Industry Advice Ask Mike: How Is “Software as a Service” Reshaping the Industry?

with Mike Anderson

This month, we “Ask Mike to discuss the growing practice of serving automotive software as a revenue source. We at Hammer & Dolly hope you find the following exchange useful, and we encourage you to reach out to us if you have a question for Mike on this or any industry-related matter that he can answer in a future issue.

Hammer & Dolly: Mike, let’s talk a bit about an acronym that’s becoming more prevalent in industry conversations lately: SaaS, or ‘software as a service.’ That acronym refers to subscription-based vehicle features and connected software services, such as navigation, heated seats and other functions that can be activated or updated remotely. How is SaaS impacting today’s industry?

Mike Anderson: The cliché has been used for years, but your car is basically a cellphone on tires. Along with that fact, consumers today also want a more personalized experience. Somebody can buy a baseline model that perhaps has multiple features. Servicing those features has become a revenue stream for the OEMs.

Look at the evolution of TV over the years. Many of us started out with just a few basic channels, then we went to cable. Now everything is subscription-based: Netflix, Apple, Hulu, Disney+, Paramount, Prime, all that. So, what’s happening now with automobiles is simply following that trend, which I believe is going to grow as more consumers choose to have their vehicles personalized for the features they want.

According to the consulting firm Accenture, digital services in vehicles could generate as much as $1.5 trillion for the automotive industry worldwide by 2030. That figure is estimated to rise to $3.5 trillion by 2040. That’s 40 percent of automotive industry revenue.

Putting on the collision repair hat, I’d say it’s obvious that ‘software as a service’ translates to more connected vehicles to repair and more OEMs to receive collision notifications. For a vehicle to have software as a service, it needs to be connected so it can do software updates. Well, that also fast forwards collision notification or the ability to refer customers to certified collision centers, which will be good for our industry.

H&D: What have you seen so far in terms of the industry response to this, as far as training and equipment?

MA: Technicians need to know whether a vehicle’s connected, and they must be aware of that before they disassemble the vehicle. They need to place the vehicle in service mode, and that process varies based on the vehicle type. Unfortunately, there’s not a lot of education out there about that. Asking the vehicle owner, ‘Is your vehicle connected?’ must be part of your intake procedure. A lot of consumers may not know.

Some vehicle manufacturers, such as Toyota, will tell you if a vehicle’s connected if you go to their factory website. The best way to learn how to place a vehicle in service mode is to go to the OEM repair procedures or perhaps refer to the owner’s manual.

H&D: This topic brings up an age-old question: ‘Who’s paying for this?’ To use the health insurance industry as an example, we’ve all seen invoices where the insurer will say something to the effect of, ‘This procedure wasn’t medically necessary’ and deny payment. Maybe an automotive insurance company could say, ‘GPS navigation isn’t necessary to fix the car.’ What are your thoughts on that, and have you seen any level of pushback at this point?

MA: As part of the ‘Who Pays for What?’ survey we conduct, we ask which insurers pay to clear the owner’s personal data when a vehicle’s a total loss. We’ve seen that increase. That’s not exactly ‘software as a service,’ and we need to gather more information on insurer practices in that area, but that upward trend is worth noting.

H&D: What have been some misconceptions, if any, you’ve encountered in the industry with respect to SaaS?

MA: Again, ‘software as a service’ is used to describe situations where people can subscribe to personalized features like heated seats or GPS or whatever the case may be, but it also lends itself to other services, like SiriusXM radio.

We had a customer with an Infiniti. Every time the battery was disconnected and then reconnected, the vehicle’s alarm system was triggered, and the police showed up. This happened three separate times. The rear window had been removed from the vehicle, and the SiriusXM radio had been acting up. Because of the removed glass and the alarm being triggered each time the battery was reconnected, the police responded on all three occasions.

That example isn’t SaaS-related, but technicians need to consider more than whether the consumer has subscribed to heated seats or GPS. They need to think about all the features that may be integrated with the vehicle. Interconnected vehicle systems can create unexpected issues that technicians must recognize before beginning repairs.

Here’s another point that may not go hand in hand with what we’re talking about, but it’s still important to make. Obviously, vehicles are getting more complex, and the ROI a shop may have achieved on their frame machines, rivet guns and welders in the past may not be the case anymore due to ADAS and more total losses. Shops need to figure out how they’re going to recoup their investment in the equipment that is going to become obsolete every couple of years. Therefore, I think that’s why shops need to start looking at having a structural labor rate. That’s another thing coming down the pike that must be considered.

Want more? Check out the September 2026 issue of Hammer & Dolly!