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Marketplace, features-on-demand, digital assistants and data monetization to create disruptive growth opportunities

The tantalizing possibilities of connected cars will be increasingly evident in 2019 as ideas like car-as-marketplace, features-on-demand (FoD) and vehicle-to-everything (V2X) pick up pace, finds Frost & Sullivan’s Global Connected Car Market Outlook, 2019. Everyone stands to benefit—automakers, adjunct industries, tier I, II and III suppliers, and customers—as the convergence of connected, autonomous, shared and electric technologies (C.A.S.E) inexorably disrupts the automotive ecosystem, often in surprising and unexpected ways.

An Unfolding Story of Transformation

Amidst all round disruption, our research picked out five main themes that will have a profound impact on global automotive markets and its key stakeholders as well as, of course, customers in 2019 and beyond:

  • Stepping Up Gears on Car-as-marketplace: The day when you can sit in the comfort of your car and order dinner is closer than you think. In 2019, 60 to 65% of newly sold vehicles from premium automakers will be enabled as an in-vehicle marketplace. By 2020, this figure will rise to 80% as the concept wins adherents among OEMs and merchant platform providers. GM, Honda and Toyota, along with merchant platform providers like Xevo are at the forefront of this transformation, as marketplace solutions begin to leverage customer data and AI based digital assistants to personalize product/service listings based on the individual preference of the vehicle occupant. (Have always preferred spicy Chinese for dinner? Your car-as-marketplace will point you in the direction of Sichuan restaurants in the vicinity!) The integration of in-vehicle payments will add to the convenience of purchasing products/services. Among major use cases will be ordering and buying food, booking hotels, making restaurant reservations, navigating, receiving alerts about offers from preferred brands, and even fuel delivery.
  • Generating Revenues from Features-on-Demand: In 2019, 4 to 5 out of 10 luxury OEMs/brands will include in-vehicle services as on-demand features. Currently, most conventional OEMs offer connected services as FoD. In the future, OEMs like Audi—which has just leaped into the FoD space with its eTRON EV— and first-off-the-block Tesla will drive hardware related functional upgrades through over-the-air (OTA). FoD represents a win-win situation; for OEMs it signifies the opening up of new revenue streams, while for customers it means an array of choices ranging from entertainment and parking/tow assist to navigation map updates and smartphone packages.
  • Unravelling the Capabilities of Vehicle-to-everything: Of the three communications protocols— Cellular-V2X (C-V2X), DSRC, and hybrid that combines V2X and DSRC—automakers show a marked preference for C-V2X. In 2019, several OEMs are slated to debut DSRC or C-V2X solutions capable modules on their vehicle models. Ongoing trials will gradually unravel the full capabilities of each technology.
  • Expanding the Role of Digital Assistants: It was only a matter of time before the engagement of AI assistants with vehicles expanded. Voice-based solutions will move front and center even as digital assistants become more versatile and integrate seamlessly across all devices through the cloud. Amazon’s Alexa and Google Assistant in-vehicle skills are continuously improving to match a connected car environment, setting the stage for users to gain full control over the user experience. These personal digital assistants will support multi modal HMI, making for enhanced in-vehicle experiences.
  • Boosting Digital Business Involvement: Automakers seeking to build in-house expertise in data management will forge strategic partnerships with cloud providers and telematics service providers (TSPs). With digitization fundamentally transforming their businesses, automakers will partner with technology companies to ramp up their direct involvement in digital initiatives. This will allow them to respond more adroitly—such as offering upgrades using OTA—to customer needs.

Driving Growth Through Partnerships and Innovative Business Models

Technology start-ups will revolutionize the industry and existing market participants, including OEMs, will need to actively look at partnerships, acquisitions and new business models to stay relevant and drive emerging revenue opportunities.

Many automakers are already acquiring, partnering or investing in technology companies whose strategic vision aligns with C.A.S.E. In the meantime, strategic partnerships have created revenue streams in adjunct industries, like in the smartphone industry, that support connected car applications.

OEM agendas will necessarily need to pivot around offering customers more personalized solutions. Here again, partnerships, innovative business models and greater investments will enhance the in-car user experience (UX). To reinforce and further enrich UX, OEMs will need to work towards optimizing the scope and applications for customization.

In an industry where change is constant, OEMs will need to rationalize development cycles to enable the rapid introduction of products with new/improved features. The implementation of firmware OTA (FOTA) updates will accelerate the provision of new features and on-demand feature updates, thereby meeting rapidly evolving customer demands.

It goes without saying that superior connectivity is at the core of a connected car environment. In this context, investments and partnerships to improve connectivity from 4G to 5G will be critical. Not only will it support better on-road safety, it will also promote richer in-vehicle experiences. For instance, high data bandwidth can be used to debut a series of differentiated services like video streaming. Over time, the seamless connectivity of all devices will create a continuous, interlinked ecosystem of connected services spanning car-to-home.

Traditional business models are already moribund. As the ecosystem transforms, market participants will need to reimagine new business models. Today, more than 60% of consumers are open to sharing data. Monetizing such data will create the potential for lucrative new revenue streams that, perhaps most importantly, will be recurring.

Ultimately, continued collaboration between traditional automakers and new age technology companies will turbo-charge the future of the global connected car market.

For more information on the Global Connected Car Market Outlook, 2019, please contact Suhas Gurumurthy, Senior Research Analyst with the Mobility Team at suhas.gurumurthy@frost.com

About Frost & Sullivan

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