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Why Car Dealerships Fight Over-the-Air Updates

by Justin Tejada
As the lobby for car dealerships nationwide, the National Automobile Dealers Association (NADA) bears the responsibility of advocating for the best interest of its members. Naturally, this spirit pervades all of its media.

Take a recent blog post, for example, in which NADA recapped a J.D. Power consumer survey about over-the-air software updates in connected cars. As J.D. Power's own recap of its survey states, more than half of consumers said they would want to receive OTA updates in their cars.

NADA's summary, however, focused on the more negative reactions.

"These new-era technologies are well received by participants, but they aren't perfect," reads NADA's blog post. "Some respondents reported problems that created frustration, like the modification of their previously programmed user settings. Others complained they disliked the current software update, and are not able to return to the earlier version which had become familiar."

NADA's characterization isn't inaccurate, but it does feel a bit slanted.

So what beef does NADA -- and the dealerships it represents -- have with OTA updates? Once they're fully operational, many believe OTA updates for connected cars could put a significant dent in one of dealerships' primary revenue streams: repairs.

"Dealerships generate the greatest share of their profits from providing parts and repair services," reads a 2016 BBVA Research report. "If manufacturers can provide upgrades and check-ups remotely, then the adoption of OTA software could put the profitability of dealerships at risk."

At the moment, dealerships are not really threatened. For one thing, certain physical fixes must be done in person -- brake repairs will never be done over-the-air.

(They could, however, be done by robots.)

Equally important, but perhaps more short-lived, is a regulatory landscape that hamstrings OEMs from providing OTA updates to consumer vehicles without someone compensating dealerships. It's a hard-earned status quo for NADA, but one that seems unlikely to last given the rapidly accelerating capabilities of over-the-air technology.

General Motors has announced plans to launch over-the-air updates before 2020 for their infotainment and mechanical software systems. Ford has found a way to offer limited OTA updates to its interactive Sync 3 system in 2016 models. Volkswagen is experimenting with different models for the way it provides OTA offerings in hopes of drumming up greater customer interest. Always the outlier, Tesla is entirely uninhibited in its distribution of OTA updates because it owns all of its dealerships.

In a recent column for Ars Technica, Jonathan M. Gitlin argued that dealerships' resistance to expanded OTA freedoms for OEMs could put drivers in danger down the road.

"We all know just how frequently security flaws are discovered (and then exploited) in embedded devices and the Internet of Things; it's almost unthinkable that any roadblocks should stand in the way of patching those flaws as quickly and safely as possible," Gitlin wrote.

A commenter on the article offered a counterpoint. "Mark my words, someday there will be a mass hack on OTA updatable vehicles and it's going to be unpleasant at best," wrote Ars Technica user Coppercloud. "I want updates, but please require physical access for that stuff." This argument is one that has been put forth by dealerships, as well.

Sooner or later, advanced OTA technology and consumer interest will combine to make a loosening of these restrictions an inevitability. The question is, how will dealerships adapt and evolve in the aftermath of those changes?


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