How Different SMR and Leasing Working Models Can Benefit from Telematics and Connected Car Data

Telematics data is proving to be a boon for lease organizations and the service, maintenance, and repair providers (SMRs) that increasingly fill a niche in the automotive aftermarket sector. Both lease organizations and SMRs are discovering that data captured directly from vehicles gives them a way to alleviate many challenges that they face in a competitive industry sector rebounding from a pandemic.

The type of business arrangements that exist or can be set up between an SMR and a lease organization can take a variety of forms, including:

SMRs functioning as independent organizations with their own networked ecosystem
SMRs that are operating as business units of a lease company
Lease companies that don’t have an SMR internally and are seeking external services
Lease companies that have an internal SMR but want to use digital acceleration to improve their business processes
A lease company that works with one or more OEMs to lease vehicles to corporations and businesses

Possible business arrangements are not limited to these examples and over time it is likely that other innovative models will develop in this sector. The availability of real-time data in support of efficient, economical vehicle operations creates opportunities for delivering new customer experiences and more effective service models.

Underlying Concepts of SMR Operations

The primary mission of an SMR is to manage vehicles, keeping them in top operational condition and minimizing downtime through service scheduling efficiency and proactive, predictive maintenance processes. The business models that constitute SMR can take several different shapes, but the basic principles behind this approach are:

The SMR organization operates with or within a vehicle leasing company, or other agency, charging a per-transaction fee or a flat fee for services.
For transparency and convenience to customers, a dashboard is provided that keeps track of the vehicle status and presents it in an accessible format as needed.
The SMR manages maintenance and service work competitively with a network of repair facilities based on established criteria, managing scheduling, overseeing completions, and monitoring the competency of the repair services.
In instances where mileage overages, equipment malfunctions, OEM recalls, unacceptable driver behavior, or any vehicle misuses are identified, the SMR delivers notices to the responsible agency promptly through the status dashboard or other notification system.

The burdens and responsibilities for all aspects of the vehicle servicing and maintenance are taken on by the SMR and practices are put in place to ensure service issues are met seamlessly and automatically.

A Real-World Scenario Illustrating the Concept

To illustrate the business value of the supporting technology, here is how this concept extends to practical interactions between the lease customer, the lease organization, and the SMR.

A business contemplating the acquisition of vehicles has immediate decisions to make. Is it worthwhile to purchase to own? If you purchase to own, you are responsible as the organization to manage your own repair times and servicing times. To support these tasks, businesses will need a team to track and manage all the activities associated with the servicing, including selecting a managed and approved repair network, choosing those with the best reputations and cost efficiencies, and maintaining the resources of the fleet so that vehicles are always ready when needed. There is also a significant outlay of capital required to purchase the asset outright. Businesses that chose to purchase outright, of course, can still enroll in a maintenance program.

Or, do you decide that you want to lease the car so you have a fixed payment across all the vehicles in use? Options might include going to a lease company that is working with one OEM or perhaps working with multiple OEMs, but they would purchase the car and lease it to other businesses, such as yours, and create a suite of vehicles that can then be leased through them. All lease companies will offer across OEMs—even if they are OEM owned.

When taking this kind of approach, businesses will also want to have a fixed service contract, which is where the SMR fits into the equation. Every year, the operating expenses for this vehicle will be known ahead of time. This essentially outsources the burden of the full financial cost, making it a predictable monthly payment, and the service becomes a monthly cost as well (or an annual fee)—an approach similar to the fixed cost financing approach of a lease.

Given this approach, it is the job of another firm to negotiate a service contract on the vehicle that will satisfy both the needs of the lease company and the needs of the lessee of the vehicles. Both the SMR and the lease organization stand to benefit from the increased capabilities and efficiencies that telematics data can enable. Through the collaboration of these three organizations, the customer leasing the vehicle can expect a smooth, trouble-free driving experience during the span of the lease agreement, and, ideally, will come back to the same lease company for another vehicle following the lease expiration.

Tackling Business Challenges with Real-Time Telematics Data

The cornerstone of successful lease and SMR organizations, is the availability of rich, real-time, extended data about the vehicles. The following table lists some of the key industry sector challenges and the ways in which telematics data can help overcome them.

Industry Sector Challenge	Telematics Solution Benefits
Mileage overages on leased vehicles can generate financial penalties as well as customer dissatisfaction.	Monitoring mileage readings using telematics can raise alert if lease limits are being exceeded, allowing early re-negotiation with customers, avoiding end-of-contract surprises that can result in the loss of a lease customer. Monitoring mileage figures using telematics can assess vehicle usage at fleet levels and determine patterns that help set realistic limits for specific clients.
The increasing prevalence of vehicle theft, particularly in Europe, is costly to lease companies.	A covert installed telematics device can locate stolen vehicles (and leverage telematics capabilities to detect abusive driver behavior and provide useful vehicle operation details).
Failure to perform maintenance at set service intervals and to detect small problems with the vehicle—before they escalate—can be extremely costly and risk generating financial penalties.	Proactive maintenance linked to individual vehicle mileage and recommended OEM service intervals can minimize maintenance costs substantially. Using telematics data, service intervals can be determined remotely by odometer readings, oil levels and tire pressures can be monitored, DTC codes can be relayed, and captured data can pinpoint other problems before they worsen.
Coordinating and overseeing repairs can be challenging when many vehicles must be managed.	Access to real-time telematics data ensures vehicles can be proactively maintained and repaired prior to major maintenance issues so vehicles spend less time in the garage and more time on the road.
Claims costs and accident repairs are rising for a variety of reasons. Leasing organizations must find a way to contend with this financial drain and the inefficiencies caused if repairs take too long to complete.	Telematics-based connected claims can help faciliate claims handling and broker services so vehicles are swiftly returned to action.
Reckless, risky driver behavior can be damaging to the lease vehicles.	Telematics data can detect signs of reckless driving, including excess G-forces, hard acceleration and braking, speeding above posted limits, and other types of bad driving behavior. Leasing organizations can choose to reprimand bad drivers or ban them entirely from leasing any vehicles from their company or use messaging and coaching to improve behavior and risk.
Maintaining the value and safety of a vehicle lease fleet requires analytical skills to detect problems and predictive capabilities to aid decision-making.	Predictive analytics can be performed, linked with AI programs that ingest available data from every source and recommend appropriate remedies.

Learn more about the opportunities and challenges faced in this emerging industry sector and the business values that can be delivered through the intelligent use of telematics data: Download White Paper – Understanding the Full Value of Telematics Data for SMR (Service, Maintenance, and Repair) and Leasing OrganizationsBoth the lease organization and the SMR can enhance their operations with a stream of telematics data to inform their business, control costs, and make projections based on the outcomes of existing agreements.