How do you think connectivity and telematics will influence the purchase decision of a new vehicle buyer in the near foreseeable future?
It really depends on many factors, such as the region, the car, the services and, of course, the quality of the user experience. For example, in Europe people usually don’t pay for safety & security services, as they do in the US. And in Japan, people are more attuned to technology and therefore willing to pay for highly integrated connected systems. What’s more, most in-vehicle-infotainment (IVI) apps just don’t deliver enough value to address the mass-market. Also, take-up rates can be quite modest: Connected Satellite Navigations systems will soon equip more than 50% of new cars, most of them will be connected and user subscriptions will be only around five to 20%.
Overall, we are convinced that it is the OEMs, not the consumers, who will benefit the most from telematics. As they grapple with ever-shorter time-to-market, and the resulting increase of defects & recalls, we strongly believe that connectivity & telematics will become an important tool for car makers to regularly improve their models once on road. This connectivity will then become a key purchase criterion for the vehicle buyer.
Who do you think will have the ultimate ownership of the harvested data from vehicles? OEMs, 3rd parties or consumers?
Consumers are the real owners of their data but they do not always have full control. At Worldline, we get consumers to register online for our white-label systems, providing information about their car and other sensitive data that Worldline must then manage with top-notch security services and a real respect for privacy, including anonymization and the “right to be forgotten”.
For years, traffic-information providers have been using GPS positions anonymously to improve real-time traffic models. Now the OEMs have understood that vehicle data is their new Eldorado. With sophisticated connectivity, including wifi and Car2Infrastructure communications, car makers will have capacity to harvest huge amounts of anonymous data from electronic control units (ECUs) at an affordable cost.
This is a major topic for us that we are addressing through the joint Atos-Renault Research Chair “Smart & Connected Mobility, the connected car” at the UPMC in Paris. This data will be used to obtain what we call the “Voice of the Product”. This kind of data is so technical, so car-centric and so anonymous that it is generally considered that the consent of the end-users would not be required. But, given the sheer value of the data, it still requires bank-grade security to protect it!
How do you think a consumer would like to pay for connected car services in future?
With Renault R-Link and Parrot ASTEROID, we have tested different Go-to-Markets models. It’s mandatory for Connected Car services solutions to be flexible enough to be able to change their business model over the course of a car’s lifecycle. What is paid with a subscription fee today, for example, may be free in a year’s time. Based on our experience, we must be able to provide the OEM with a way to combine business models and also to adapt their business model market by market.
Car owners also need to gradually get used to the new possibilities and eventually reach a stage when they realize that they cannot live without them. Therefore, a one-year “Try&Buy” is a minimum to get mass-adoption. Our studies in the EU show that car owners consider most apps and services to have a perceived average value of 4€ per lifetime, and would therefore prefer to pay one-shot. However, significant trends such as demotorisation and digital transformation mean that the Pay-As-You-Go model will rise as car ownership declines. For example, Worldline could provide a pre-paid card for a car marker that can be used to pay at charging stations, at the dealer or even rent another car. Worldline is also exploring the use of loyalty cards and mobile payments with customers.
Many of the car makers have launched their own branded app stores. Is it fair to say that they’re largely becoming “app companies”?
With the Renault R-Link launch, Worldline introduced the first mass-market app store in 2011. That was definitively a competitive advantage and is now considered as a “must-have” service. Since 2009, we have been convinced that the eStore is a central enabler, putting the OEM at the center of the ecosystem and allowing it to monetize access to the car. We also see the eStore as a digital sales channel, closing the loophole for dealers in selling services. It is true there is a limit to the number of apps one can sell, probably a maximum of about 200 apps. It’s also true that the rise of mirroring systems will allow the use of standard app shops for many non-car centric apps. Nevertheless, we foresee that connected car eStores will become a “must-have” for every OEM, allowing them to regularly integrate new services and generate locally adapted commercial offers.
But focusing on becoming a pure automotive app store would be a mistake. Car makers need to become active, user-centric, digital services players, and their connected eStores will be one part of this strategy. In time, these will become full automotive eCommerce solutions allowing drivers to order after-market parts or repair and maintenance services directly from the car. Some car makers have already started this transformation, converging towards solutions similar to those we have been delivering in the retail area for years.
Since most of the OEMs are planning their proprietary embedded telematics system. Would it pose a great amount of threat to the aftermarket ecosystem?
What I find most interesting today is the battle for the repair and maintenance applications. Our business intelligence and data science experts are working on CRM for both independent repair shops and car makers. It’s already clear that the first ones have won the battle for control of customer knowledge, segmentation and marketing. Now, thanks to “Vehicle Relationship Management”, or VRM – which refers to embedded telematics connected to the ECU, remote diagnostics, and full data collection, such as mileage, levels and pressures – the car makers are in a position to win back some market share. They are targeting customer retention in their dealer network and some of them even speak about six-year customer retention thanks to the connected car! As a counter measure, however, independent repair shops are starting to work on solutions with advanced OBD telematics systems and smartphones or tablets. This is an area where we are active with our EVA, or Extended Vehicle App, which we presented at IFA last year.
It seems the automotive dealerships are always missing from the connected car equation. How they are going to benefit from connectivity and telematics?
Indeed, they are focusing too much on the P&L where revenues only come from the B2C users. Volvo US has demonstrated in the truck sector, for instance, that connected maintenance services help to reduce repair times and also optimize timing for repairs. This means that dealers become smarter, vehicles have less downtime and user loyalty is improved. Thanks to the full range of fresh data provided, dealers could have a fantastic R&M marketing weapon to improve their customers’ loyalty. We are working on this with a truck OEM and we believe that this could be the real enabler of the connected car business: if the OEM can show the dealership networks that fresh data and connected maintenance will bring the dealer more money in the workshop, then the dealer will be more interested in selling connected car services, thus creating a virtuous circle.
Recently, few OEMs have announced the compatibility of their infotainment systems with wearables. How do you see the intersection of automotive and wearable industry shaping up in days to come?
It would be a “nice to have” for the mass market, especially for the elderly. I remember an IT Challenge Atos organized in 2013 related to the connected car. One of the universities created a steering wheel with sensors to track the driver’s level of stress, as in watches. Having sensors in seats sensing the human behavior will lead to more convenience services. Worldline is member of an EU-funded R&D project called eGO* in which the main idea is that one’s credentials are assessed by simply touching an “ego-ready object”.
In your opinion, how sustainable are the new connected car business models like “car-sharing” or “smart-parking”?
Thanks to growing urban concentration and digital transformation, this trend will continue apace in cities. With smart parking, everyone already dreams of having the car navigate its way to find free parking slots in the street. Worldline operates street parking systems for Paris, Vienna and other cities where we send an SMS to the car owner a few minutes before his parking time expires. We can inform other drivers about free slots. But setting up a broader partnership with cities is not easy and so the global roll-out is very slow.
What is the future of connected cars in relatively less-developed markets like BRIC, ANZ, and APAC etc.?
Again, it is very different from region to region. With Renault we already cover Australia, North Africa, South Africa and Russia. Elsewhere, Worldline is addressing other countries quite successfully with other individual solutions. For example, Russia’s ERA-Glonass accident emergency response system is taking that country into a new era. Brazil will one day follow with its SIMRAV. China will have ubiquitous IVI and Navigation within the next five years. And India and south East Asia will adopt Smartphone-based solutions and low-cost telematics solutions such as OBD dongles.
This interview was originally published on the Telematics Wire website. You can read it here.
* The eGO Project is a group of companies and academics working within a Catrene framework. This group aims to design, develop and promote an innovative way to establish wireless bidirectional channels of communication between objects and users.