The connected car brings a host of benefits for end-users, suppliers, OEMs and commercial fleet managers alike, but building a positive business case for embedding connectivity across the vehicle range is not quite as clear-cut as it may seem.
In-vehicle infotainment acts as a selling point for many new car buyers, with the vehicle manufacturers and supporting suppliers benefitting from such demand. When it comes to vehicle ownership, there is also the potential to make recalls a thing of the past by catching software related issues early and carrying out over-the-air (OTA) updates. With the help of telematics systems, fleet managers also have a better idea of how efficient, safe and well maintained their vehicles are.
Speaking in a recent Automotive Megatrends webinar, experts from TomTom explained how those invested in connectivity can optimise their offerings. As Frans de Rooij, Director, Product Marketing at TomTom Automotive, commented: “Putting forward the business case is the key challenge – it’s not very difficult to put a telematics box in a vehicle, but making it worthwhile is.”
Paul Verheijen, Director of Product Management at TomTom Telematics, believes that features which are “most remote from the actual use of the car” – such as social media apps – will be difficult areas for OEMs to add value, “and therefore make any money.” In this case, he believes that providing a connectivity bundle featuring social media apps could be the best step for an OEM.
Most consumers today have a set data usage plan which is dedicated to a smartphone or tablet. However, many will also be paying a data plan for in-vehicle connectivity at the same time. For example, GM’s OnStar package features 4G long-term evolution (LTE) connectivity through a monthly or one-off payment plan. Is there potential for business models to converge in future in order to simplify the billing process, with one comprehensive ‘connected life’ data plan?
“There are already a variety of business models, and we think they will continue to exist,” mused de Rooij. “Some of the things will be paid as an option by the driver, like we see with luxury cars where there is the option to subscribe to services for a few hundred dollars a year. As these features become more mainstream they may be packaged into the overall vehicle price, paid up-front by the OEM, just like anti-lock brake systems (ABS) were.”
Deals for commercial vehicles
It is worth noting that commercial vehicles are used for business purposes, as opposed to passenger cars, which are personal vehicles. How can the various parties involved in offering connectivity best leverage the business proposition here?
Verheijen believes that features specifically designed for telematics or fleet management will play a far stronger role in commercial vehicles than in the consumer space. He added that the definition of a ‘user’ differs for each vehicle type: “For passenger cars the user can be ‘the driver’, but in a commercial space the user could be the fleet manager in the office.”
For commercial fleet managers who monitor and analyse their vehicles on a daily basis, the opportunity to catch maintenance issues early could limit vehicle downtime and reduce costly repairs. Telematics systems log driving data and can track the health of certain components; if something goes wrong, this will be flagged up.
In addition, connectivity brings with it the opportunity to perform remote repairs through OTA updates whilst a vehicle is out in the field. However, as de Rooij pointed out, “Many faults are not simply software issues, but where they are, OTA updates could be a way to avoid vehicles coming in for a recall altogether.”
“TomTom’s M2M contract for its PNDs covers most of Europe with no additional cost to the user. There’s no reason to stop OEMs from providing connectivity in the same way.”
With the benefits for all parties established, where then should those interested in monetising connectivity turn for optimum demand? The US and Europe are obvious first choices, said de Rooij and Verheijen.
“TomTom has the benefit of being a Dutch company in Europe – we have experience covering a wide range of languages as well as being in the navigation, mapping and telematics space. From that point of view, I think both markets are of equal opportunity to us,” said Verheijen.
De Rooij added that although connectivity is currently still expensive – pointing to data roaming charges associated with smartphones – “TomTom has a machine-to-machine (M2M) contract for its PNDs that covers most of Europe with no additional cost to the user of that device. There’s no reason to stop OEMs from providing connectivity in the same way.”
