Connected Vehicle

The cost of connectivity – What consumers are telling us

Every year Capgemini conducts extensive consumer entitled Cars Online. The new 2017 study has some fascinating results covering what consumers want and don’t want, and what they are prepared to pay for or not. The good news is that consumers value connectivity, and are open to share information, but the bad news is that they do not really want to pay for this service. When it comes to making that final choice of a vehicle, the in-car technology is more important than the driving experience, but any retailer or manufacturer that tries to cash in on the connected car features risks either not getting the signature or losing the sale.

NIck Gill
Nick Gill Executive Vice President Capgemini

I was recently with an automotive company that has launched a suite of connected car services for what seems like a very reasonable premium of £29 per annum. The initial take-up has been slow, and I hope that this is just early inertia, but I did wonder if this company might have the wrong business model, and that instead of charging consumers for the service, it would be better to bundle the cost into an overall service charge, and not make it a separate buying decision.

Companies like Onstar have struggled with this dilemma for many years, and to be honest never found the perfect solution. In the balance between wide consumer adoption of a free service, and limited take-up of a paid service, the digital economy tells us size matters, and it is better to go for market share first and revenue second. It is often only clear how you will benefit from the quantity of customers and data at a later date, and trying to predict value in the digital world can often be difficult. Nearly all automotive companies are struggling with a traditional Return on Investment analysis for connected services, and just not getting the numbers to stack up. There are clearly benefits for consumers to have vehicle connectivity, but they are not seen as significant enough to justify a financial investment. So do you accept the cost of connectivity as a table stake, or price it as a value-added service? Furthermore, companies that offer a free trial period for their services are often fighting with a conversion rate of around 10%. They are not able to convince their customers to register themselves with their vehicles, maybe because retailers are not really interested in promoting these services on behalf of the OEM.

Many OEMs are talking about the transformation of the industry from product-based to services-based, and declaring that half of the company revenue in the near future will come from such digital services. The automotive industry needs to look holistically at share of consumer wallet, and accept the argument that the value of the data collected will be valuable enough internally already to justify the investment, agree that the “killer app” for the data has not yet appeared, and realise that customer insights and intimacy is worth more than an annual service charge.


Check Also
Back to top button