Monetising Connected Car Data

Automotive players are treading water amid a deluge of data being retrieved from increasingly connected vehicles.

Now it seems vital that companies have a coherent strategy for using and analysing this data in a way that gives flexibility for new services and capturing additional revenue. Recent research on automotive data monetisation shows the vast commercial opportunities for effective data strategies. With new data use cases, automotive players can create better, more profitable services for their customers.

It is true that automotive data monetisation has advanced considerably in the last few years, although it has been a long time coming in comparison with other M2M or IoT segments.

In a new research report on data monetisation Roger Dewey and Leigh-Ann Ryals of M2VM LLC explained: “During the early 2000s, the value of M2M in industrial and durable goods segments was mostly derived through increased efficiency, reliability, and predictive maintenance.”

Carmakers and 1st Tier OEMs have since moved on, harnessing the data to improve their core business of a better car-buying and ownership experience. However, they are still lagging behind other IoT segments. Roger Dewey states: “The subservice providers furthest away from the core automotive business (i.e. parking, infotainment, etc.) are ahead in understanding of the value of, and opportunities for, monetising said data in an IoT model.”

The Automotive Data Monetisation Report outlines the challenges experienced by automakers and telematics companies and the strategies they employ to handle the data effectively.

WirelessCar has observed that carmakers’ priority is the data they can obtain from embedded sensors and the impact on warranty and future design. WirelessCar works with manufacturers that believe connected vehicle services are going to bring large amounts of value to their bottom line as a new source of revenue.

In reality, the mix of service fees and customer retention presents an unattractive business case, given that carmakers will allocate a standard percentage of their sales to cover warranty cost, usually about 2%. Bringing that 2% down to 1.8% is a huge saving considering the number of units involved. Software updating campaigns are particularly attractive, because they avoid bringing people and cars into the dealer by using an over-the-air software update that can provide enormous savings.

Nissan believe careful and pragmatic data integration is crucial to building customer confidence in electric vehicles particularly in the area of changing customer perception around “range anxiety”.

Toshiro Muramatsu, director of vehicle information technology division at Nissan explains: “Nissan needs to understand how consumers use the electric vehicle. The starting point for our telematics service for the LEAF is to maintain the quality of the battery, as the battery is the major component feature of the LEAF. The LEAF is the first electric vehicle in mass production, so there are a lot of unknowns where the battery has to be monitored.”

Conclusion

In today’s economic environment, it is challenging to maintain profit margins in a traditional manufacturing model. Vehicles at the low and middle layers of the automotive market are in a highly competitive situation, with little room to increase revenue by offering new features that can be quickly and easily replicated by competitors. It is, therefore, difficult to gain a true competitive advantage over a sustained period of time.

The increase in smart and connected consumer devices means today’s consumers expect constant improvement in device quality and services that make their lives much easier and more efficient. This expectation now extends to vehicles, as an extension of their personal devices.

To meet and surpass those consumer expectations, it is essential carmakers and 1st Tier OEMs capture data from all aspects of the automotive spectrum of vehicle lifecycle, user interaction and environmental dynamics. This information then needs to be analysed in a Big Data model to achieve its full business potential. The creation and successful implementation of these models is both crucial and challenging for both new players and existing automotive behemoths.

A strong data collection, analysis and exploitation model can provide automotive players with a clear competitive advantage across their existing operations and value chain, as well as create new growth and revenue opportunities. Using data collection and analysis as a trade secret is much easier to maintain as a competitive advantage over time than it is to launch incremental mechanical feature improvements.

The power of data analysis to improve vehicle design, reliability and feature mix will provide carmakers who are strong in this area with sustainable advantages in their core automotive businesses that weaker market competitors will find harder to overcome. Putting a strategy in place now will result in far greater revenue opportunities later.

Data is becoming the foundation for all strategy and new products for many automotive players. Implementing an effective monetisation strategy can lead to changing customer perception, increased savings and reducing previously unknown costs. To discover more about Nissan and WirelessCar’s data monetisation strategy request a copy of the report here


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