A method of using an adaptive fault diagnostic system for motor vehicles is provided. A diagnostic tool collects unlabeled data associated with a motor vehicle, and the unlabeled data is transmitted to a central computer. An initial diagnostic model and labeled training data associated with previously identified failure modes and known health conditions are transmitted to the central computer. The central computer executes a novelty detection technique to determine whether the unlabeled data is novelty data corresponding with a new failure mode or normal data corresponding with one of the previously identified failure modes or known health conditions. The central computer selects an informative sample from the novelty data. A repair technician inputs a label for the informative sample, and the central computer propagates the label from the informative sample to the associated novelty data. The central computer updates the labeled training data to include the labeled novelty data.