Between voice recognition, artificial intelligence and autonomous driving, new connected vehicle services are being introduced at every turn. Whether bred out of market need, technical innovation or both, there’s no shortage of opinion around what the future holds for the IoT, connected vehicles and car ownership in the automotive space. But what do consumers really want—and what are they willing to pay for?
Given the pace at which connected vehicle technologies are developing, it’s paramount for companies to understand and incorporate the voice of the customer into not just the automotive development process, but also into product and service innovation. Understanding consumer interests and expectations can help shape which connected services are optimal for the market, how they’re packaged, financed, marketed and distributed. Acxiom and JD Power recently partnered to uncover what consumers really want when it comes to connected vehicles and what ownership will look like in the future. The results reveal four trends OEMs, suppliers, automotive financing lenders, insurers and others must keep in mind as they pursue their unique approach to Internet-enabled vehicle offerings.
Shifting the paradigm from vehicle-centric to consumer-centric
Over the past decade or more, digital technology became the center of people’s lives with the introduction of the smartphone, meaning mobile technology manufacturers and automakers could no longer pursue separate paths. Consumers began to wonder why they couldn’t have a seamless experience across all of their technological interactions. The introduction in the early 2000s of automotive technology such as OnStar and Sirius Satellite Radio was a critical turning point in the move from vehicle-centric to the consumer-centric connected vehicle of today and tomorrow.
Like smartphones, the advent of new technology systems and capabilities onboard has made the vehicle an integral part of an individual’s existence, and thus it needs to seamlessly connect with other areas of life. And similar to the manner in which we’ve become used to paying for services on our smartphones, consumers are increasingly open to paying for in-vehicle services such as diagnostic checks, vehicle deactivation if stolen and even personalized recommendations for dining and entertainment.
Offering connected vehicle services like these is something the market is receptive to. However, the services must be compelling, as many consumers feel they won’t use the in-vehicle services enough to warrant paying a monthly subscription fee. Whatever services are offered, consumers are interested in universal vehicle apps that can manage services and be used in any vehicle.
Navigating a change in consumers’ first vehicle experience
With income levels relatively stagnant and younger consumers saddled with paying off college debt, millennials don’t have a lot of money to go around for the expense of owning a vehicle, not to mention associated costs like insurance, registration, fuel and more.
Further, younger generations are increasingly eschewing purchasing a car for longer periods due to the availability of ridesharing and similar offerings. This is especially true in urban environments where tapping into the sharing economy is much more economical due to the density of the areas and hassles of car ownership.
With a large segment of the population unable or unwilling to invest in owning a car, how does an automaker build a brand relationship with them? OEMs and auto dealers must readily recognize and respond to the varied consumers needs associated with different life stages. This can help ensure they’re able to offer the right services and approach to suit the consumer’s needs at that point in their life.
With more people willing to give up vehicle ownership, opportunity exists to create subscription and loyalty programs for ridesharing or vehicle usage to further entice users. These programs can serve to introduce an automaker’s products to younger generations, driving brand awareness for potential future purchase consideration when the consumer approaches the applicable life stage. This type of program would enable these consumers to sample a number of different vehicles, which could then entice them to the OEM’s products when they are ready to buy.
Data security concerns drive consumer opinion
As the level of connectivity in consumers’ lives has increased, so has their awareness of how data about them is being used for marketing purposes. Huge leaps in delivering more user-friendly experiences are possible in this data-driven economy, and consumers largely enjoy the benefits of brands being able to tailor offers to meet their needs. But as consumers become savvier about the way data can be used to personalize offers, they’re becoming more selective regarding the brands with whom they choose to share information. Those developing new programs or applications for connected cars would be wise to consult with the companies who are recognized for their commitment to security and privacy.
What does this mean for consumers’ appetite for sharing their data? That consumers will share their data with brands they trust. OEMs and service providers should work with partners that fully understand privacy regulations and can work with consumers’ data ethically.
Despite the security concerns that exist, many consumers are open to sharing some personal information in exchange for more relevant, personalized brand experiences in the form of services or discounts. Saving on insurance premiums is one example of how this “value exchange” works. Consumers recognize that vehicle information, driving behavior and ownership status are relevant information needed by the insurance company in order to provide a discount. Similarly, consumer data sharing can enable offerings such as proactive vehicle maintenance alerts, service discounts and reports on how to improve fuel economy. This sentiment only proves there is ample opportunity to develop new connected vehicle services.
“All-in-one” business models are on the road ahead
A few brands and program providers on behalf of dealers have dipped their toe in the water with the bundling concept, such as Cadillac’s vehicle subscription service, “Book by Cadillac,” Hyundai’s all-in-one offering, “Ioniq Unlimited Lease,” and recent offerings from luxury brands including Porsche and Volvo—evidence that bundling and/or subscription based programs can exist in the automotive sector.
Using bundled “all-in-one” leases could include the vehicle, insurance, connectivity services and fuel for one monthly payment. Looking to the future, consumer interest in an all-in-one lease offering can apply to autonomous vehicles. In a scenario that assumes autonomous vehicles would be safe and reliable, the study found that when it comes to leasing or purchasing a vehicle, consumers are much more likely to consider an all-in-one package for an autonomous vehicle than for a non-autonomous vehicle. Even though more than half of consumers would consider an all-in-one lease, this proportion swells to 90 percent when autonomous vehicles are introduced. The opportunity to capitalize on this interest exists now and is expected to grow in the future, especially among younger buyers.
As in-vehicle services, ridesharing, data sharing and more continue to take hold, those in the automotive connected services market must understand one thing: It’s consumers who will decide which offerings will win, and which will lose.