Connected Cars: Its Assured Possibilities & Commercial Benefits

National Highway Traffic Safety Administration, US, states that 93% of the road accidents in US happen due to driver error

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With IoT becoming a mainstream technology across the world, we are not very far from having a whole new breed of "connected cars' on the roads. Connected Cars, unlike their lesser counterparts, will have more smarter technology that is more powerful than your computer back home.


Imagine this, you are stuck in traffic. Behind the wheels of a normal car, you will be left with no option but to grunt and wait for the bottleneck to resolve. But a connected car will be able to connect to the Internet, review the route to your destination, identify an alternate route that is free to use and help you get going in moments.

That is just one instance to mention. From Silicon Valley to Autobahn, the concept of connected cars are gaining momentum. The number of concepts cars introduced in recent Auto shows, including BMW's latest Vision Next 100 Concept car, are all proof that we are edging towards a futuristic world where vehicles will merge with their immediate surroundings to make driver and passenger experience better.

But, why is the business world hyped about Connected Car concepts, you might ask. Innovative business models, cost reduction and competitive edge are the primary factors that are luring car manufacturers towards Connected Cars. For customers, the pleasure of driving a car that is almost a leisure to drive is the major benefit.

Telematics & Vehicle diagnostics

Connected cars are literally computers on wheels. They can spew so much real-time information about the vehicle's health condition and how critical components are functioning. Right from basic metrics like fuel volume to brake wear and tear, the sensors fitted to a connected car can even highlight the owner with the location of the nearest service station where it can be fixed.

Autonomous Infotainment

Safe driving and elevated passenger experience are the major focal points of connected cars. Many global car manufacturers, including Indian auto giant Mahindra, have developed mobile apps for their cars that will allow passengers to control the car infotainment using their mobile phones. Technologies like BLE, NFC, RFID, etc. are in play here. The intent of these technologies is to make driving less distractive for drivers and ensure safe driving.

Safe Driving

National Highway Traffic Safety Administration, US, states that 93% of the road accidents in US happen due to driver error. These errors largely happen due to texting while driving, drunken driving, sleep deprivation, distracted driving, etc.

The new breed of smart cars would be smart enough to recognize if the driver's driving pattern is in alignment with the regular pattern or exhibits any off-course indicators that could result in danger. In autonomous cars, the car will take over the driving, while in non-autonomous cars, the driver would be alerted or forced to stop the car.

Commercial Benefits for Car Manufacturers

Connected cars will throw open numerous revenue channels for car manufacturers, primarily in the form of after sales service. On the onset, no manufacturer can expect customers to pay for connected car service. Customers need to be proven the benefit of connectivity in their daily commute vehicles and how it can transform their driving hours.

Subscription/One-time Payment Revenue Model

That said, the revenue model can anticipated to be a freemium model where free services are rolled out followed by upgrades for premium services. The revenue model can probably be a subscription model or an one time payment model depending on the network presence of the manufacturer.

Predictive Maintenance

On the commercial front, customers and manufacturers always want to keep the maintenance costs to a bare minimum so that the overall cost of ownership remains affordable. "One size fits all" maintenance processes do not serve vehicle well, since the driving habits of vehicle owners differ drastically.

Connected cars can strike a difference here by highlighting the exact mechanical junctures where the vehicle suffers maximum wear and tear. Predictive maintenance can be carried out in such locations thus helping the car owner and the manufacturer to extend the car's vehicle and also keep costs of replacement down.

Usage-based Insurance

The data that a connected car generates can be a gold mine of insurers to analyze and decipher driver behaviour. Although the UBI has been around for a long time, the adoption rate will swell significantly in the next three years as car owners have started to show interest in the data-driven model. In a recent white paper EY has suggested that the adoption rate of UBI model can inflate up to 15% by 2020. Connected Cars will play a major role in making this Pay-How-You-Drive format commonplace.

Final Words

One thing is for sure — traffic is not going to die down. But with connected cars, driving around bottlenecks and the whole journey can be a whole new experience. The cars of the future will be intelligent enough not only to make drivers drive safe but also to take care of themselves in a proactive manner through data analysis. Telematics and sensors will also enable passengers to control the car entertainment console, navigation, climate controls and much more easily from their smartphones.