Will concept cars ignite the telematics market?

While horsepower, torque and exotic styling still ruled press reports from the Detroit show earlier this month, carmakers had a lot more to say about infotainment. Toyota said its vehicles would become another communication hub in the connected-consumer lifestyle, showing the concept plug-in hybrid NS4 with a touch-screen system, as well as the Scion 2013 FR-S with its BeSpoke connected system powered by Pioneer’s Zypr technology.

Lexus showed the LF-LC concept car with two 12.3-inch screens, one for information and one for navigation, plus a keyboard for entering information. BMW unveiled the power to Yelp directly from the car's embedded system. Mercedes-Benz USA launched mbrace2, with 3G network connectivity, enhanced integration with other vehicle networks, and an Internet-based service called Mercedes-Benz Apps with Facebook, Google, Yelp, Web browsing, stocks and news headlines. (For more on apps, see Telematics: Making the most of the app opportunity, part I and Telematics: Making the most of the app opportunity, part II.)

And Ford presented its cloud-connected car concept in an elevated theater that Allan Vivian, vice president and director of automotive research for Decision Analyst, says, "was almost on the scale of what you would see at Disney World."

What about demand?

According to David Frerichs, strategic consultant for Pioneer, "Consumers want this. We see 2012 as the year when this stuff is not mainstream—that will require a certain price point and level of integration—but a high-visibility item."

He and Pioneer, as well as the rest of the industry, hope so. But the hype has some competition from the US government, which wants to put some brakes on all this.

In November 2011, Jonathan Hurd, a director at Altman Vilandrie & Company, presented the findings of a survey that showed consumers were enthusiastic about telematics features that they already knew about, such as voice-controlled navigation and real-time traffic information. But their awareness lagged innovation when it came to many infotainment options entering the market. (For more on the survey, see Why telematics needs better consumer marketing.)

Now, Hurd says, consumers seem to be focusing more on the anti-distraction messaging from the US Department of Transportation than on commercials showing connected-car services. "Consumers are a bit doubtful that, with the complexity of media options available to them in the car, there will be an easy way for them to navigate and use those things," Hurd says. " The more multipurpose car interfaces are, the more modes and buttons you have to push, the more your eyes go off the road. A significant segment of consumers who took our survey recognized that complexity. That will still be an issue."

Purchase funnel

NHTSA seems to be giving the industry its head, with the first guidelines covering installed devices being released for comment in the next month or so. Guidelines covering voice-activated systems may not come for years, if they come at all.

Roger Lanctot, associate director of global automotive for Strategy Analytics, thinks hands-free, voice-activated systems will be anointed by the Feds. He points out that, when the National Transportation Safety Board called for a ban of all phone use in cars, "[Secretary of Transportation Ray] LaHood came out and said he's fine with hands-free interfaces, a significant differentiation. It separates LaHood from those who believe and suggest that the use of a hands-free device is as cognitively challenging as the use of a phone in your hand."

Lanctot notes that auto tech had a large presence—and lots of attention—at the Consumer Electronics Show as well. While automakers' telematics announcements were positioned as breaking news, he says, "Everything in the auto industry takes time. It looks like it's happening all of a sudden, but that's the result of years of effort."

With automakers getting telematics and infotainment solutions into showrooms, now may be the best time to start getting consumers' attention.

According to Vivian, many of today's potential car buyers are only at the top of the purchase funnel, that narrowing path from awareness through consideration and intention to shopping and buying. Vivian points out that the average age of vehicles today is 11 years. Car buyers, having weathered car company bailouts and a depression, may finally be ready for a new car.

"The telematics industry today is still sitting at the entry point of the funnel in awareness,” Vivian says. “A lot of that has to do with the fact that people have been disengaged with the industry. [For consumers with older models,] having two air bags is high-tech. I think the Auto Show is an example of OEMs trying to improve awareness of these other services and to have people thinking ahead to what's down the road."

Maybe the best hope for consumer excitement is Generation Y, many of whom are now ready to afford their first new cars. Says Vivian, "It's a process that takes some time, and the people who will be most receptive are the younger people. Generation Y and the youngest of Generation X will adapt the quickest." Adapt and buy? We’ll see…

Susan Kuchinskas is a regular contributor to TU.

For more on Generations Y and X, see Telematics and Generation Y: Making the car an iPhone on wheels, Getting inside the mind of the telematics consumer, and Telematics and the car-as-service model.

For more all the latest telematics trends, visit V2X Safety & Mobility 2012 USAon March 20-21 in Novi, MI, Content & Apps for Automotive 2012 on April 18-19 in Germany, and Telematics Detroit 2012on June 6-7.

For exclusive telematics business analysis and insight, check out TU’s reports on In-Vehicle Smartphone Integration Report, Human Machine Interface Technologies and Smart Vehicle Technology: The Future of Insurance Telematics.

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