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Executive Interview with Ieon Chen, CEO of Equus Products Inc.
May 11, 2009
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By Amy Antenora
The visionary behind the INNOVA line of “check engine” light tools, Ieon Chen recognized the potential of on-board diagnostics second generation (OBD2) technology more than a decade ago. He has been committed to empowering do-it-yourselfers, professional technicians and consumers alike with easy-to-use tools, technology and access to vehicle repair information ever since.

A 25-year veteran of the automotive aftermarket industry, Chen graduated with a master’s degree in architecture from University of Detroit. Before entering the automotive aftermarket arena in the early 1980s, he served as design director for the Las Vegas McCarran Airport terminal and garage project. In 1984, Chen joined Equus Products, Inc., which was owned and operated by his parents. At the time, Equus specialized in the manufacturing and distribution of gauges and tachometers for the automotive aftermarket. Under his guidance, the company has expanded its business from gauges and tachometers to automotive test equipment, intellectual property, store testers and more.

Today, Equus Products, Inc. is still based in Fountain Valley, Calif., and remains a family owned and operated business. It is an ISO 9001: 2000 certified company, and a leading manufacturer and distributor of test equipment, gauges and tachometers for the automotive aftermarket. The company markets and distributes its line under the EQUUS brand to major retail and WD accounts throughout the U.S., Canada and Mexico. In 1990, Innova Electronics Corp. was acquired for research, design and product development. Products developed under this division carry the INNOVA brand, and are designed to provide customers with easy-to-use products for servicing the vehicles of today and tomorrow.

In this exclusive interview, Chen talks about the future of telematics, the economy and its influence on the DIY market as well as the company’s anticipated milestone of selling 500,000 INNOVA scan tools by the end of this month.


You anticipate reaching a significant milestone this month, having sold nearly 500,000 INNOVA 3100 CanOBD2 diagnostic tools. Why do you feel this is such a successful product?

There are many reasons why this INNOVA 3100 CanOBD2 Diagnostic Tool has become the single best-selling OBD2 tool to date – with one single unit accounting for about 20 percent of all OBD2 tools sales in the U.S. every year – according to industry and internal calculations.

First, this 3100 tool’s specifications were initiated by ASE Certified technicians and with substantial input from end-users. The head of our Technical department successfully ran his own shop for over 25 years before taking the position, so he knows what do-it-yourselfers and professional technicians need and want in a tool.

Second, we made this, and all of our tools, very easy to use. All INNOVA diagnostic tools are plug-and-play. You simply plug the tool in, turn the key to “on” and perform a lightning fast test; within 15 seconds, the diagnosis is done.

Then, the patented all-in-one display shows more than 20 essential pieces of information on one screen – no scrolling, no note taking, etc. We also make the 3100 a very high quality product at a very affordable price in the hundred-dollar range. For that you can get a long lasting tool with free updates that will be able to work on cars for years to come. And if there are any problems regarding the tool, our toll-free customer service line manned by a team of all ASE Certified Technicians, will work with you to fix the problem.

Equus Products Inc. prides itself on delivering many of the best selling tools in the marketplace – it takes time to derive well-thought-out tools. We are also dedicated to implementing constant improvements to this tool and the entire family of INNOVA diagnostic tools. Since launching the 3100 in 2002, we have made many improvements to it, passing these enhancements along to our customers and end-users without increasing the costs. Some of these major enhancements include the addition of CAN (Controller Area Network), USB connectivity, trilingual on-screen definitions, MY2010 compliance; as well as several Internet flash-updateable software updates. And most recently, we offered 3100 tool owners the opportunity to use the optional repair solutions at www.CanOBD2.com database, featuring most likely VIN specific fix, parts needed and repair procedures of how-to’s. So, Equus Products is not just providing its customers with easy-to-use tools for diagnosing their vehicle problem – we are also providing the knowledge, information and solutions to our customers so they are capable of fixing their vehicle problem and fix it properly.

With all the talk recently about telematics, where do you see on-board diagnostics heading in the next five to 10 years?

Personally, I have serious doubts that telematics will be the future of on-board diagnostics. It’s no secret that this type of technology is becoming more available each and every year; however, the fact is that there is some strong resistance in the marketplace today from all fronts, including the cost of hardware, subscription fees, privacy concerns, etc. After over a decade of push, On-Star is still struggling, with its used-car subscription rate at almost zero.

