OEMs, technology players & insurers worldwide are converging to realize greater value from connected vehicles. Mobility has set its focus on telematics & data analytics for creating the next wave of deeper customer relationships with a connected lifestyle.
As cars have evolved into advanced mobile connectivity platforms, at the center of this evolution is the connected car technology that assists customers in driving safely, lowering emissions, benefiting from insurance telematics, and enjoying connected lifestyle services. Globally the connected car market was valued at $63.03 billion in 2019 and is projected to reach $225.16 billion by 2027, registering a CAGR of 17.1%. And, with connected cars offering large volumes of data, entirely new possibilities for OEMs to create value for themselves and their customers have emerged.
Consumers’ Increasing Appetite for In-Car Connectivity
India is one of the largest and fastest-growing markets for digital customers with Internet users expected to exceed 630 million by 2022. No wonder consumers are demanding seamless online and offline experiences, hinging the success of the automotive industry’s next evolution on digitalization.
80% of Indian Customers think Connected Cars are Beneficial
Notably, Indian car buyers top the list when it comes to being open to increased vehicle connectivity, revealed a new study by research firm Deloitte. In India — one of the largest car markets in the world, 80% of respondents did not mind sharing personal information with OEMs or third parties if the significant value could be received.
Indian Customer is Willing to Spend ~50K on Connectivity
Further, India is one of the few countries where the willingness to pay for advanced technologies is considerable, with two out of three Indians willing to pay up to INR ~50,000 for connected technologies in their cars.
The Path Ahead for OEMs in a Competitive Landscape
With connected technologies becoming integrated into daily lifestyle, automotive consumers are more likely to evaluate OEMs based on the digital experiences offered. By 2025, most cars in India are expected to be connected to users’ homes and offices.
- Consumers expect more digital services, both inside and outside the car
- Consumers are willing to finish a lot of activities while they are in the car
- Driving needs, patterns, and customer expectations differ across geographies
- Consumers expect more transparency in the pricing
- The convergence of applications and command interface in mobile devices for an increasing number of use cases
- Consumers willing to share their personal data in exchange for better services, which can then enable ecosystem players to collaborate
According to a report by Telematics Wire, by 2030, profits available to traditional automakers globally may fall from 70% to less than 50% of the industry total, which will also affect the Indian OEMs. The balance will be open for new entrants, including suppliers of new technology, mobility services, or digital services to capture.
Driven by customer demand and profitability, increased collaborations with technology start-ups, insurance companies, and OTT platforms, will be the new order of the day, where partnerships between OEMs and insurance companies will yield personalized insurance products, and fleet management companies will transform the entire e-mobility space through advanced driver behavioral data for cleaner and safer driving experiences.
01. Invest in Telematics Solutions
In a highly competitive market, mobility will play a vital role in attracting and retaining customers, especially younger drivers, known to be inclined towards new technologies. Telematics offers the requisite scalability and customization to OEMs, by equipping them for location-based & emergency services, navigation and traffic alerts, fleet operations, breakdown support, security service, facility searching, etc. It enables OEMs and insurers to share critical feedback on driving behavior and provides customers with a transparent and real-time feedback mechanism to check their driving behavior and vehicle health stats.
02. Customize Usage-Based Services
The growing number of vehicles with embedded devices is expected to drive down device prices, and encourage innovation, making it easier to adopt UBI products. UBI programs, which are already upending the traditional auto insurance business model and benefitting OEMs, insurers, and consumers, provide better risk assessment and incentive-based programs. This translates into more accurately priced insurance premiums and discounts for good driving behavior. This allows insurers to make considerable time savings and optimize claims processes, which effectively keeps customers apprised of claim status, helps close claims faster and gain feedback, leading to increased customer satisfaction.
03. Build Data and Analytics Capabilities
With the prospect of a data explosion on the horizon, it is critical to invest in a well-designed data, and meta-data layer with clearly defined objectives of the system, along with the right technology solution. By integrating big data analytics into their long-term strategic planning, OEMs will be able to better respond to vehicle faults, and access nuanced consumer behavior analysis, increasing loyalty and driving profitability overall. Further, opportunities for using big data generated by connected cars, is a potential market on its own, with value-added services or cost savings estimated to be worth anywhere between $16-$80 billion.
04. Develop New Revenue Sources
While connected car capability is a differentiated value proposition today, it is expected to be commoditized in the future. These can range from in-vehicle-location-based advertising, connectivity loyalty programs, to OTA updates. OEMs need to devise their own strategies for new features or offerings with aim to create a balance between new revenue sources while increasing existing operational profits and customer satisfaction. Post-purchase services also offer enhanced customer engagement through predictive maintenance, automated services, repair, and health checks.
A New Connected Paradigm
While representing one of the greatest transformational forces in the automotive industry, the connected car with its potential usages vast in application, and monetization possibilities still to yield concrete numbers, it is quite clear that connectivity makes autonomous driving possible, which is the next and absolute future of the automotive industry in this century.
India needs to take bigger strides in embracing emerging technologies to leverage this revolutionary phase shift in the automotive industry. The focus should be on innovating the driver’s experience, creating seamless access to the car’s features and interfaces, while building a suitable digital ecosystem for the technology to truly flourish.
