Ways Automakers Can Offset Connected-Car Costs

With a market that is expected to exceed $37 billion in the U.S. by 2023, the future of connected-car services is bright with possibilities.

Imagine a car knowing the way to work, suggesting stops along the way for coffee, dinner, gas, etc., and then providing a money-saving coupon.

Go a step further and imagine using the in-car infotainment system to place and pay for a dinner order and having your food ready when you arrive. 

The one hiccup, of course, is who exactly is paying for the in-car connectivity of the future? As OEMs add connected services, costs increase. So far, consumers are unwilling to pay, quickly cancelling their satellite radio or safety service as soon as the complimentary trial period expires.

With consumers armed with smartphones that can offer many of the same services as an in-car infotainment system, how can OEMs offer an enhanced experience that engages drivers without breaking the bank?  

Make Services More Affordable

To keep costs low for both consumers and OEMs, automakers should open their infotainment systems to brands looking to provide contextual, personalized engagement with consumers.

Americans spend a lot of time driving to and from work, so it’s no surprise that they also spend a lot of money during their commutes. According to The Digital Drive Report, commuters spend approximately $212 billion annually. So, as demand for connected vehicles grows, so does ad revenue. By partnering with brands looking to reach consumers on the go, OEMs can use in-car ads and commerce to off-set the costs of maintaining and managing connected services in their vehicles.   

Add Value for Consumers

For this in-car monetization model to work, OEMs will need to deliver personalized, relevant experiences for drivers that help them save time and money, stay safe and reduce stress. The secret to making this work is through the collection and analysis of vehicle data.

Using vehicle data not only will allow OEMs to offer improved, real-time map and navigation systems that help drivers avoid unsafe road conditions and delay but will also help deliver contextual and predictive in-car offers that aid – not annoy – drivers.

From a context and value perspective, relevant recommendations (such as coupons or a prompt to order coffee on the way to work) can be delivered to customers based on anonymized information from the vehicle, including frequently traveled routes, typical destinations, and time of day.

Running late for dinner? A recommendation can help a driver safely order and pick up a pizza on the way home. Low on gas? Drivers can be alerted of nearby stations along their route, potentially with discount offers.

Prioritize Safety 

We’ve all seen nearby drivers who are distracted while trying to open a phone-based map app or otherwise fiddling with smartphones. To ensure driver safety, in-car infotainment systems should only show ads when the vehicle is stopped. (Wards Industry Voices contributor Sal Dhanani, left).

Ads should automatically disappear whenever the car is in motion or when users interact with other in-dash functions, such as music or phone calls, thereby ensuring a positive user-experience. 

Look Ahead

Connected cars are the future. Gartner predicts their market penetration will increase from 39% in 2018 to over 80% by 2022. This means consumers soon will rely on in-car infotainment systems as much as their mobile devices.

Today, however, the road is still a bit bumpy for consumers, who are leery of this shift, and for OEMs who are trying to figure out how to make connected cars cost-effective.

As automakers introduce new services, such as in-car ads and in-car commerce, the path forward will become smoother, and consumers will soon begin to enjoy a much more connected ride. 

Sal Dhanani is co-founder and co-president of Telenav, a provider of GPS navigation, local search, automotive navigation solutions, mobile advertising and enterprise mobility.