At best, on-board diagnostics via telematics will be limited, costly, cumbersome and present to the driver with symptoms and problems only. Without knowledge-based solutions, this will only add to the driver’s frustration level. We believe there are alternatives with lower cost and more user-friendly solutions available in the market today.

In fact, the future of on-board diagnostics will focus much less on the hardware (telematics or not) and much more on the information-based knowledge and solutions. It will go beyond diagnosing a current problem to predictive diagnostics, which can essentially determine a possible problem before it happens.

Of course, telematics does have its advantages. With telematics on-board, OEMs (original equipment manufacturers) will be able to monitor each system on the vehicle, query a database for acceptable parameters, set a threshold and notify their dealer or vehicle owner about a pending problem. This technology will even enable OEMs to watch degradation based on mileage and conditions, and predict when parts will be needed. Imagine the possibilities if OEMs will be willing to open this information to professional technicians, vehicle owners, parts stores and even insurance companies. We believe that our job and challenge as suppliers will be to provide the market with needed knowledge-based information and solutions to work with the future hardware (i.e. telematics, etc.) to capture the bulk of future market share.

In addition to telematics, we will see even more standardization in on-board diagnostics. Beginning in 2010, this standard will go beyond cars, light trucks, SUVs and minivans to also include medium- and heavy-duty vehicles. OBD2 technology is also now standard on motorcycles as well. In fact, by 2018, at least 85 percent of all vehicles on the road in the U.S. will have OBD2 technology.

Additionally the world is moving toward a global OBD2-style standard related to safety issues such as SRS and airbags. Called ISO 14229, this measure is calling for unified diagnostics services with a single tool and single protocol anywhere in the world. However, we have learned that it is very hard for one country to adapt to another country’s standards. At this moment, EOBD2 and OBD2 (U.S.) have differences. The best way to be successful in a new territory is with a continuous commitment and investment to engineering and troubleshooting – there are no shortcuts. We learned this when we entered the Japanese market with our 3111J, which has since become the best selling on-board diagnostic tool in Japan as well.

Do you feel the independent aftermarket, particularly the service and repair segment, is prepared to handle the challenges that lie ahead, with respect to diagnostics, OBD and telematics?

No, unfortunately as vehicle technology keeps on moving forward, we see the interest in our aftermarket industry with potential for continuous decline, fewer new future technicians entering our industry and even less training to the existing technicians. With all of the new technologies that have been added to newer vehicles, aftermarket technicians are facing more and more challenges to catch up. One of the main reasons is that as the demand for more training increases (one industry report estimated that a technician will need to be trained three months each year in order to keep up), the technicians have less time and are not encouraged to participate in the proper training in order for them to catch up with today’s technology. This is why INNOVA is very conscientious and concentrates on making new tools more sophisticated that are also easier to use. We are committed to doing our best to save technicians the training time and provide them with the knowledge, information and solutions they need to bring the “total solution” together to help these aftermarket technicians save time, improve their knowledge and get their job done.

Equus began as a gauge manufacturer but has successfully expanded beyond that one product category today. When did the company begin pursuing on-board diagnostics and why?

Equus Products, Inc. was founded in 1982 as a distribution arm for Equus Inc., which was established in 1967 as a contract manufacturer of private label gauges. As early as 1976, we began to manufacture private label testing equipment as well. By the early 1980s, Equus provided product for many of the top test equipment and gauge suppliers in the U.S. In 1990, Equus Products, Inc. acquired INNOVA Electronics Corp. for its research, design, and product development abilities. Products developed under this division carry the INNOVA brand. INNOVA offered early-model OBD1 code readers. Our INNOVA 3145 Ford Code Reader was the first to offer an easy-to-view digital display codes, which eliminated the frustrating task of needing to count flashes to diagnose a problem.

It was in the mid-1990s that I began to have conversations with ASE Master Technician Keith Andreasen, about the future of the test equipment industry. We saw how vehicles were becoming more and more high tech. We shared a dream to provide consumers with a way to diagnose their vehicle’s “Check Engine” light as easily as you might check your tire pressure and oil levels. And then when the U.S. government standardized on-board diagnostics second-generation in 1996, we were confident that the market size and opportunity was ideal. At that time, our product development began to take shape.

