TU-Automotive Detroit 2015 – Day 1: More tech, more information and much more debate

The first day of TU-Automotive Detroit 2015 was a model of the fast expansion of the industry: more attendees, more exhibitors, more speakers and four different tracks. The focus is shifting to autonomy and creating value for consumers in the rapidly changing world of mobility.

High energy prevailed on the opening day, although many topics are fiercely debated, including paths to monetisation for connected-car services and how best to get applications into the car and in use by drivers. There was a greater focus on cars as part of connected transportation systems with new models and more excitement about cars as part of the internet of things (IoT).

We need new names

Part of the difficulty in selling telematics, aka connected-car services, aka a plethora of OEM brand names, is that it’s confusing for potential car buyers. As cars evolve to become smarter and more functional, the auto industry has struggled to explain the value proposition. Michael Deitz, senior group manager for connected car and owner marketing for Hyundai Motor America, said: “The word telematics is very confusing to customers. We need to speak in terms that customers can understand. What helps sell the car is solving problems and offering solutions to customers.”

A panel involved in helping to craft legislation for autonomous cars concurred, saying it’s vital to correctly set consumer expectations by being clear about different features. Jude Hurin, from the management services and programs division of the Nevada DMV, said he didn’t think that autonomy should be introduced to consumers in the same way that other automotive innovations have been. “This is a crossroads, a huge milestone event, and we need to look at this in a different way,” he said. “It’s not cruise control.”

We also must work to adjust the public’s perception of what is reasonable when it comes to autonomy, according to Bryant Walker Smith, assistant professor at the University of South Carolina School of Law. “If expectations are built up far too high, the first crashes and allegations [of liability] will be viewed by the public very critically.”

Then, there are the ethical issues pointed out by J. Christian Gerdes, director of the Center for Automotive Research at Stanford. Some of them are life-and-death, for example, would a self-driving car ever be faced with a choice between hitting one pedestrian or a group of five? While that’s not so likely, he pointed out that every day, human drivers make tiny decisions to break the law, such as crossing a double yellow line to give a bicyclist more room. If autonomous cars strictly obey the rules, he said, they might end up impeding traffic.

What consumers want

The show kicked off with Nissan’s announcement of NissanConnect. Dan Teeter, director Vehicle Connected Services for Nissan, said that customers are beginning to understand what connected-car services are. “Because customers are starting to understand it, they’re starting to expect it.” The service will start with a six-month free trial and then move to three levels of subscriptions providing different levels of support. To support customers who opt for it and fuel consumer demand, he said, “We have simulators to make it easy not only for dealers but for customers, so they can understand how it’s working.”

But there is wide disagreement about what consumers want, need and/or will pay for. Andrew Hart, a director of SBD, said flatly that consumers don’t want to pay subscription fees for connected-car services. They will pay a one-time fee or accept data charges that are rolled into an existing data plan, he added.

David Taylor, managing director and CTO of Aupeo, said: “We are moving from apps to services. They have their preferred services, and they want them everywhere.” They may be less attached to some services than others, for example, music providers may have more loyalty than a weather information provider.

There’s still debate about limiting in-car services to a smaller, curated collection versus allowing brought-in apps or mirroring the phone experience via Apple CarPlay or Android Auto.

“We need to focus on an experience that is integrated with the vehicle,” Taylor said.

Gary Stromolo, manager of vehicle design and infotronics for Ford, disagreed. He said that lines of apps on the screen of the car is a dead model. “People want answers to questions,” he said. “If they want to know the score of the ballgame, they don’t want to go to the Major League Baseball app and open it to find it. They want to ask the car, ‘How did the Tigers do?'”

However, a panel of consumers – all of whom used iPhones – loved the CarPlay interface, with its row of apps. The consensus: “It’s simple and familiar.”

The consumer panel is always a highlight of TU Detroit: It’s an opportunity for us to break the bubble and hear from people outside the industry – the end users whom we want to buy these fancy, expensive gadgets. Last year, consumer panellists were lukewarm to even basic connected-car services. This year, five owners of a variety of 2015-model cars talked about what they liked in their cars and what they didn’t.

The consumers on the panel, which was moderated by SBD’s Hart and Bryan Krulikowski, vice-president of Morpace, were much more aware of connected-car services than last year’s panellists, with navigation and music being the most-used services. While they wanted an Apple-like interface, the consumer panel was less certain about buying an Apple car. (A new survey by SBD and Nielsen found that 47% of consumers would definitely not be likely to buy a car from Apple but 21% would be extremely or very likely to do so.)

While one opined that a tech company could likely do a better job of delivering a high-tech car, the rest didn’t think Apple knew enough to pull it off. There’s also the walled garden problem. As one pointed out, an Apple car wouldn’t work for her family because her husband uses an Android phone.

Emphasise consumer experience to make money

Everyone speaking at TU Detroit 2015 agreed that the consumer experience should be at the centre of the industry’s thinking and design, and that experience should be seamless. How to create that seamless experience, of course, depended on what the speaker’s company was selling.

And the consumer experience has to work for OEMs and the providers of tech and services, as well. Prasad Satyavolu, global head innovation for Cognizant, said OEMs could monetise connected-car services two ways: indirectly, from improvements to product quality and managing recalls by early prediction of problems; and from redefining business models to “focus on transportation as a lifestyle enablement function.”

Andreas Mai, director of smart connected vehicles at Cisco, said automaker can gain $200 from the connected vehicle domain: $110 would come from connected vehicle care. The top profit pools for the other $90 include remote diagnostics and prognostics ($79) and customer stickiness, worth $19.

John MacLeod, CEO of Rivet Radio, noted that the industry has begun to retool itself culturally to better address consumer needs. “The car industry is a much more flexible and adaptive industry now that’s looking for ways to solve not only their own problems but deliver what consumers want,” he said.

New mobility

Many speakers warned about a coming change in which consumers will not want to own cars –  a bit ironic for a conference taking place in Novi, a place that’s supremely walker unfriendly. Automakers must be prepared to allow cars to participate in IoT, so that they become part of intermodal transportation solutions or better enable advanced forms of car sharing or alternative ownership models.

To do that, they will need greater interoperability, higher levels of security and persistent connections to robust cloud services, speakers said.

One example, proposed by Thilo Koslowski, vice-president and distinguished analyst at Gartner, was MyEx, a delivery service in which owners of private autonomous cars let them deliver packages when the owners don’t need them.

Koslowski was optimistic about the future of cars, even if private ownership does go down. “New value propositions will be defined and completely different business models will arise. This is the renaissance of the automobile.”

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