Smart cars are quickly becoming the most sophisticated mobile devices in the marketplace. Internet connected cars already send about 25 gigabytes of data to the cloud each hour. As more sensors enter the car, the volume of data will grow exponentially.
With all this data, opportunity to monetize it is immense. According to a McKinsey report, the global scale for car data monetization “might add up to USD 450 – 750 billion by 2030.”
Automakers and mobile providers are the obvious beneficiaries of potential data-linked revenues. OEMs are already leveraging new business models to sell connectivity-related options and services to their customers. They are also using their customers’ data for R&D purposes as it relates to improving safety features and shaping repair and maintenance choices.
However, the opportunity for other industry players as well as those that sit well-outside the auto sector, could be just as significant if they act quickly in testing and developing appealing customer propositions that are supported by effective business models, advanced capabilities and key partnerships.
Insurers, for example, can use the data to enhance and evolve their usage-based and occasion-related policies. Data collected within internet connected cars can also be leveraged by governments and operators of city infrastructures as they look to improve billing and toll road operations for smart city initiatives.
New and evolving revenue streams are only one part of the equation. By driving data, companies can find ways to reduce costs, increase safety and security, and improve marketing efforts.
With a constant intake of data, OEMs can improve their R&D operations with real-time, reliable customer data that can be used to reduce development costs or optimize materials and designs. The IoT data can also be used to assess how real drivers use their vehicles and its components, so they can better predict repair and maintenance needs and offer new choices that better meet consumer needs.
The data can also be used to improve customer satisfaction as it relates to more tailored vehicles and services, improved customer-dealer relations as well as more enjoyable, customized ride with entertainment, features and advertisements that are fit for the driver.
Security: a disruptive force
Consumers, at least a large majority of them today, consciously and willingly share their personal data with their smartphone developers and the makers of the apps they use. Following this trend, the majority of consumers are okay with their driving data with OEMs.
Even with this acceptance, the smart car industry will need to take great strides to protect consumer privacy. Compromising customer data as it relates to the smart car can raise critical issues related to trust. Something that is also of concern for other industries growing out of the Internet of Things (IoT).
A next frontier in the monetization of the smart car is if consumers are willing to pay to share their data. So far the results are mixed with consumers willing to pay for certain features, but not all.