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The connected car

Just about safety or is there a commercial play?

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Connected, or smart cars, are no longer science fiction. Modern automobiles are being built with a large amount of electronics and connectivity, turning them into more than simple modes of transportation.

This past February, the US Department of Transportation’s (DOT) National Highway Traffic Safety Administration (NHTSA) announced in a press release that they would be taking the necessary steps to bring vehicle to vehicle (V2V) technology to light vehicles. In their announcement they emphasized the safety benefits that would come from this technology, click here for press release, equating V2V technology to the adoption of seat belts and air bags. But is there an opportunity to monetise this technology for OEMs and other players, or is it really just a safety enhancement?

Research seems to indicate a little of both, including research published by IDC Manufacturing Insights on data privacy and connected vehicles in Business Strategy: Building Value from Connected Vehicle Data and Overcoming Privacy Concerns MI247733.

On the positive side, consumers seem open and eager to leverage this technology if it makes their lives easier. Drivers, especially in North America, spend a tremendous amount of time in their cars. According to a recent study, in some cities drivers waste close to a week commuting; that does not include the other usage of the automobile. Based on our research, it makes sense that these consumers are willing to accept a technology if it makes this time easier on them.

For example - being able to communicate with their car with voice commands rates high on acceptance by consumers. In addition consumers are open to technology if it provides greater security for their investment - their car. Just like the adoption of alarm systems being remotely monitored for our homes - consumers are happy to leverage the connectivity of their cars to make sure their car is safe and sound when they are not driving it.

On the flip side, consumers, similar to their attitudes on connected devices, remain guarded when they are asked to give up some of the data from their connected cars for 3rd party applications. The perception of "big brother" makes consumers nervous. Functionality such as insurance companies using smart data from cars to provide a more accurate rate or traffic entities leveraging the data to create more favourable traffic patterns are seen with a healthy dose of scepticism.

The willingness of consumers to accept this usage of data might be placed under the microscope as some insurance companies, according to an article in the Economist, click here for article, are looking to incentivize consumers to accept giving up this information in exchange for discounts. Consumer fear of how their data will be leveraged should not be a surprise since this mirrors how they feel about other connected devices.

So what does this mean for the future of V2V and the impact on automobile OEMs? As the NHTSA stated in their press release, the adoption and evolution of connected cars is only going to pick up as we move forward. But the question remains, can OEMs and other related entities find a way to commercialize this technology? Or will the technology be regarded as purely for safety, just like seat belts and airbags? OEMs need to approach this cautiously; there is a fine line between integrating this technology to make consumers safer and to use it as a platform for additional revenue generating services.
Posted by Guy Courtin

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