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Car as a service: a trend supported by IoT

The connected car could see the automotive industry change more in the next ten to 15 years than it has in a long time, says Richard Cornish, Head of Internet of Things at Xchanging

The ‘connected car’ offers up such tantalising opportunities for the smart use of driving data that we can expect to see the automotive industry change more in the next ten to 15 years than it has in a long time.

It’s not just about in-car features – although clearly a land of opportunity exists right there with the likes of automated parking and now the early beginnings of the driverless car. It’s also about a business model for car manufacturers that caters to the needs of the new driving generation.

Driving can be an expensive business. Today’s teenagers and twenty-somethings, with a high cost of living, are not automatically going to go down the buy or lease route that the previous generation is used to. While their finite funds are spread thinly across their outgoings, what they are used to is a concept of ‘use as needed,’ as opposed to buy. The nicknamed ‘Boris bikes’ in London are a case in point: for London workers and regular visitors the self-service, bike-sharing scheme is a well-understood, popular way of getting around town.

Automatic-Dashboard

Business model

It is a model that can translate to motoring – and indeed it has: Zipcar operates a membership scheme that gives its customers access to cars and vans that they can use by the hour or the day. Car hire companies and other car sharing schemes are similarly in on the act. Now the opportunity is there for car manufacturers. In addition to continuing to produce cars to be bought and leased as high-value commodities, they can foster the ‘car as a service’ model with ‘micro lease’ car options.

It is a business model made more effective by the connected car. As car manufacturers build cars that exploit the Internet of Things (IoT) – sending and receiving information from networked features and devices within the car and connecting it to other devices and network services – they can support a change in the whole trend of car ownership. A modern-day car sharing with sophisticated analytics.

Driving produces vast quantities of data. At the moment it isn’t all captured or used to deliver full advantage for consumers or manufacturers. Future drivers could use their smartphone to not only give them access to their temporary car but also record the distance they have driven, the fuel usage, the time they had the car on hire and, with the right automated analysis of data inputs, how safe their driving was. The latter measure could be used to calculate future discounts as a reward for safe driving, as could usage to calculate loyalty points. For customer convenience and comfort, their phone could also record and carry the data needed to set the seating and mirrors so they are just right for that individual each time they get into their on-loan car.

Driving data

Driving data is, of course, of significant value to insurers and also to car manufacturers in developing cars that are safe and fuel efficient in the context of today’s modern driving conditions and styles.

This model for car usage can suit not only those conscious of the outlay associated with car ownership or leasing but also those who want or need a different type of car at different times to suit their lifestyle, such as an off-roader at the weekend or a particular car to impress a client, for example.

Meanwhile, to the stalwart car owner or leaser of the future, the IoT also has something to offer. Data gathered on how a driver’s car has been used can count towards evidence of car history, which in turn can help a car hold some of its value. As that car changes hands, it continues to ‘learn’, enabling data to be tracked back over its lifetime. This is reliable driving history from source data that doesn’t depend on owners or users maintaining service history.

We know the IoT is having an impact on the way we use cars. ‘Driverless’ vehicles are headline-grabbers, without a doubt. Over time, we can expect to see the data the connected car generates being put to good use supporting business models for car usage that benefit both manufacturers and consumers.

This article appeared in the Q4 2014 issue of Automotive Megatrends Magazine. Follow this link to download the full issue.

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