The Connected Car: An Evolving Intelligent Experience For Drivers

Steven Kim

Connected cars present an ever-growing market opportunity, one that McKinsey & Company believes could grow to US$1.5 trillion by 2030 – and in fact, one that is dominating the smartphone in connectivity growth. According to consulting firm Chetan Sharma, in the first nine months of 2016, cars and the Internet of Things (IoT) combined for a 55% share of net-adds in the U.S. mobile market, while phones accounted for only 29%. The firm also reported that AT&T has added more cars than phones and tablets combined for seven straight quarters and that the company now has 10 million connected cars.

What does this mean for the players in this industry – the automotive OEMs and suppliers, as well as the telecommunications and insurance companies? Thanks to connectivity, mobility, sensors, and mobile apps, these companies can now be connected directly to drivers so they can offer innovative vehicle-centric services that increase customer satisfaction, loyalty, and retention.

Data-driven innovation for happier drivers

With the massive amount of data from the millions of sensors in connected cars, these companies can deliver a new kind of intelligent, automated experience for consumers. Insights from the car itself, its surroundings, and driver behavior are creating revenue-generating solutions. Consider what these solutions can do:

  • With mobile wallet apps in cars, drivers can easily make purchases at gas stations for fuel and other necessities or buy food and drinks at a McDonald’s or Starbucks drive-through.
  • A connected car solution can also help drivers when they are out on the road. They can book and pay for advance reservations at parking lots near their destinations right through their phone. The app can even open the gate for drivers when they arrive.
  • Rental car companies are turning their cars into on-the-road concierges. Business travelers can purchase fuel, parking, food, tolls, and roadside assistance – then automatically link it all directly to an expense report.
  • Car maintenance can be easier and more proactive too. The connected car can talk to drivers, alerting them to a mechanical problem and identifying whether it needs immediate attention or regular maintenance. A service appointment can be automatically scheduled, and related service offers, such as a car wash or pickup and delivery of the car before and after service, can be sent to the driver.

Longer-lasting customer relationships

With these new opportunities, auto manufacturers can establish relationships with car owners that last long after they leave the dealer lot. They can offer customers many of the above-mentioned services and even automatically add the services to a lease or loan payment. Similarly, telecommunications companies that provide mobile connections in cars can extend their services through offers of convenient and relevant purchases that are charged directly to customers’ phone bills.

Insurance companies can benefit in unique ways too. With data from OBD-II dongles, devices, and sensors in cars, insurers can now offer drivers usage-based insurance that is modeled on information such as type of driving, destination, speed, and duration of typical trips.

The companies that capture all this data can extend the revenue possibilities even further when they combine data with customer information and preferences from other vendors, such as credit card companies. For instance, contextual recommendations can become richer with the addition of purchasing histories and buying patterns from credit card companies. A good example is location-based offers, such as discounts from Dunkin’ Donuts on the drive into work in the morning, or one from a favorite Chinese restaurant on the way home at night.

The connected car reality

Technology, automotive, telecommunications, insurance, and rental car companies are coming together to collaborate on the development of innovative connected car experiences that deliver new levels of value for business and consumers.

In fact, SAP recently showcased many of these technologies with partners Hertz and Nokia on a connected business travel experience, and Mojio, Deutsche Telekom, and T-Mobile for a seamless parking and fueling experience.

The connected car is a now a reality that everyone – even you and I – can start taking advantage of today.

Want to learn more about how leading automotive companies are making the shift to digital operations? Join us in Detroit September 18-20 for the Best Practices for Automotive (#BP4Auto) event at the MGM Grand Hotel. Early registration extends to August 11. 

Steven Kim

About Steven Kim

Steven Kim is Senior Director of the Internet of Things (IoT) and Digital Supply Chain at SAP. He is responsible for incubating and commercializing a range of digital transformation solutions focused on digital manufacturing, extended supply chain and IoT. Steven has been with SAP for over 11 years in various leadership roles and previously led solution management teams for SAP procurement solutions and Ariba Network solutions. He is an industry veteran, starting his career over 23 years ago working with manufacturing and supply chain planning systems. He has many years of direct experience designing and implementing supply chain, procurement and business network solutions in various industries and has a keen interest in applying network based approach to solve complex supply and demand problems. He has worked with many high-tech, aerospace, automotive, mill, mining, and industrial machinery companies, focused on supply chain, manufacturing, and procurement projects. Steven is based in Palo Alto, CA.