In the late-1990s, the demand for low-cost, easy-to-use on board diagnostic (OBD2) tools was requested by one of our long-time customers, O’Reilly Auto Parts. We evaluated the market situation and determined that the time was right to initiate our OBD2 project into production.

Has the recent downturn in the economy been an upswing for the sales of your DIY diagnostic tools as consumers try to save a buck?

Yes and no. Over the years, it’s been pretty standard to see an increase in automotive aftermarket tool sales when the economy is in a slump. Consumers are holding on to their vehicles longer and need to either repair vehicles themselves or have a professional perform the work. Recently, the average age of a passenger vehicle jumped from 7 years to 9.6 years.

Just last year we did a survey of our local area repair facilities. At the time, the price for a diagnostic check on a vehicle ranged anywhere from $20 - $250, with the majority from $50 - $75, just to plug in a tool like ours to read a code. When the economy is booming, it would be acceptable to most consumers to pay this type of fee. But in this economy, consumers are looking everywhere they can to save a few dollars.

Our most affordable tools can be purchased for about $69 - $100, and they often pay for themselves after their first use. Then of course they will be able to use the tool in years to come with a simple free online upgrade to get all the latest updates. Independent online tool reviews are saying the same thing. We recently have seen a shift in comments left on our tools at Amazon.com where the consumer says things such as, “This tool will pay for itself after one use.” Comments in the past would always say worked well on my car, easy to use, etc., but lately we have seen more of an emphasis on the value and cost savings.

That said, we are seeing some alarming statistics that consumers are ignoring important maintenance and repair issues, partly due to the economy. A recent Harris Interactive survey reported that 10 percent of all U.S. drivers had a check engine light on, and fully half of those drivers had ignored the light for three months or longer. It’s important for us all to work together in an effort to educate consumers about the importance of automotive maintenance, and the products available to help them save time and money when it comes to automotive repairs.

We also have repair technicians who are using our more affordable handheld diagnostic tools and scan tools to do most of their daily diagnostics. In this day and age, a shop can’t afford to spend thousands of dollars on big box tools for every tech in the facility. We’re seeing longtime technicians and students alike using our tools. One industry veteran tells us he uses our handheld tool at least a dozen times each day. He loves the emissions readiness monitors, and also likes that it simplifies his test drive and repair confirmation.

And although we are seeing an increase in the sales of diagnostic tools, we are also seeing retailers that are very cautious in placing orders. Everyone is afraid to carry extra inventory these days. We work closely with our retailers to try and forecast product needs to help maximize purchasing power and return on investment for everyone.

With automotive technology changing so fast, do you see a shift in the market away from expensive dedicated/stand alone scan tools?

From talking with technicians on a daily basis and listening to their comments, a high-end dedicated scan tool is still in need for each shop; there will always be the call for looking down into sub-systems in order to find a problem that’s not easily fixed in any other way. However, the biggest complaints we are hearing with the expensive tools are the costs and the speed of the tools. Most garages can only afford to purchase one of these, so what do the other technicians in the bay use when this is in use? Then the information is slow coming out of the tool, which results in more time standing around waiting for diagnosis instead of actually working on a car getting the problem fixed which means more revenue for the garage.

The smaller tools are beginning to get a lot more sophisticated with some of the higher end features and functions added in there all at a fraction of the cost which make them more appealing and cost effective to the garage owner. There is also the problem of theft in some garages where tools that cost several thousand dollars have been known to develop ‘legs’ and walk out the door. With a $350 scan tool, if it gets stolen you can just go out and buy another. It’s not an ideal situation but the loss of a few hundred dollars versus several thousand is a lot more bearable. We don’t believe that any smaller scan tools can completely take the place of a big box tool; however, we do know that for their price point, they are filling a void and allowing more people to perform diagnostics than ever before. It is our belief that the expensive scan tool will always have its place as a shop tool, but that the small handheld diagnostic tool will also become a technician tool with room for co-existence between the two.


 
 
About the Author
author
Amy Antenora
Editor, aftermarketNews
aantenora@babcox.com

Amy Antenora has served as Editor of aftermarketNews.com since 2002. Prior to joining Babcox Media, she worked as a general assignment reporter and columnist for Sun Newspapers, and as a freelance Arts & Entertainment writer for AOL. Her professional communications experience also includes time spent handling public relations for two state universities in Ohio. A graduate of Kent State University, she earned her AAP designation from Northwood University's University of the Aftermarket in 2009.