AAA exec sees data next motoring battleground

Bernhard M. Koch, CEO and president of AAA Mid-Atlantic, wonders about automakers collecting drivers' data, and how this will affect independent repair operations, like AAA's Clifton Heights shop. AKIRA SUWA / Staff Photographer
Bernhard M. Koch, CEO and president of AAA Mid-Atlantic, wonders about automakers collecting drivers' data, and how this will affect independent repair operations, like AAA's Clifton Heights shop. AKIRA SUWA / Staff Photographer
Posted: July 08, 2014

Monday morning marks the end of the July Fourth holiday weekend, one of the busiest travel periods of the summer, but Bernhard M. Koch, 59, president and chief executive of AAA Mid-Atlantic Inc. auto club, wasn't too worried about emergency calls from cars stranded on the highway.

He and his wife were too busy traveling by ocean liner, hosting 40 automobile club members on a AAA Mid-Atlantic cruise to Barcelona, Istanbul and Venice.

"Rolling into Venice on a cruise ship is one of God's gifts," Koch said.

Koch said that lately, though, he's spending a lot of time talking about what he sees as a little-understood privacy issue that should alarm all car buyers. It has to do with the increasing computerization of car systems.

Question: What's going on?

Answer: We're concerned that [automobile] manufacturers are building a closed system. They are going to capture all your driving habits, how fast you are going, how hard you're braking, how you accelerate.

Q: So what's your concern?

A: What are they doing with that data? Are they selling it to insurance companies? Are they selling it to marketing companies? There's no one looking at the appropriateness of the data they are capturing from a privacy perspective.

Q: What's the solution?

A: The consumer should have the explicit right to say, "Wait a second. I'm allowing you to capture [this data] because, that's the way the cars are built, but if you export it to someone else, you have to ask for my permission."

Q: Do the manufacturers have any other motives in this?

A: Their business purpose, which I don't think they'll deny, is that they want to have a closed-end system, so the only place you can have your car serviced is the dealership.

Q: Not to be too cynical here, but aren't you partly taking your stance because this closed system could potentially interfere with one of AAA Mid-Atlantic's newest lines of business, auto repair shops like the one in Clifton Heights?

A: No question about it. But our position is that consumers should have the right to decide. And that's not the only reason. We are the voice of the motorist. We're the ones that [pushed] for seat-belt laws, for distracted-driving laws.

Q: Speaking of which, do you use the phone while driving?

A: I always have hands free. I use a Bluetooth.

Q: It came as a surprise that AAA Mid-Atlantic repairs cars.

A: The average car in the U.S. is about 13 years old. We've gone down the road of putting our retail facilities that have the traditional tour books and maps together with these car-repair facilities. It's all about people trusting the brand.

Q: Do the garages make money?

A: For the first six months, absolutely not. We get to break-even after 12 months. When you look at a full year of implementation, our insurance leads were up 25 percent, credit-card applications up 30 percent, travel sales up 20 percent.

Q: I guess when people are sitting waiting for their cars to be repaired, they are sitting ducks for your sales people.

A: We don't refer to them as sitting ducks. They are future clients.

Q: What do you drive?

A: A 2009 Audi with 80,000 miles on it.


BERNHARD 'BERNI' KOCH

Title: President, chief executive, since January 2012, AAA Mid-Atlantic.  

Home: Kennett Square.

Family: Wife, Maggie; children, Elizabeth, 32, Diana, 29, Michael, 26.

Diplomas: Queen's University, Kingston, Ontario, business.

Resumé: Increasing responsibilities in financial services and insurance companies, rising to chief financial officer. In 2005, joined Mid-Atlantic as CFO of its insurance business.

Vacation must: A golf course near a winery.

Years ago: Financed college as a drummer in a cover band.


AAA MID-ATLANTIC

Headquarters: Wilmington.

Where: Southeastern Pennsylvania, Wilkes-Barre, Delaware, Maryland, Virginia, Washington, parts of New Jersey.

Members: 3.7 million.

Employees: 2,800; 560 in Phila. area.

2013 revenues: $500 million.

Stores: 60, 14 with repair garages; 70 with 30 garages by 2015.

Roadside assistance calls: 2,024,631 in 2013.


MORE ONLINE

"Berni" Koch on the difference between a CEO and a CFO.

www.inquirer.com/jobbing


Interview questions and answers have been edited for space.

jvonbergen@phillynews.com

215-854-2769

@JaneVonBergen

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