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Connected cars are not interesting

Consumers have little interest in connected cars, according to Rethink Research. It found that fewer than 16 million owners out of the 105 million plus cars that could buy services from a connected car have shown interest. And fewer than 16% have actually committed monthly cash to the provision of services.

Source: Autofinity

Typically, these spend between $99 and $200 a year and the big four brands that have recruited the bulk of these are General Motors, Toyota, Volkswagen and Hyundai, according to Vehicle Electronics.

The services they offer are mostly a packaged bundle of emergency assistance, stolen vehicle locator, roadside assistance and automatic collision notification.

The rationale for the major 20 car manufacturers tracked in the report is to sell data. The primary purchaser of data is seen as insurance companies but also anyone, such as retailers interested in drive-past data and in car demographics.

Manufacturers are expected to absorb physical costs in the region of $2bn a year to build connectivity into cars. But the biggest cost will be connectivity itself. In this field, car makers are expected to absorb a further $11bn in connectivity costs, making the price of entry for the major car makers into the connected car just shy of $13bn.

A different hardware BoM for V2X communication is expected to reach an additional $1.8bn to underpin safety services, bringing the total for BoM plus connections to $14.7bn.

The payback in 2017 came in driver acquired services revenues, of some $2.6bn, but this could fall to just over $1bn by the end of the forecast in 2023, with 75% of that being spent in the USA.

The real payback is the sale of data, but even by 2023 this will not bring in quite enough fresh revenue to pay for all the costs and it will not be until 2024 at the earliest that car manufacturers can look at this market and breathe a sigh of relief.

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