What is OBD?
On Board Diagnostics is the vehicle’s ability to report faults. These faults are accessed by technicians to monitor the health of different components during scheduled maintenance and to also troubleshoot malfunctions
PIDs or Parameter IDs are used to request OBD data through the adapter from the vehicle. The data collected can be broadly used in the following ways:
- Diagnostic Trouble Codes (DTCs) - These allow a person to rapidly identify and remedy malfunctions within the vehicle
- Real time data - engine speed, coolant temperature, oil temperature, throttle position, vehicle speed, distance and time travelled with malfunction indicator light on etc.
OBD scanners are used to perform vehicle diagnostic after plugging it into OBD port. The OBD port is located near the steering wheel. OBD scanners can be broadly divided into two types:
- Wired scanners - They have their own screen and cable to connect to the car's OBD port. They are relatively costlier and require a decent skill to access all the functionalities. If you buy a cheaper one, it can read only generic DTCs, not proprietary (manufacturer specific DTCs)
- Bluetooth / Wireless readers- These devices are plugged into the car's OBD port, but are connected via Bluetooth to a phone or tablet to display their findings. These are cheaper than wired scanners with full capability and are easy to use. On top of that, the applications on phones can provide additional functions to get true health of car.
CarDr.com’s vehicle diagnostic & appraisal app provides you real time vehicle diagnostic along with vehicle valuation by industry leaders and estimated repair cost for DTC codes. Moreover, the customers can choose the services they want to avail and pay only for those.
Where do dealerships fit into this picture?
Mechanics have been using these devices for quite some time - as they have enabled detection and repair of problems with minimal overhauling. Used car dealerships are not in the business of vehicle maintenance, but they are centered on reselling vehicles it acquires for profit.
According to a report by Mobility Foresights, about 39 million used cars were sold in the US in 2020. Most of these sales are through brick and mortar dealerships.
Used car dealerships' business is centered on reselling the vehicles it acquires for a profit. Vehicle with severe conditions wipe out their gross profit. The trouble codes detected on OBD scanners can help them make better purchase decisions.
1. Buying the Car
Buyers are in no position to determine the real quality of what they are buying. Sellers, on the other hand, are well aware of the quality of what they are selling. This situation is a typical one of information imbalance between buyers and sellers, which is to the latter’s advantage. But, due to lack of transparency, the purchase decision is not always easy. Watch the experience of a CarDr customer.
It would be extremely costly and time taking for the dealership to hire a mechanic and detect all the issues of the car.
The National Automobile Dealers Association data shows that the average used-vehicle sale in 2019 saw a gross profit of just over $2,000. This margin is significantly affected by the repair costs - before selling to the customer.
Bluetooth scanners are cheap. On connecting with a mobile phone, the trouble codes can be accessed on a single scan. CarDr.com also provides an estimated labor cost and time. A better estimate of the price is available in minutes, once we know everything wrong with the car.
Dealerships buy a significant portion of their cars from auctions. CarDr.com’s app will diagnose the car in a few mins and the report can be accessed at that time or it can be stored for later. The value of the car can be better estimated, once the vehicle history, fault codes, their possible causes and estimated cost of repair is accessible in the report. Once the true value of the car is obtained, the dealership has the price to determine their max bid price
The repair cost and time is reduced as we have already narrowed down the list of possible errors. The car can available for sale relatively quickly than if the entire maintenance check would have to be done.
This increases efficiency for used car dealers – increasing daily transactions or reduce cost.
3. Sale of Cars
Transparency is a very important factor in sales of used cars. A scan can be done in minutes - right in front of the buyer. This way, both the buyer and seller have equal knowledge about the car - a key factor for growth. Transparency between both the parties can lead to a greater demand relative to competitors and the supply can also be improved as the cars can be restored in a smaller duration.
What should you look for while purchasing a scanner?
The main factor is the reliability of the device. As described in the article here, there are basic codes and manufacturer specific codes. There are very few players in the market which are able to extract manufacturer codes.
CarDr.com is able to read manufacturer specific codes across cars of different makes and models. See the case where CarDr.com's device was able to detect errors which could not be detected by hard wire shop scanner.
Additional services - As Bluetooth scanners connect to smartphones, it is easier to add additional features like fraud checking and vehicle history via VIN, price estimation, repair costs and the ability to order parts online.
Price is always considered before making any purchase - but the reliability should be given a more weight than the price. Consider this case where the dealership could cover the yearly subscription of CarDr in a single trade. As this is a monthly subscription, dealers don’t have to incur high capital expenditure
On Board Diagnostics can help increase the dealer profit in the three ways:
- Improve gross margin - by detecting vehicle faults easily
- Enhance growth and revenue by increasing customers
- Reducing cost by adding efficiency in the system