Big Data From Connected Vehicles Could Drive Big Changes For Automakers
The race to develop self-driving cars and trucks has started to receive greater mainstream press attention, especially as automakers test new prototypes and move closer to commercial availability. But while autonomous vehicles aren’t likely to see widespread adoption for at least a few more years, some of their supporting technologies are on the road today, presenting new opportunities and challenges throughout the automotive industry.
Most notable among these enhancements are features that enable the collection and streaming of data from deeply integrated sensors. Together with improved mobile communications hardware, these connected vehicle systems will support the “awareness” of driverless cars, but can also provide automakers with useful information about how their vehicles get used.
Once anonymized to ensure customer privacy and security, this data can be analyzed by data scientists for patterns and trends that suggest how the various parts of each model are holding up under real-world conditions. Recognizing when and how a component is prone to failure can help manufacturers become more proactive and precise in alerting customers to recalls and needs for preventative maintenance, addressing issues before they require complicated fixes or pose serious hazards to passenger safety.
On-board computing systems aren’t new — they’ve been included in some cars and trucks since the 1980s — but until recently, the data captured by these systems have remained within internal repositories, limited largely to use in diagnostic efforts during repairs, and some theft prevention applications. This has now begun to change, as rapid advances in mobile broadband devices, cloud storage, and small industrial sensors have brought down costs for streaming larger and larger quantities of data over the internet.
Electric carmaker Tesla is recognized as the early leader in applied analytics, fully instrumenting all the vehicles in its fleet, and using its active connections with each car to push out fixes and features through software updates. But many other manufacturers are moving in this direction as well: BMW has partnered with IBM, Kia is experimenting with next-generation broadband technologies, and Ford says every new model it releases will be connected starting in 2019. These and other major announcements are in line with Cisco’s estimate that, by 2022, a quarter of all vehicles will be internet-connected in some way, transporting more than 400 million gigabytes of data over mobile networks each month.
This all stands to benefit not just service delivery, but how future fleets are designed and built, as automakers with strong data science programs will be equipped with consumer research and product engineering data that is more comprehensive and accurate than ever before. Even marginal improvements can affect outcomes in highly competitive industries, and companies are making sizable investments in connected vehicle technologies in hopes of establishing new market advantages. Overall revenue from the monetization of car data, already estimated at over a billion dollars, is expected to exceed $400 billion by 2030, according to McKinsey & Company.
Here at Earlybird, we’re following what this means for those downstream from manufacturers — dealership groups, service operations, aftermarket retailers, and others whose businesses are impacted by vehicle design trends outside of their control. And some in these categories, at least privately, view the rise of connected cars cautiously, seeing it as a potential source for new headaches, or as yet another way for manufacturers to exert leverage over unaffiliated third parties. There’s also concern that more complex on-board computer systems will force investment in expensive new service equipment, or require that personnel become more technically specialized, deepening an existing labor shortage for qualified mechanics.
But we see reasons for them to be optimistic as well. Connected vehicles can urge owners to seek service in more engaging ways, providing richer descriptions for why maintenance might be necessary. And once in the shop, vehicle data may assist technicians in identifying and solving certain problems faster, which, alongside more personalized service experiences, could help improve customer satisfaction and loyalty. Producers and distributors of parts and accessories probably won’t succeed universally, but those prepared to sell online could do quite well, especially if they take advantage of channels created by in-car integrations with devices like Alexa and Google Home.
Have thoughts or opinions to share about the future of the automotive industry? We’re interested in hearing your perspectives. You can find us on Facebook and Twitter, or drop us an email at email@example.com.