Our modern lives are increasingly connected. Cars are no exception. Cars have become extensions of drivers’ smartphones, and increasingly, they are connected to their computers via mobile devices. The car’s value has always declined when removed from the lot. However, cloud technology is changing that. It enables owners to future-proof their cars while creating new revenue streams for automobile makers, wireless telecommunications companies and entertainment brands.
Understanding consumer demand is key for OEMs and automakers to realize the full potential of these revenue streams and retain customers. Consumers will expect cars to function as other computing devices. This will enable seamless, wireless-connected experiences while on the road. It’s no surprise that car buyers are looking for navigation systems and app services. This can make it easy to switch brands. As people adapt to digital lifestyles, they are less likely to purchase cars over their lifetimes. Instead, they will buy vehicles that offer reliable, customizable digital experiences.
The transformation of cars to smartphones
Accelerated deployments of 5G networks and connected infrastructure innovations, such as cellular vehicle-to-everything (C-V2X) technology, have created a perfect opportunity for companies to reimagine and seamlessly digitize a customer’s daily transportation journey. The car has become more complex with added functionality and software. New cars can be connected to LTE or 5G wireless networks. This allows for smartphone-style software updates and app downloads over the air.
This has made it more difficult for customers to choose the right car and features. Automakers now need to consider what services can be included with the car and offer more options for upgrading. Automakers should anticipate increased challenges such as managing a growing list of digital functions that are competitive and must have’ while also developing their software and hardware offerings.
Automotive companies, wireless companies, entertainment brands
Inflection points have allowed automotive companies to create digital products that improve the vehicle experience for passengers and drivers. Automakers, connectivity developers, and entertainment companies must work together to create cohesive suites of products for enabling secure services–entertainment subscriptions, navigation, and driver assistance. Service can increase car manufacturers’ value and provide superior user experiences. They also create revenue opportunities for service companies at every stage of a vehicle’s lifecycle, as customers unlock new features or purchase additional applications. Automakers need to be strategic in their partnerships. They should prioritize work with technology partners and mobile network providers who can provide reliable global connectivity. This will ensure a smooth user experience.
Changes in consumer behavior have an impact on revenue streams.
Automotive lifecycles are long and require lengthy development. Features and hardware capabilities are cemented in the early stages of design, so vehicles become obsolete shortly after they are purchased. Companies must offer customized experiences to customers to retain them. Consumers today approach car buying with a long-term view. In some cases, they bypass dealerships and trade in their cars every six to 8 years instead of every three to five. Customers who value a modern driving experience and are keen to customize their cars have less loyalty to brands. Automakers are having a harder time retaining customers.
These personalized features can be offered over-the-air (OTA), which is a cost-effective and efficient way to get them. OTA updates are a quick and inexpensive way to offer customization to customers. They allow them to pay for features they need, such as enhanced telematics, infotainment solutions, and safety features like driver assistance technologies. Automakers can now modify a vehicle’s software, unlock hardware features, and use existing hardware to provide personalization options. This makes cars more valuable than they were when they were first purchased.
Cloud updates are essential for supporting OTA upgrade support. Companies can access the internet to stream data and offer customers new features that are unavailable with older cars. Companies can use in-vehicle data to identify key trends and optimize user experiences. They also help troubleshoot problems and target/segment customers. This will allow them to extract value from continuous engagement with consumers.
C2C connectivity allows vehicles to have app stores. This lowers customers’ upfront investment and could lead to additional savings for car buyers and companies. Software, firmware, and hardware bundles make removing these features from the car’s lot easy. The car’s life span will be enriched by app stores and subscription data plan packages providing an ongoing revenue stream.
Prioritizing digital experiences
Automakers must incorporate digital capabilities into their vehicles to provide cloud connectivity. McKinsey & Company stated that by 2030, the entire auto-retail experience would be digital. Customers already think digital as soon as they are considering buying a vehicle. The vehicle cloud market has huge potential to grow and could generate significant revenue growth for automakers. Automakers must capitalize on these amazing opportunities by developing in-car digital offerings and partnering with trusted partners. Then, they must secure customers long-term with engaging, connected in-car experiences.