Vehicles with a wireless network connection, or connected cars, are quickly entering roads, giving automakers opportunities to engage people with new entertainment and safety features. By 2020, about one in five vehicles worldwide will have some form of wireless network connection, amounting to more than 250 million connected vehicles, estimates Gartner.
"The connected car is already a reality, and in-vehicle wireless connectivity is rapidly expanding from luxury models and premium brands, to high-volume midmarket models," says James F. Hines, research director at Gartner, in a statement. "The increased consumption and creation of digital content within the vehicle will drive the need for more sophisticated infotainment systemsnew concepts of mobility and vehicle usage will lead to new business models and expansion of alternatives to car ownership."
Packing cars with the latest Wi-Fi enabled navigation and entertainment features is not enough to win customers, though. Companies must understand customer needs and desires and center their services on these insights.
Courting Mobile-first Drivers
Tesla Motors garnered plenty of buzz when it rolled out its Model S electric sedan three years ago, which included a large touchscreen featuring integrated system controls. The electric car manufacturer is known for offering cars with a user-friendly operating system and considered a leader in connected cars. Part of its Model S cars' appeal is an OS that automatically updates itself to provide improved suspensions, new top speeds, traffic-aware cruise control, and more.
The carmaker is also known for its customer experience. The company has retail locations, but it doesn't have dealers since its stores are self-owned, allowing the company to maintain more control over the customer journey.
Speaking at the Monetate Summit last week, George Blankenship, a former Tesla executive who spearheaded the company's retail operations and showroom expansions, explained that "Tesla doesn't want to 'sell' cars, they want to educate consumers and make a connection." As an example, Blankenship pointed to the company's salespeople who are trained to engage customers in conversations without overtly selling the car with the idea that the sale will more likely happen online after the initial store experience.
Other automakers are also transforming their cars and services to better suit digitally inclined consumers. Last year, General Motorsbegan offering4G LTE-equipped vehicles starting with the 2015 Chevrolet Malibu, which it followed with more than 30 other Chevrolet, Buick, GMC and Cadillac models. The majority of the company's cars offer connectivity features, and by the end of 2015, GM expects to offer about 40 models with Wi-Fi connectivity capabilities.
When customers compare car features, "we've found that in-vehicle technology is up to three times more important than traditional measures such as fuel economy and horse power," notes David Mingle, executive director of global connected customer experience program execution at GM "Customers want to be able to bring their digital life into their vehicle and vice versa."
Even before Wi-Fi-enabled cars became popular, GM was already connecting owners to their cars through a mobile app, Mingle adds. For example, the OnStar RemoteLink Mobile App lets drivers unlock their cars, start them remotely, set navigation routes, and track vehicle diagnostics like the fuel level and tire pressure. The company also added more app features such as the ability to manage Wi-Fi hotspot settings.
As part of the move toward connected cars, GM is extending its mobile-focused capabilities with a new service. Earlier this year, OnStar unveiled AtYourService, a concierge service that connects drivers with retailers while driving.
Through partnerships with Priceline.com, Dunkin' Donuts, and other retailers, GM car owners can use AtYourService to connect with an advisor who will help them find and book hotel rooms, locate restaurants offering discounts, and other actions.
Additionally, GM is using predictive analytics combined with a car's Wi-Fi connection to provide advanced diagnostics for its cars. Electronic components that send out signals when they're about to fail can alert owners to get the part fixed before it becomes a problem. Car owners who sign up for the service through OnStar can have their vehicles automatically check the condition of their engines, transmission, antilock brakes, and more and then email the results to the owner. "We can notify a customer that in about 30 days his battery may need to be replaced and allow the customer to schedule the service before the failure occurs," Mingle says.
Advance notifications of necessary repairs and upgrades could potentially reduce the time and money spent on automotive repairs. Automakers for example, can get a more accurate estimate of which parts they need to have in stock for repairs and car owners can have minor issues fixed before they escalate.
Looking ahead, the company is exploring partnerships with Apple's CarPlay and Google's Android Auto systems and watching emerging technology trends closely. While GM doesn't have an immediate plan for integrating with the Apple Watch, for example, that doesn't mean it couldn't in the future, Mingle notes.
"In everything we do, we have to make sure we're putting the customer in the middle," he says. "And if people choose to communicate with their cars through a device like a smart watch, we have to be prepared for that."
To Partner or Not To Partner
Just as app developers created apps offering innumerable services and features for smartphones, automakers are looking into partnerships with tech companies. Tesla partnered with AT&T to use its data network for carrying vehicle navigation, diagnostics, weather and traffic reports, and other features. AT&T also launched an automotive development platform, AT&T Drive, and a connected car studio to test and showcase ideas.
And while Tesla vehicles can already communicate with Apple, Android, and Windows products, it could easily integrate with the Apple Watch as well. The car company hasn't announced plans for an official Apple Watch app yet, but an independent developer is already promoting an app, Remote S, that can reportedly control a Tesla Model S using the new smartwatch, including unlocking the car and opening the sunroof.
Additionally, Google is consulting with Ford Motors, Toyota Motor Corp., GM, and others on its self-driving car project. Earlier this year, Chris Urmson, head of Google's self-driving car project, said "at some point, we're going to be looking to find partners to build complete vehicles and bring the technology to market," Automotive News reported.
But should automakers be wary of working too closely with third parties like Apple and Google? Tien Tzuo, CEO of Zuora, a software provider that helps companies manage subscription models and build relationships with customers, warns that the auto industry is at risk of commodifying its cars by turning them into an extension of a smartphone.
"I think the auto industry is in real danger of handing over their dashboards to Silicon Valley," Tzuo maintains. "Technology firms are looking at connected automobiles as the next big mobile device market, as a huge data services opportunitybut automobiles aren't phones. The auto industry needs to protect what makes their vehicles unique, and reinforce their decades of industrial manufacturing and design expertise with cool new features that happily surprise their drivers on a consistent basis."
Jason Vines, an automotive consultant and former communications executive at Ford and Chrysler, dismissed these fears. "Automakers have been working with Silicon Valley for yearslook at Ford's relationship with Microsoft," Vines says. "If Google and Apple can bring something that's better and less expensive, the automakers will beat a path to their doors and they should, because it means the customer wins."