In-car connectivity has been causing carmakers a goodly amount of head-scratching. Since the first telematics services were launched, car manufacturers have been trying to figure out how to use the myriad possibilities connectivity presents to deepen relationships with consumers but, so far, it just hasn’t happened.

A report from PricewaterhouseCoopers (PwC) in Q3 2016 on the connected car noted that: “The top five OEMs spent $46Bn ($38Bn) on R&D in 2015, an 8% increase year-over-year. For most of the industry, however, success has been elusive and there is very little noticeable differentiation between players.”

Certainly, driver-related services such as young driver programmes, insurance usage-based pricing and safety features including automated roadside assistance calls have gradually been picked up.Yet,as far as indulging in add-on services such as concierge assistance,infotainment subscriptions and car-as-service (picking up deliveries or even using the vehicle registration as a payment system), pick up has beenslow.

Then, from among the exhibition of all that was fabulous, fatuous and downright fantasy at CES 2017 in Las Vegascame an announcement that both surprised and delighted the automotive sector. Ford announced it was getting into bed with Verizon and Amazon to integrate the latter’s Alexa voice interface into all of its Sync-enabled vehicles. Alexa has certainly been making waves over the last quarter. In the run up to Christmas 2016 it was touted as a virtual PA finally done right. Subsequently,the Echo and Dot speaker housings flew off the shelves in a total festive sell-out.

Cynics might say what’s new, voice activation has been around for years and most carmakers have some kind of voice-activated connected car interface. The difference is Alexa is better, smarter and most importantly of all, she’s Amazon. This digital player getting into the in-car infotainment space doesn’t mean, as in so many other industries from grocery to film rental, that automakers are about to be squeezed out by a warehouse company. What it means is this is the boost into mainstream consumer-consciousness that in-car connectivity needs in general to pick up momentum and become a real driver of value for manufacturers.

Dr Ben Miners, innovation leadership at IMS, explains: “Lifestyle experiences are important but most individuals don’t see those services coming from the manufacturers. They’re services from a mobile phone and it’s more of an individual model than a vehicle-centric one.”

Towers Watson’s UBI specialist, Katie DeGraaf, expresses doubts that car manufacturers can step far outside their remit: “Our consumer survey around what telematics are important to the consumer sees three rise to the top: automated emergency calls, theft tracking and breakdown notifications. Another that comes out is vehicle wellness. These three or four things cover off 30% of respondents consistently. Traffic also comes out high, as does weather or construction incidents.” She notes that consumers don’t mind social media updates on the move but, on the whole, prefer not to be distracted from the job in hand.

Finding the right services is going to be key and carmakers are still working on it. Like consumers, even experts can’t agree on what’s going to prove important. Audi’s senior manager of connected vehicles, Anupam Malhotra, suggests customers seek more lifestyle content than de Graaf would anticipate: “Information that has a daily relevance in customers’ lives like infotainment or content plus information that improves their driving experience gives brands the opportunity to differentiate. When I have connectivity in my car it helps me to be more productive and saves time. This, I’m willing to pay for.”

Malhotra’s position is not without evidence as he suggests Audi is experiencing strong revenues from its connectivity subscription model. He adds findings from McKinsey which, he quotes, show that in the US there has been a 50-60% increase in customers who say they are willing to pay for the right services and 30-40% increase year on year of customers who are willing to switch car brands if they don’t provide the right in-car service.

Considering the cost of investing in a new car, these are strong sentiments indeed. Perhaps for carmakers who feel that the paid subscription model is a step too far in nudging consumer behaviour towards connectivity, the opportunity cost of not including such services in car may prove too high. “The window of opportunity may be in the killer app,” Miners explains. “It’s the right combination that adds value.” In the case of in-car connectivity this could be the right mix of infotainment, ongoing driver safety but also, by bringing Alexa on board this could be the permission car manufacturers needed to move from the vehicle-centric model to the individual one Miners mentioned above.

Will Alexa become the default in-car voice? It’s hard to imagine so. Amazon’s power over its data is legendary and the question of who owns what when it comes to consumer information looks set to be a sticky one for some time to come. Amazon’s power will be to force the car industry as a whole to up its game in terms of the quality of voice-activated interactions, while pulling consumers into new behaviours and using its brand power to turn these behaviours into habits in short order.

In terms of convincing customers to pay for subscription services, following the Amazon model may well be the way forward. In a sense, it is similar to Audi’s current approach. “Our subscription model is a large package called Connect Prime with a suite of 35 different services geared to improving your enjoyment. For one fee you get unlimited access. Now, we’re also looking at services one by one and packaging them in a similar way under Connect Care where the customer doesn’t pay and then adding in pay per use services on Connect Plus, such as buying access to WiFi as and when it’s needed.”

[Tele.Cuddeford-Jones.2016.11.07]