The Scope of the Opportunity is Substantial
The potential of the connected car services market is enormous and, at the same time, end user expectations are extremely high. A survey by Telefonica1 indicated that 80 percent of respondents expect a connected car to deliver an experience equal to the mobile device connectivity and communications they are accustomed to at home and at work.
In a Business Insider article, “The Connected Car Report: Forecasts, competing technologies, and leading manufacturers”, John Greenough wrote:
“ Over the next five to 10 years, this Internet integration is expected to change the car ownership model, create a new platform for consumers to access content, lead to fully autonomous vehicles, and revolutionize the auto industry. The market position of the car today is similar to where the smartphone was in 2010—
it has just taken off.”
“The Connected Car Report: The Transformation of the Automobile”, released by BI Intelligence in April 2016, strikes a bullish attitude about the market opportunity. Excerpts from this report indicate:
- Over 380 million connected cars will be on the road by 2021. Automotive OEMs are accelerating their plans to connect the majority of vehicles that they sell, as they increasingly recognize the business opportunities in doing so.
- Consumers are adopting connected car technology at faster rates than expected.
- Technology companies will play a major role in the future of the automotive market.
According to McKinsey & Company, the combination of shared mobility, connectivity services, and feature upgrades could expand automotive revenue pools by approximately 30 percent, reaching USD 1.5 trillion by 20304.
Elements of Data Commercialization
For OEMs, commercializing the surging interest in the connected car requires gaining a better understanding of the shifting attitudes of the connected driver and discovering the best ways to conduct an outreach campaign to these drivers. It also requires selection of a trusted partner to handle the complexities of data collection and processing in a responsible manner. Finally, to obtain maximum value from data that is harvested and granted usage rights by end users,
OEMs need a framework to create and offer services.
An effective ecosystem must:
- Support data exchange.
- Connect with complementary partners and services.
- Provide the necessary mechanisms to unify disparate formats, communication protocols, data collection and transmission rates, and differing hardware conventions.
Obtaining Informed Driver Consent
At the heart of any effort to commercialize driver and automobile data is obtaining consent from each individual considering a program. The prevailing lore across the industry is that drivers shun the idea of providing information to other parties—whether insurers, OEMs, or government agencies. Statistical and anecdotal evidence, however, suggest that consent often depends on the terms being offered.
In surveys, drivers typically express reluctance to share data with a manufacturer or another organization unless there is a specific benefit to them. Shaping that benefit to something of reasonable value to the driver makes a considerable difference in consent rates. Assuring the driver in absolute terms that the data will only be used for specific purposes is also a primary consideration.
Millennials in particular are very comfortable with a quid pro quo approach to sharing data. They often download and use free or low-cost smartphone apps in exchange for access to a fair amount of personal data. Sometimes the benefit to the user seems almost negligible, for example, consenting to personal data access in exchange for a smartphone flashlight app (even though that capability is already built into many smartphones). Millennials should not be ignored by automakers. In 2010, they made up about 17 percent of new car sales and in 2015 that number has grown to 25 percent (which is now the fastest growing segment in the
auto industry). Sharing data typically is not an issue with them.
Older, seasoned drivers typically require more direct benefits to provide consent. For example, a study referenced on Movimento shows that more than half of drivers are willing to share vehicle data with insurers to obtain better rates. Over 66% will share data to help improve future vehicle quality and design. Nearly half are willing to share data with manufacturers to gain a more individualized experience in their automobiles. Other quid pro quo areas currently indicate
greater consumer reluctance, such as sharing data with advertisers for special offers (34%), but the increase in location-based advertising is expected to diminish this resistance over time5.
Gaining consent from drivers is not a given nor is it an automatic process; carmakers will need to earn this consent. By offering better experiences, special offers, or unique services that satisfy consumer wants or needs, the chances of obtaining informed consent rise accordingly. Encouraging drivers to exchange data on operations for free connected car services—over the life of the vehicle—can be a power inducement for them to take part in a program.