certain information to the manufacturer’s server. After a completed registration (disclosure of the car owner’s entire personal data), the car owner can access this information provided by the manufacturer. The following chart illustrates this additional concept including an external server.

Chart 3: Extended service offer via an external server

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Telematics System

Manufacturer Server

Send/Receive Car Owner

Information

The Extended Vehicle Concept

The concept illustrated in chart 3 shall now also be used – from the car manufacturers‘ point of view – in a modified way to provide access to the information generated by a car to third parties – although this was originally not intended and is for the below-mentioned reasons technically not suitable. This concept is called Extended Vehicle.

Chart 4: Extended Vehicle Concept

One decisive disadvantage is that third parties have no direct access to the telematics system of the car. Direct communication with the car owner via the central information display is thus no longer possible for third parties.

Two additional possibilities of access to car generated data

1. Dongle plugged into the OBD port

Dongles can be used to access car generated data. These dongles are plugged into the OBD port inside the car.

Especially the following reasons speak against the use of a dongle:

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Telematics System

Manufacturer Server

Send/Receive Car Owner

Information

Third Party Server

Dongles can only send car generated data; it is not possible to receive data inside the car. Third parties and car workshops in particular, however, need both of these functions (send and receive).

Only a limited amount of car generated data can be read. Significant data such as the GPS signal, mileage and fuel level cannot be read.

Each third party needs a separate dongle to provide services. Given that only one dongle can be plugged into the OBD port at a time, the user has to regularly exchange the dongles he uses. A parallel use of different dongles is not possible.

The OBD port is not directly accessible for the user. For instance, the user has to open up a cover in the passenger compartment before the dongle can be plugged in. This cover has to remain open as long as the dongle is used.

Using dongles can furthermore overload the systems inside the car which can cause the car to automatically switch into emergency mode.

2. Google and Apple

Due to the rising customer expectations and the resulting market pressure some car manufacturers went over to minimally opening their on-board telematics systems. They only enabled the two major companies in the digital sector, Google and Apple, to install their operating systems and selected apps in the on-board telematics system - under strict requirements by the car manufacturer. Nevertheless, even Google and Apple have only a highly limited data access precisely defined by the car manufacturer.

Even if there was the possibility to install a non-manufacturer app via the operating systems of Google or Apple into the telematics system and thus to make it visible on the information display, this would not be sufficient due to the fact that the car manufacturer limits the data access.

IV. CECRA’s position regarding the Extended Vehicle

1. Equal access to car generated data for the benefit of the consumer

Car generated data – especially combined with user information – has become increasingly important for the entire automotive value chain. The market position of a company is significantly influenced by its access to data. This economic relevance of data is perfectly reflected by the accurate quotation of Günther Oettinger, EU Commissioner Digital Economy and Society:

”Those who have the data, have the power“

Consequently it is necessary to find solutions to ensure equal opportunities for all market players on the digitalised market.

The European legislator identified this necessity early on and created with the eCall Regulation (EU) 2015/758 the basis for the legal requirements for an interoperable, standardised, secure and open-access telematics platform (article 12 (2)).

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From CECRA’s point of view it is inevitable to stipulate precise legal requirements and standards for such a platform (on-board telematics system). There is an urgent need for a framework granting standardised and unrestricted access to car generated data for all market players – also for the period from today until the implementation of the interoperable, standardised, secure and open-access telematics platform (see paragraph V).

The Extended Vehicle concept however does not meet these requirements. It privileges to a large extent the interests of car manufacturers and provides them with an objectively unjustified competitive advantage over other market players whose business models include services of the same kind. Only a balanced and fair competition between all market players will provide consumers with the greatest possible advantage when using digital services.

2. Competitive effects of the Extended Vehicle concept

Data access and the opportunity to use data represent already today decisive factors for companies when it comes to maintaining their market positions and to establishing innovative, digital business models for the benefit of the consumer. It is needless to say that the quantity of data will grow rapidly in the future and thus increase the dependence of entrepreneurs on such data. Any access barriers or restrictions concerning the data access complicating a direct and independent communication with a car will therefore significantly influence free competition and the competitiveness of the single market players.

This however is exactly the key aspect of the Extended Vehicle concept which implies a transfer of the telematics platform to an external server held by the respective car manufacturer outside the car.

The implementation of the Extended Vehicle concept would privilege car manufacturers in many respects over other competing parties and thus lead to considerable competition restrictions.

The following severe restraints on competition are mentioned by way of example:

a) Access to data exclusively via the car manufacturer as a competitor

The car manufacturer has unrestricted access to all car generated data at any time – directly via the on-board telematics system. Third parties however are not granted equal access. Instead, they have to access the data via a server of the car manufacturer in order to receive the data they need. Since car manufacturers offer their own competing products for numerous telematics services, an exclusive access to data via the car manufacturer – being a competitor – already has in principle a significant competitive relevance. Compared to the status quo this would cause an unjustified disadvantage of the market players while privileging the car manufacturer at the same time.

b) Third parties without unlimited access to data

Due to the unlimited access to all car generated data and the possibility to process this data in the telematics system, car manufacturers have 100 percent of the data available at any time (data quantity and quality). In comparison, third parties (competitors) only have access to the car data via the server of the car manufacturer. On the way from the car to the server

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of the car manufacturer and from that server to the server of the third party, the data is inevitably subject to technical restrictions (e.g. varying transmission times) which is why third parties only have access to a limited data quantity and quality (significantly less than 100 percent).

