Data and the Connected Car: Part 1

Data and the Connected Car: Part 1

The connected car is a work in progress, and has been for more than a decade. As the technology evolves and more players enter the ecosystem, its business case continues to evolve as well, with staggering possibilities for car-makers, if they get it right. But as more solutions enter the space, it is becoming increasingly difficult to get a clear picture of just what ‘right’ means.

On the Threshold

According to Andrea Sroczynski, head of Global Automotive Sales at Telenor Connexion, many car-makers are still unsure of what services to provide and how to provide them.

“OEMs are struggling with what consumers want and what OEMs think they want,” she says. The problem is a particularly thorny one in Europe, where there is “a diversity of different countries, and therefore different cultures, and therefore different needs.”

Sroczynski believes that high-data infotainment services such as video streaming will always remain niche products. “These are backseat services. The mass market will never buy this.”

Car-buyers want connected services that are easy to use and understand, she insists, and recalls that when Volvo Cars and Telenor Connexion first presented Volvo’s OnCall service, it was far from a success – not until it included an app that allowed drivers to remotely heat their car.

“Once we connected to remote heating, the customers got hooked,” she says. “They also like services such as remote lock/unlock and car locator. These are easy to understand for them.”

Sroczynski also believes that consumers will find smartphone-related services irresistible. “Everything where I can interact with my car via a smartphone is really important for consumers, but to ensure this you need embedded connectivity,” she says.

She emphasizes that the smartphone in-car experience must be “as seamless as it is with services on their smartphone. HMI is the key. It must be easy and not add to driver distraction, of course.”

The growing popularity of electric vehicles presents opportunities for services that create consumer trust in these vehicles, which require new ways of “tanking up.”

“It’s strange,” Sroczynski says, “that I have to plan ahead to find a place to charge my car, to organize my charging so that I find the lowest price for energy.”

To that end, she cites a recent announcement by the innovative German luxury car-maker BMW of the launch of an app for the electric 2015 BMW i3 and i8 that helps customers automatically identify the best rates and times for charging their vehicles at home.

Sroczynski believes that, thanks to the smartphone, the car – whether electric or not – is becoming more and more intimately connected to the home in the all-encompassing network known as the Internet of Things, where a variety of utilities and appliances in the home could be engaged from the car and vice versa.

“The smartphone will become a kind of remote control of the car,” she says.

Sroczynski’s vision of the future, however, centers around a revolutionary cloud-based platform that allows vendors and application developers access to applications and services to add new functions and services.

“For me, an open platform is when everyone in the whole ecosystem can participate and access and service their customers,” she explains. “To attract a community developing services and bring added value services to your driver, you need an open platform approach.”

The value this brings to the consumer lies in the fact that it gives access to applications from other developers and enhance and mash-up services, which would be accessible to drivers whose OEMs are part of this open platform.

“That is the key [to connectivity] that will come,” she declares, and compares the present situation to a standard library where one looked up a source to get some information and the open platform to what is possible to do with Google and the internet.

“You’ll have everything you need in the cloud,” Sroczynski says. “You won’t need to reach out to four different sources.”

As an example of what this future can bring, she cites the recent pairing of the Jawbone UP wristband activity tracker and the Automatic car-mileage tracker app to enhance the user’s health-related information. With this mash-up, the Jawbone UP user can see if the reason she missed her daily step count was because she used the car when she might have walked. The new functionality allows her to see how many steps she would have logged if she’d walked instead of driven.

“This is what can happen when you open a system,” she declares. “The [brand] differentiator will be what platform the OEMs open.”

Sroczynski says the “big players” will get involved in this development, particularly those capable of operating a cloud of sufficient capacity, such as Microsoft, Google, Apple or Amazon.

“The problem with Google and the others is that they have no clue of how to connect to a car,” she says. “There must be an infrastructure to connect the car to the cloud, such as our Telenor CloudConnect.”

The Health of the Car

Connectivity now allows cars to monitor their own health and transmit that data to the OEM and other concerned parties, which has enormous implications for road safety, cost savings and ROI.

“The health of the car is an important safety factor,” says David Green, product management director at Volvo Car Corporation. “The connected car gives us the ability to monitor the health of the car while it is on the road.”

Green says an application of Volvo’s OnCall system also allows the car owner to track his vehicle’s health via his smartphone. ”With this app, you get the status of your engine on your mobile phone.”

Martin Rosell, managing director of WirelessCar, says that by using the remote diagnostics service “the OEM will enhance the product with capability by getting prime information about the health of the car.”

Rosell says diagnostics should be used to reduce warranty costs. “This creates a better experience for the owner of the car, because you fix the car before it breaks down. And it saves the OEM on warranty costs, because roadside assistance is under warranty as well.”

Warranty costs make up 2% of an OEM’s total sales, he explains. “I know of an OEM that earns about 80 billion euros a year. So 2% of that is no small number. If you can reduce that by 5%, you’re talking about a real business case.”

But more than that, Rosell argues that diagnostics and prediction based on diagnostic data can – and should – be used to change warranty schedules, to make them less expensive for car-makers. “Why do service based on mileage?” he says. “That is just not wise. It should be based on reality, if there’s an error message for a component, and if there’s evidence of a problem, then you go in for service.”

Rosell suggests to car-makers that another potentially profitable service would be to monitor the health of the car battery (on a normal car, not an electric vehicle). “They have very high failure rates,” he says. “If your car suddenly can’t start and you need roadside assistance, the entire warranty charge on the sticker price is used up.”

Batteries are easy to monitor, and with the proper connectivity the driver can be told to bring the car in to the workshop to have the battery repaired before if ceases to function.

