Less than third of consumers see connectivity as essential, as OEMs face disruption
Automotive Original Equipment Manufacturers (OEMs) face imminent disruption, as new technologies, demands and necessities push through changes in the industry, from electrification and car sharing to automation. Connectivity is another major disruptor for the industry, although a new study shows that a targeted approach is key for successful deployment.
The automotive industry is set to undergo a period of transformation, as social and economic needs, such as transformation in the face of climate change and diesel pollution, towards more sustainable and clean methods of locomotion, see to transformations in vehicle power trains, while vehicles may be steered by robots in the future. New mobility options are becoming more prolific too, with car sharing and other forms of utilisation improving overall resource efficiency.
The latest mega-trend anticipated in the automotive market is connectivity. This trend is relatively less transformational than the others, although it has the potential to boost revenue streams for market leaders. In a new report from BearingPoint, titled ‘OEMs and connected-cars: time to seize the connected future’, the consultancy firm considers the likely impact of various connectivity related technologies on the wider automotive value chain, including customer interest.
The issue is that, if the technology is non-essential, how will the industry convince consumers to invest in it? While just under a third of customers continue to indicate interest for connected cars, with 32% of those who responded to this survey indicating that connectivity is the ‘most important, or one of the main reasons’ for their choice of vehicle, a further 27% said that it was ‘not key’ and while it contributed to the choice of car they would buy, was secondary to other factors. Meanwhile, the largest number of 38% of respondents said connectivity features had absolutely ‘no effect on the choice of car’.
In terms of the features that customers value, in relation to connected vehicles, those pertaining to safety and navigation won out, perhaps predictably. The benefits of connectivity in promoting safety are most easily passed off as game-changing innovations, and ones that respondents could definitively need, meaning 62% of respondents noted that ‘safer journeys through automatic warnings about potential hazards’ were the main benefit of the technology. To this end, Bearingpoint themselves recently leveraged connectivity technology on behalf of Continental to provide a new safety service for motorcyclists.
A similar number said that ‘internet-enabled navigation to tell me where I’m going’ was a key factor. Other benefits reported by the respondents as highly beneficial, included ‘understanding of fuel consumption/driving habits through monitoring services’ and ‘access to better in-car entertainment and streaming media services’. Customers who utilised a connected car feature, were also considerably more likely to continue to use them into a new subscription period (66% of respondents).
In terms of features more desired by respondents, navigation related features reign, as cited by 20% of non-users who say that they will use the connected feature in the future. Infotainment follows, as cited by 14% of respondents. Convenience, driving style and safety follow, at 6%, 6% and 3% respectively. Security features are of least interest, at 1% of those responding to the survey.
The study also noted that younger males were the most interested in the technology, with 88% of respondents being aware of connected features. This was followed by 81% of young women. Among those older than 41, 78% of male respondents and 66% of women in the age group noted awareness of features.
In this respect, it might be sensible for automotive manufacturers to not place all their eggs in the basket of interconnectivity. The average age demographic of most new car buyers is around 51, which effectively means that an older group of buyers, less interested in connectivity, remains the dominant group for revenue in the industry. Given the long-term transformation of the automotive industry, and the relatively poor state of finances for the millennial generation, vehicle demand may be relatively different by the time that their finances have sufficiently improved.