Safety, economy and entertainment are the three main benefits of the connected car. They are the advantages that drivers appear ready and willing to embrace, but less willing to pay more for. So which companies will benefit most from the new value chain the connected car will create?
So far, car manufacturers have tended to use digital technology to enhance the in-car entertainment experience. But more recently, attention has moved to connecting cars to external sources for safety, telematics and infotainment. These benefits are easy to communicate, and data from our multi-country Connected Car study shows significant interest in a range of possible new vehicle concepts, particularly amongst younger auto/technology engaged consumers.
The immediate impact of the connected car is already being felt in the insurance and vehicle maintenance markets where the use of telematics, for example, is helping to reduce insurance premiums for some young drivers. Automatic connected cars with personalized routing feedback are estimated to save drivers up to 30% in fuel costs. Infotainment, including advanced navigation systems, are also appealing. All of these features require greater connectivity between the driver, their surroundings and road users.
One major implication of the shift to connected cars is that the vehicle is no longer solely the province of the auto manufacturer. The market is opening up to a wider range of companies including technology manufacturers, digital entertainment companies, mobile operators, software designers, content and financial services providers.
Choosing the right brand partnerships will be essential to help companies succeed in unfamiliar territory – not just software and telco brands, but car marques too. Which operating system should they go with? With no dominant player as yet, some auto manufacturers, for example Hyundai Sonata, have opted to give their end-users the choice to connect their smartphones to either Android Auto or Apple’s CarPlay. This is an expensive route and low appetite for consumers to pay more for the benefits of the connected car suggests that car brands will need to make a definitive choice between Android and Apple in the near future.
• Accidents are the main concern globally (37%), ahead of fuel costs (36%), the cost of repairs (31%) and traffic (32%).
• Costs associated with driving are the main concern in developed markets (Germany, UK and US). Safety is the main concern in developing markets (Brazil, China and Russia).
• Self-driving cars appeal to 66% of respondents.
• 44% would consider car sharing/ lift-sharing/ride-sharing/carpooling, (highest in Brazil 57%, lowest in Germany 34%).
• More than one third (34%) would consider pay-as-you-go cars (highest in China 55%, lowest in Germany/UK 23%).
What the overall consumer spends on a vehicle is unlikely to change dramatically, but connectivity has the potential to completely alter the automotive value chain. As the demand to connect their vehicle to personal preferences and surroundings grows amongst consumers, so that cost of connection will create new (relatively small) revenue streams for mobile operators and software developers. More significantly, the connected car will impact other existing revenue streams such as the cost of insurance and repairs. Whether it is the mobile operator, operating system or car manufacturer, the key battleground this year will be over who takes ownership of the most valuable asset – the data.
Frank Haertl is Global Lead Automotive for GfK.
GfK’s Connected Car Report: Download our free preview report or get the full insights in our global report, which is available to purchase now. It contains detailed market-by-market analysis and brand specific insight. For your definitive guide to the road ahead or any further information, contact us.
GfK’s TechTrends 2015: This article was first published in GfK’s TrechTrends 2015, which is available to download. It contains ten short articles of Tech Trends providing insight and inspiration to help you to continue to navigate the ever-evolving and complex world of tech.
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