“BMW did this,” Rosell says. “They said at a recent conference that this simple service sponsored their entire Big Data Analytics program.”

He believes that eventually every component in a car will be monitored, even the tire pressure.

This is already being done on commercial vehicles, says JörgLützner, Head of Services & Commercial Vehicles Division, Continental Automotive GmbH. “It reduces downtime and, more important, it saves fuel,” he says. Running on under-inflated tires uses up fuel. Anything that saves fuel is an instant hit.”

He says that as more data becomes available, diagnosis can move to prognosis. “You can be more proactive and more precise regarding the health of the vehicle.”

Rosell says that this data offers an excellent opportunity for OEMs to leverage diagnostics into a customer relation management (CRM) solution that provides value to everyone involved, the car-maker, its dealer-workshop network and the customer.

“In a user-friendly way, OEMs need to fine new innovative IT systems and integrate them in their business model,” he declares. “Some are doing it.”

Building Brand Loyalty through CRM

Indeed, many OEMs are beginning to recognize the value of connectivity in building and maintaining brand loyalty through an enhanced CRM solution. Nowhere is that more evident than in aftermarket services, such as maintenance and the sale of spare parts.

According to Rosell, “This is a highly profitable area. About 70 to 80% of an OEM’s profit comes from the aftermarket. So if you can increase your aftermarket business by 10%, it’s a lot of revenue.”

Some analysts say that in the United States billions of dollars in revenue are lost every year because the car-maker failed to keep his customer within his dealer/workshop network. The recent development of real-time dealer management systems, such as the solution developed by the American company Xtime, is transforming that space, with significant implications for OEMs, dealers and consumers.

Chris Ice, vice president of Product Marketing at Xtime, says the problem for the OEM, once the warranty expires, is “how to create an environment that makes the customer want to spend more time with the dealership for service.”

In addition to aftermarket revenue, this can also have an impact on car sales. “Vehicle and parts sales are key areas of focus for this industry,” Ice says. “And a loyal customer is more likely to repurchase within the brand.”

To that end, Xtime models itself on such successful customer-friendly operations as Starbucks or the Apple Store, Ice says. “The aim of the Xtime platform is to create an online and dealership experience that is modern and customer-centric and that seeks to replicate a modern online and in-person retail experience.”

He notes that Xtime does not provide any telematics hardware, just a suite of online tools running in the cloud. Its platform receives a vehicle’s CAN Bus events from the OEM just minutes after the driver sees it and enables the customer to book a service appointment.

 “In an ideal world, the dealer is then informed and prepared,” Ice says. “The part will be there in time for the appointment. Downtime is minimal. The consumer’s expectations are met. The experience is positive and meets the customer’s expectations of a modern retail interaction.”

Xtime provides three solutions for booking a maintenance or repair appointment with the workshop, Ice says. “One, the customer can book it himself through the vehicle. Two, we reach out to the customer by email or smartphone and ask if we should book the appointment. And, three, we have a model where the customer can actually talks with a service center agent and then books the appointment through our software with any dealership enrolled in the program.”

Providing such a refined CRM solution can make the difference between a customer remaining with the brand or looking for another make of car when the time comes to repurchase. Ice cites the results of a survey he saw that revealed a strong connection between the customer’s service experience and what he thinks of the car itself.

“It showed that most people think poor service also reflects badly on the vehicle itself,” he says. “In other words, that a poor vehicle with good service is nearly equal in customer perception to a great vehicle with lousy service. We, at Xtime, often refer to the ‘ownership experience’.  Service is as much a part of the car as the car itself.”

This solution provides another benefit for the customer and the OEM, particularly in the United States, Ice says.  “Manufacturers in the U.S. have less influence in getting their dealers to use common process, which is quite important as the OEMs want to create a consistent brand experience for the customer,” he explains. “But as the service experience is now being built into the vehicle itself, this creates more harmony between the vehicle, the dealer, the OEM and, ultimately, the consumer. This bonds the dealer closer to the manufacturer and the car owner.”

Building Brand Loyalty through Used Car Analysis

Christina Rux, product manager at WirelessCar, says she and her team have been focusing “a lot” on Big Data using business insight analysis. One result has been a project to develop a solution that uses data to identify the worth of a used vehicle.

“The car needs to be connected to build a history of its use,” she explains. “From this history, you can draw up a profile of how it has been used, if the parts have been replaced as they should be, if the software has been updated as it should be.”

This technology would be very useful to both commercial and passenger vehicles. “On the truck side, if you are selling a fleet of used vehicles, it would provide a snapshot of the entire fleet,” Rux says.

For passenger cars, this would be a service OEMs provide to purchasers of new cars, with the added prospect of selling the car back to the manufacturer when the time comes to repurchase.

“This would motivate consumers to take good care of the car and to stay within the OEM service network and remain loyal to the brand,” Rux says.

Analysis of data generated by the vehicle could also reduce errors in the manufacture of a car. “The question we asked is, How can we help you to avoid building more cars with the same [technical] problem?” she explains.

The solution would combine vehicle-generated data with data from dealers, such as what parts are being replaced in a particular car model. “The tricky part is determining what the critical failure rate is,” she says. “You’re looking for a pattern.”

You also need to know “what questions didn’t we know to ask,” Rux notes, adding:  “This is a learning process. And for this you need skilled people in addition to computer analytics, skilled people who look for questions you didn’t know you should ask.”

For the latest telematics trends, check out Telematics West Coast 2014 on October 30-31 in San Diego, USA, Telematics Munich 2014 on November 10-11 in Munich, Germany, Connected Fleets USA on November 20-21 in Atlanta, USA and Consumer Telematics Show 2015, January 5 in Las Vegas.

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