BearingPoint: 80% of new vehicles connected by 2020

06 August 2015

By 2020 it is expected that up to 80% of new vehicles will be connected to digital services, a survey from PAC supported by BearingPoint finds. Of the companies surveyed, 52% expect that connectivity services will be a major business driver in the future. However, for 95% it will remain secondary to their main offerings. The development of new connectivity innovations and their deployment in the future car fleet is seen as a collaborative effort by 69% of respondents, with consultants and IT service providers seen as very important by 35%.

A recent survey from Pierre Audoin Consultants (PAC) supported by BearingPoint, investigates the strategies of the automotive industry to develop and launch connected car technologies and services. This includes all (hardware & software) technologies within a vehicle that enable (one- or two-way) communication between the vehicle and a third party (e.g. driver, environment, other vehicles) as well as all infrastructure and back-end technologies that are required in order to complete a connected car business case. The survey involved 250 CxOs (Chief Experience Officers) from automotive companies in France, Germany, Italy, the Netherlands, Spain, Sweden and the UK, with more than 50 employees.

Stage of the value chain

Connected driving
The key finding of the survey is that by 2020, 80% of all new vehicles will be connected to digital services. The consulting firm notes that the driver for the demand for connectivity comes from consumers, business as well as government safety legislation, which has pushed Original Equipment Manufacturers (OEMs) to invest in embedded and tethered connectivity solutions. The survey finds that 52% of the companies surveyed indicate that connected car offerings will be the major business drivers in the future, although 95% expect these offerings to become a complementary business, and not a substitute for their current business. In terms of where companies are in the journey toward connectivity, only 2% lack any connectivity offering. 14% are in an early phase, 30% in the design and implementation phase and 22% are in the rollout phase. Just over one in ten (13%) have offerings currently in operation.

Connected car services

According to the survey, there are two waves of development in car connectivity. The ‘first wave’ (35% of those surveyed) has already rolled out car connectivity in technologies including emergency call, breakdown call, stolen vehicle tracking and teleservice, and the possibility for customers to connect remotely with their vehicles through a smartphone apps. The ‘second wave’ (55%) is currently in the design or development phase. Services in this ‘wave’ will include information services, such as environmental information (69%), news (61%) and navigation (52%) services are the primary services provided currently. In the medium term, the focus will be on driving assistance (21%) and security services (14%), which will push the maturity of corresponding ‘car-to-x connectivity’ technologies.

Challenges for the company

Challenging road conditions
Connected cars continue to be an important strategic topic for three out of the four companies surveyed. However, certain issues remain a concern for the viability of their digital offerings, including a consistent user experience where connectivity is not lost (an issue for 72%) and invoicing the digital service (named by 70%). Furthermore, manufactures and suppliers highlight that a lack of standards across both parties are an issue for 38% of those surveyed, with many respondents agreeing that while standards add value and make business scenarios work, they also hinder market positioning and opportunities. A further 36% say that new entrants and their competition are an issue, while integration of the new technology is found to be a major challenge for 35% of respondents.

Importance of supplier groups

Driving together
External support from consultants and IT service providers is seen as very important for 35% of those surveyed, and important for 41%, in relation to developing connective car offerings. Two thirds (69%) of the companies surveyed prefer joint product development with external service providers. In terms of the development of offerings, particularly software development (95%), security (90%) and testing services (87%) are seen as benefiting from external partnerships.

Commenting on the results, Matthias Loebich, Partner at BearingPoint and firm-wide Automotive Leader, says: “From a technology point of view, the market is currently shifting from in-car connectivity to car-to-x connectivity, and companies are going to put a stronger focus on the design and provision of third-party services.”