In addition to these technical restrictions car manufacturers would moreover be able – due to the data collection on their own servers – to decide on access, waiting times, nature, quality and functionality of the data. This would complicate the development of services for third parties – if not make it entirely impossible. If the access to data is denied, limited (data packets) or only delayed, this represents a clear restriction of competition at the expense of third parties who need certain data to carry out their business activities and do not have the required access.

c) No access to real-time data

The Extended Vehicle concept makes it impossible for other market players to access real-time data, such as time-critical or highly available vehicle data. Only car manufacturers have this opportunity as they themselves do not make use of the Extended Vehicle concept but have direct access to the on-board telematics system.

The usability of time-critical data is highly dependent on an immediate transmission. High availability means that a multitude of new data is created in rapid succession. The engine speed typically fulfils both of these criteria. In this example, car manufacturers would exclude all service providers depending on a real-time transmission of engine speed information from competition.

Furthermore, real-time data will play a central role in the future, e.g. for the further development of road safety. Examples include information about traffic light phases, construction sites and accidents. The same applies for telematics services concerning riding comfort, such as information about the search for a parking place and for anticipatory driving. Access to this data is of initial importance for providers of such services.

d) Exclusion of market players by means of telematics contracts

Concluding a so-called telematics contract with the car manufacturer is the precondition for using all telematics services. If the user does not sign this contract, the external communication of the car is deactivated by the car manufacturer. These telematics contracts are presented to the customer for signature along with the sales contract and often include various mandatory services. Due to the link with services offered by the manufacturer – requested by the customer or not – third parties have effectively no more opportunity to afterwards offer their comparable services to the consumer. The initial contact to the customer and the content of the telematics contract thus represent a considerable competitive advantage for car manufacturers. They are for example able to send offers and invitations to the on-board information display. Nobody else is able to do that. Via information on the display, the driver could be specifically routed to a manufacturer-owned workshop in case of a breakdown instead of to a franchised dealer, or - if requested by the driver - an independent workshop.

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As a result, consumers are effectively dependent on a monopolistic offer by the car manufacturer. Consequently, innovation and competitiveness in the aftermarket are significantly restricted.

e) Exclusion of market players by means of exclusivity agreements

Car manufacturers could moreover conclude exclusivity agreements with single providers which would make it impossible for competitors to access certain vehicle data. Third parties would thus be substantially dependent on the commercial policy and the business models of car manufacturers and would have to adapt their business activities accordingly. The consequence would be a significant restriction of the competitiveness in the aftermarket.

f) Control and supervisory options of the car manufacturer

According to the Extended Vehicle concept third parties only have access to the car via an external server held by the car manufacturer. A direct and unlimited communication between these providers and the car owners would as a result be impossible. This would represent a clear distortion of competition in favour of the car manufacturer. If car manufacturers can constantly control all details regarding the performance and use of the services of their competitors, this as well represents a massive distortion of competition. Car manufacturers could not only analyse the customer and competitors’ behaviour but also see their prices and react accordingly. Moreover, they could analyse the customers’ buying habits and their willingness to pay for certain products and services. On that basis, they could fix prices for certain groups of customers. The consequence would be an unacceptable data-related price discrimination.

The afore-mentioned examples clearly emphasise how competition would be substantially restricted in case of the implementation of the Extended Vehicle concept. Additionally, the market-dominating position of the car manufacturers regarding vehicle generated data would be manifested.

3. Data protection concerns regarding the Extended Vehicle concept

In addition to the above-mentioned competitive problems there are also data protection concerns regarding the Extended Vehicle concept which need to be taken into account.

From CECRA’s point of view it is needless to say that provisions and obligations of data protection need to be strictly observed and controlled regarding all questions related to the digitalised car. In view of the rapidly growing amounts of data generated by cars there is a need for clear legal information obligations providing the person concerned at any time with a transparent overview about the data generated by the car and eventually sent to third parties. Moreover, the person concerned needs to retain full sovereignty over whether, and if so, what data is collected, used and processed and by whom. This basic principle of data protection is not only confirmed by article 20 of the General Data Protection Regulation (EU) 2016/679 but even extended regarding the free choice of the person concerned about the data transmission. Recital 68 of the General Data Protection Regulation calls just as Article 12 of the Regulation (EU) 2015/758 on those responsible to develop interoperable formats allowing the data transferability.

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The legally standardised right of the person concerned to free data transmission would however be considerably endangered by the Extended Vehicle concept, if car manufacturers do not provide data or only to a limited extent. Also for this reason, the Extended Vehicle concept is to be rejected.

V. A solution which can be implemented at short notice

It is inevitable for the European Commission to define according to Regulation (EU) 2015/758 precise legal requirements for an interoperable, standardised, secure and open-access telematics platform (article 12 (2)). Thus, a framework is created that ensures a standardised and unlimited access to vehicle generated data for all market players.

When defining this legal framework it has to be taken into account that competition for vehicle data will develop dramatically. Furthermore, manufacturers are already creating precedents today which in effect make it already now – and all the more after a legislative process of several years up until the implementation of the above-mentioned telematics platform – impossible for third parties to develop innovative, digital business models based on vehicle generated data. This is neither acceptable from the car dealers’ and repairers’ point of view, nor is it from the car drivers’ point of view.

As a result, an interim solution which can be implemented at short notice is urgently needed.

The so-called IP address solution or the shared server solution are such interim solutions for the period until the implementation of an interoperable, standardised, secure and open-access telematics platform.

CECRA is open to discuss further solutions at the benefit of the consumer with all relevant market players.

CECRA, established in 1983, is the European federation bringing together national professional associations, which represent the interests of motor trade and repair businesses and European Dealer Councils. CECRA represents on a European scale 336,720 motor trade and repair businesses. Together they employ 2.9 million people.

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