Connected Cars: When Will They Take Off?

When we think of the definition of a “Connected Car”, we often relate it to the internet: being able to surf the web through infotainment interfaces, being able to stream music or movies, online shopping, or accessing and updating multiple social media accounts. This is because these concepts are part of our everyday lives, so we expect them to be significant in our future vehicles as well.

The truth is, using the internet is a major aspect of this growing trend, but Connected Cars are not limited to social media or webpages. In fact, many Connected Cars on the road today are already capable of far more. They are able to read traffic situations and suggest alternative routes, automatically set the speed and brake, or set off warnings when the front or rear bumper gets too close to another object. Still not impressed?

The new BMW 7 Series is capable of self-parking just by the push of a button. Cameras analyze and calculate the parking space and the car automatically reverses into the spot. Additionally, customers can customize or select the weather pattern that the innovative sunroof displays, whether the user prefers rain, stars or sunlight. Ford on the other hand has developed “MyFord Mobile,” an application you can use to control the climate of the car from your mobile device, which is great for those going to work in winter climates. The application also tracks your car and gives you directions back to it, if you are lost in a new city. Finally, the Tesla Model S already offers its very own highway autopilot system, which only requires the driver when exiting the highway or for emergency purposes.

Why aren't Customers Lining Up for Connected Cars?

These features sound innovative, exciting and life-changing, so why aren’t connected cars taking off as quickly as expected? The truth is, most of you have sat in an early model of a Connected Car already without knowing it; whether it is a GPS system warning you of a traffic jam coming up, or a rear view camera to assist you with parking. This is one of the major problems the Connected Car industry is dealing with, as it is a very unique and new trend, which many of us are simply uninformed about. In reality, close to half of all consumers have never heard of a Connected Car. This is common, because many of us simply consider Connected Cars as “regular cars” with certain technological upgrades. In fact, only 14% of consumers are well-informed regarding this product.

The awareness of this phenomenon tends to fluctuate depending on countries or regions. In fact, high growth markets such as India or China are much more likely to be interested and educated regarding high-tech vehicles when compared to mature markets such as Western Europe. Many of these nations are desperate in solving their traffic and pollution issues, as well as experiencing rapid changes in lifestyle. Another factor that plays a large role is obviously age, as younger consumers and therefore younger countries, have a higher portion of knowledge when it comes to this phenomenon. As we know, many Western European nations have low birth rates and an aging population, hindering the interest in connected vehicles.

What is Scaring Buyers Off?

Even among consumers who have heard of them, there is a growing mistrust of the product for two reasons. Firstly, like for smartphones, tablets and laptops, customers are demanding more data privacy, and fear that connected cars will further track their daily activities. Drivers often view their vehicle as a space to reflect, talk with family or unwind similar to their houses or apartments; this means that infringement on privacy is less tolerated. More than likely, Connected Cars will be able to track where someone is headed, details regarding their driving behavior and even offer them targeted advertisements, which consumers are suspicious of. The second reservation consumers have is that as the car becomes more connected, the chances of hacking are greatly increased. Unlike a smart-device, in which only data is compromised, hacking a car could lead to far-reaching implications, such as losing control of the vehicle completely.

Source: McKinsey, 2014

Additionally, the involvement of numerous companies from differing sectors in the Connected Cars market is making consumers nervous. Typical customers already have a difficult time trusting and finding one suitable company for their needs, and are now being asked to trust a combination of automotive, internet providers, technology, and insurance companies among others.

What Does the Future Have in Store?

As customers become more aware of this trend and begin to trust the product, the growth potential is enormous. In fact, Connected Cars are expected to blossom in the next five years, as OEM’s begin to cooperate with technology giants such as Google, Apple and Microsoft. Forecasts show that by 2020 roughly 220 million Connected Cars will be cruising the streets. On top of this, 97% of North American, 95% of Western European, and 75% of all globally produced vehicles after 2020 will be fully connected models. This global statistic is quite baffling, as the majority of the world’s population still reside in developing economies and shows the tremendous demand regardless of region or culture.

Source: Business Insider, 2015

What the future holds after the 2020s however, is difficult to say. It is likely too optimistic to assume that all cars will be self-driving or capable of other science fiction concepts such as flight. However, chances are that vehicles will slowly be taking more and more responsibility from us, to the point where we are simply an emergency or fail-safe option. This would have a positive impact on emissions, decrease traffic jams, and lower the number of accidents, as human error is decreased continuously. So do not be surprised that within our lifetime, it may be possible that on your way to work or home, you are handling a project using a touch screen, in a conference call or reading a newspaper.

Accepting What We Are Given

In the end, it will be difficult for us as consumers, to gauge the exact potential of this concept. As we can see, today’s customers are relatively unaware of this topic, and for the most part our imaginations are often limited to the environment that presently surrounds us. This is why the majority of us are not fiction authors or inventors. It is like Henry Ford once said:

“If I had asked people what they wanted, they would have said faster horses.”

About the author:

Dennis Melzer | Business Consultant |

As a Business Consultant, Dennis focuses on supporting our clients all over the world in international projects in regards to making their business processes more efficient. While analyzing the processes and workflows within different OEMs, Dennis helps them to choose the best solution and proposes the possible improvements within the DMS used. One of the main interests that Dennis has is to analyze the newest automotive business trends and ensure that all the companies and customers are up to date on the ongoing changes in the automotive market.