Connected Services is the only growing automotive space after coronavirus
The coronavirus has impacted just about every sector of the economy, and the automotive industry is no exception. If the industry wants to recover from the virus, it will need to adapt connected services — the only space that is currently poised for growth.
How the coronavirus is impacting the automotive industry
Although the pandemic has not eliminated the need for the cars, it’s safe to say that automakers will struggle as the pandemic’s effects continue to ripple across the globe.
There are numerous factors which are likely to contribute to an industry-wide decline:
● In the foreseeable future, more people will be working from home. This means that they have less reason to invest in a new car. It’s also likely that people will be more cautious about leaving the house for other purposes. With reduced car travel, there is much less urgency associated with buying a new car. Drivers will be putting less mileage on their existing cars, extending their lifespan.
● The general economic depression will also contribute to reduced demand for new vehicles. With so much uncertainty around the future of the economy, we can anticipate that fewer people will be interested in purchasing a new car. This uncertainty is likely to persist even after the worst of the pandemic passes.
● Disruptions in the global supply chain will increase the challenges of manufacturing a car. For an industry that was already struggling with cash flow, this is a significant challenge.
We should expect consumers to be more cautious about purchasing a vehicle in the coming months and years.
Fortunately, there are a few silver linings for automakers. Safety concerns about virus transmission are likely to reduce demand for public transportation and ridesharing services. Although we’ve been seeing a decline in personal vehicle ownership, it’s very possible for the trend to reverse itself in the pandemic’s wake.
Even so, a question remains: How can automakers convince consumers to invest in a new car?
Connected services: a market opportunity
If automakers want to lure customers, they will need to provide a clearly superior experience. People will be traveling via car after the pandemic. But, automakers need to convince consumers that buying a new car is a worthwhile investment. To do that, automakers can’t just recycle the same old marketing pitches. They must provide something new.
Autonomous vehicles (AVs) do, of course, represent a clear improvement on our current vehicles. Yet we’re a long way from being able to offer safe AVs for consumers. In order to develop functional AVs, automakers must invest massive amounts of money into development — money that will be scarcer after the pandemic. And we’re still not likely to have a consumer-ready product any time soon.
This means automakers can’t count on AVs to be a game-changer. Instead, they’ll need to offer immediate value to consumers.
The answer lies in connected services. Connected services provide drivers with a noticeably superior experience. This gives them a clear incentive to invest in a new vehicle even with all the economic uncertainty impacting us all.
Since the technology for connected services is already here, automakers won’t have to invest in R&D. The potential is already here, just waiting to be tapped.
Another advantage to connected services is that it has a model for recurring revenue. The automotive industry has traditionally relied on people purchasing vehicles every five or ten years. This is an inherently risky business model, especially during economic downturns. But if drivers sign up for connected services that have a monthly or annual fee, revenue becomes more predictable.
These are definitely tough times for the automotive industry. But we have the tools to get through this crisis.
Connected services like Parkofon present a major opportunity for automakers. With no upfront investment, automakers can start to provide consumers with a clearly superior driving experience. This is just the kind of innovation that we need during these times.
