28 Jun 21

Monetising In-Car Technology and Data

Monetising data from in-car technology is a step outside most fleet managers’, fleet operators’ or leasecos’ comfort zones. However, it could be worth braving the pain.

McKinsey & Company predicts the potential revenue from doing just that could be €380bn - €630bn globally by 2030. Capgemini puts that figure at between €68bn and €670bn.

Those projections primarily concern all connected fleet data but in-car technology, specifically the HMI (Human Machine Interface) will likely be the hub for in-car commerce.

The value of fleet data was discussed in detail at the recent Smart Mobility Conference. Catch all the presentations (and more videos) here.

As vehicles are becoming increasingly connected - to each other and external infrastructures - data is being generated. In-car technology, including sensors, computing and in-car HMI, enables fleets to collect masses of data and leverage insights from it. This can help save costs and make driving safer. However, the next step in the evolving automotive ecosystem is to turn car-generated data into valuable products and services customers will enjoy - and pay for.

Slow progress to monetisation so far

According to Capgemini’s 2020 report: Monetizing Vehicle Data, progress has been slow so far. The report states:

“Despite investments in IT platform infrastructure, in-vehicle technology, and service innovation by OEMs, achievements are falling short. Volumes of connected vehicles started to rise later than expected and data signals are often restricted to a limited set of basics.”

According to McKinsey, the opportunity to monetise in-car data hinges on an ability to:

1) quickly build and test car data-driven products and services that appeal to customers

2) develop new business models built on technological innovation, advanced capabilities, and partnerships that push the current boundaries of the automotive industry.

That last point is noted as being one of the primary barriers to progress. Data platform providers, service providers and vehicle OEMs consider each other competitors (or have in the past), rather than enablers for fast service adoption, so these companies will have to find ways of collaborating; none of them can do this alone.

Monetising customer data - but what’s in it for them?

Of course, asking private drivers and mobility users to pay for services is no easy task, so getting the customer value proposition right in the first place is critical to success. Fleet managers will have to collaborate (and maybe partner) with technology companies, 4G and 5G network operators, regulators, infrastructure operators, content providers, cybersecurity players, and data centre operators, plus backend processing providers (if they don’t have the facilities in-house). And that could prove costly in the early days.

In order to pay for services, customers want to know what’s in it for them. In a report entitled: Monetizing Car Data, McKinsey & Company conducted extensive research and found that the benefits for drivers typically fall into four categories: safety, convenience, time-saving and cost reduction.

Customers will pay for safety

In terms of safety, car data can enable real-time emergency calls and facilitated rescue services, plus alert drivers to road hazard so they can be informed and respond quickly. When it comes to convenience, car data can be used for predictive maintenance, which can reduce breakdown risk and downtime. Concierge services make light work of routine tasks, and connected infotainment can provide entertainment for passengers.

Customers will pay for perceived value

Services such as networked parking, for example, where a driver is automatically guided to a nearby parking space, can be highly valuable, meaning that they never have to waste precious time driving round looking for one, and automated payment schemes could also save time on toll roads and in paying for parking and fuel (or energy).

Insurance companies have been successfully using in-car data to offer usage-based contracts. This is done via in-car monitoring hardware and software to capture details as to how the car is being driven, at what time of day, how often and so on. In exchange for being monitored, drivers are rewarded with significant cost savings in their insurance policies, which is particularly popular among younger drivers for whom premiums are normally high.

A key watchpoint is building and maintaining customer trust and anything to do with data faces multiple threats such as cyberattacks, data loss or leakage and data misuse.

The 5 Golden Rules for Building and Maintaining Customer Trust (McKinsey & Company):

  • Never use data against your customers, but rather in their service. Frequency of interaction is critical, as customers do not want to be stressed by continuous questions or propositions.
  • Provide clarity and education on what kinds of data are to be used, why and how (e.g., anonymised vs. personalised), with a simple experience in the “terms and conditions” acceptance.
  • Do not misuse and do not allow potential third parties to misuse data, aggressively promote data security and respect of privacy, and be clear on “legal aspects.”
  • Give customers the choice of what to share and what not to share and for which purposes (i.e., customers need to be in control of their own data); periodically remind customers that they can revise the parameters of data sharing.
  • Make gathered data available to customers.

In the future, as driving becomes autonomous, vehicle users will be free to make their time in the car more productive or fun and this is potentially a lucrative opportunity for players who control the social space through in-car data. This could be mobility operators, partnering with telcos and social media giants or other content platforms and creators.

On a per-vehicle level, connectivity could deliver up to $310 in revenue and $180 in cost savings per year, on average, in 2030. Source: McKinsey & Company - Unlocking the full life-cycle value from connected-car data

In June 2021, global provider of software solutions for the automotive retail industry Keyloop partnered with event broker technology provider Solace to develop an in-car booking system. Currently in prototype phase, one application being tested includes an in-car service booking app. Designed to connect a driver with service and repair centres in real-time, if they are notified of a fault or an upcoming service during a journey, the app displays availability and pricing from various repair centres, allowing them to book an appointment at the repair centre of their choice.

Capgemini concludes that automotive connectivity is increasing faster than ever and is expanding the potential for data monetisation across the ecosystem. Data suppliers, such as OEMs and vehicle fleets, are well positioned to benefit, as are insurance players, companies in the automotive aftermarket, cities, infrastructure providers, and other data customers. Importantly, all stakeholders must act fast. Those that fail to act now will miss the opportunity to differentiate themselves in one of the industry’s customer-facing spaces.

Images: main image courtesy of Shutterstock. In content image depicting the framework for monetising fleet data, courtesy of Capgemini

Authored by: Alison Pittaway