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Car Data Revenues: What is the Future?
Automotive manufacturers are waking up to the reality that with the degree of car data and connectivity generated by today’s vehicles, there is a revenue “goldmine” waiting to be unleashed. But how?
A new issue?
Connected in-car services for personal transport is – relatively speaking – not a new concept as in 1996 GM’s Onstar service was unveiled to the market.
Therefore, you would expect that in the subsequent 23 years the demand for connected in-car services would have grown to the point of being a cornerstone of every automotive manufacturers’ revenue stream. If you did however, you would be wrong…
Despite the fact that new cars have tens to hundreds of touch points, all of which are capable of generating data plus the processing power which, in some cases can generate 25 gigabytes of data per hour, it is surprising that it has not been utilised and begs the question why? Especially when current estimates suggest that this market could well be worth over US$219 billion by 2025.
Which way to go?
A key reason for this lack of progress has been in no small part due to the myriad of different ways a manufacturer could chose its car data strategy and how it should invest.
Practically, services can go in the following directions:
- They could be 3rd-party applications (i.e. hosted via the Google App Store (GAS) on its Android Automotive platform, allowing the user to optionally chose via the UI on the infotainment system;
- There could be (and within the premium sector are) “native” user-facing apps (connected/provided via OEM installed software and more completely integrated into the vehicle’s system of operation, Onstar being a good example of this;
- There is also the potential for non-user-facing monetisation (i.e. vehicle telematics informing OEMs/service providers of vehicle condition, maintenance requirements, usage etc) leading to a connection between the user and the additional services that the OEM can up sell as part of an annual subscription package.
Three key directions
The fact is that there is no one solution for OEMs. However, for some brand segments the route forward is clearer than others:
- Premium manufacturers must decide how they should focus their efforts, in recent surveys premium brand owners have stated a willingness to subscribe to native services on an annual basis;
- Mass manufacturers need to decide how they can approach the market, as with tighter margins selecting “off-the-shelf” platforms (such as Android Automotive coupled with GAS) may be the only option to keep pace with rival brands, especially where base-spec premium brands and top-spec mass brands overlap in the marketplace;
- For ALL manufacturers with any interest in the fleet markets, advanced telematics MUST for part of their strategy, enabling better care and maintenance of their vehicle fleet whilst in active service. Thus ensuring that when the vehicles come to be remarketed, residual values can be maximized and the inherent risk involved in selecting a price position at the beginning of a lease, protected.
At PTOLEMUS Consulting Group, we’ve spent considerable time monitoring the telematics markets, assisting clients looking for answers, helping them to navigate their business challenges in the world of telematics and vehicle data with a combination of research reports and consulting experience.