Connected Car 2014 Connected Car Business Models - State of the Art and Practical Opportunities
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Connected Car 2014 Connected Car Business Models – State of the Art and Practical Opportunities http://connectedcar.autoscout24.com © Continental AG
Table of contents
1 Executive summary . . . . . . . . . . . . . . . . . 3
7 Outcome and use cases . . . . . . . . . . . 10
2 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 8 Position AutoScout24 . . . . . . . . . . . . . 18
9 Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
3 Study methodology . . . . . . . . . . . . . . . . . 5
Appendix. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
4 Relevance of the Connected Car 6
market . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5 Trends affecting the Connected 7
Car market . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
6 Challenges for the development 8
of the Connected Car market . . . . .
2
1 Executive summary
The car market is currently undergoing major After analyzing the trends, challenges and the
changes. Stricter regulations, pollution restric- customer value of the use cases, the conclusions
tions, more driving assistance and an increasing drawn based on the view of AutoScout24 are:
awareness of safety and security are driving the
development of the Connected Car. Furthermore,
the expectations of consumers are shifting towards • Connected Car Cloud as a driver for
greater connectivity. These changes are giving rise the success of the Connected Car
to new business models and opportunities for the
entire Connected Car market. This study examines • There aren’t any applications with a major
both existing and future business models related value for the customer on the market
to the Connected Car.
We interviewed 27 participants from related indus- • A real open source initiative could push
tries such as car manufacturers, telecommunica- the Connected Car market
tions and the digital sector. We asked them about
the various challenges, trends and business models • Used cars could have a major impact on
relating to the Connected Car. The main challenges the development of the Connected Car
identified were technical-, business-, and mar-
ket-related. These include the difference between • Consumer needs and problems have not
the automakers and the Internet industry as well yet been identified extensively
as the question of how to monetize the Connected
Car. Moreover, there may be conflicts caused by
the use of varying platforms in different brands of AutoScout24 takes part in the identification of
car. The platforms all need to be compatible with customer problems and needs. Being the largest
the smartphone used by the driver. This difference online car marketplace in Europe, the development
accounts for embedded and brought-in solutions. of the car offers great potential. This study can
The concern about data security remains. Who has serve as an overview of possible Connected Car
the right to access which data and to who does the applications and also as an overview of the main
data belong? Many use cases require the collection trends and challenges in this young growth market
and analysis of car or user data. The Connected Car for everyone in the industry.
market still needs to overcome a range of chal-
lenges in order to grow. The study identified over
40 potential and existing use cases.
3
2 Introduction
© Audi AG
Connecting the car to the Internet could lead the consumer. The results will then be categorized
to major changes in the automobile industry. and analyzed.
It introduces the IT business to a traditional in- The study begins by explaining the methodology
dustry segment. This new field of business follows that was applied. This chapter is followed by a
different rules and has contrasting characteristics. description of the relevance of the Connected Car
There are some advantages and also a number of field. The study then analyzes the current trends
challenges that accompany the introduction of the affecting the Connected Car. We asked 27 market
Connected Car. However, not only carmakers stand experts to state their opinions and share their
to benefit from the development of the Connected insights on this topic. The future of the connect-
Car. The industry is set to undergo a great many ed vehicle faces numerous challenges that are
changes and see new market entrants within the described in the chapter prior to the outcome and
next few years. These new market participants findings of the study. The use cases will also be
have the opportunity to expand their businesses mentioned and categorized. Furthermore, these
and enter the automobile sector. This is especially possible applications are evaluated and ranked
true for the telecommunications industry and the according to their importance. The study then
digital sector. These markets are very consum- concludes by outlining the position of AutoScout24
er-driven. Therefore, the main goal of this study is and providing an outlook.
to identify use cases that provide greater value for
OEM
Network Provider OEM Network Provider
Connected Car
Digital Business Digital Business
4
3 Study methodology
AutoScout24 surveyed 27 experts from various The questionnaire consisted of basic questions
industries related to the Connected Car market concerning the trends and factors driving the
in Germany. The study was performed from the development of the Connected Car. The survey
end of December 2013 until March 2014. During focused on the identification of use cases.
qualitative interview sessions the experts answered Questions concerning customer value made up
open questions with the goal of identifying use the third part of the questionnaire. Monetizing
cases. The experts work in the following industries: the Connected Car played as much of a role as
the outlook and further development.
• Car manufacturing 4 In order to identify a trend in the importance of
• Consulting 8 the use cases identified, the experts then received
• Telecommunication 3 an online questionnaire in which they were asked
• Tier 1 supply 3 to evaluate the use cases on a scale from very im-
• Car sharing 2 portant to very unimportant. The survey gathered
• Information technology 4 information from 24 expert participants in order
• Financial services 3 to obtain knowledge on the perceived importance
of the use cases for the Connected Car market.
2 Financial services
3 Information technology
8 Car manufacturing
3 Car sharing
3 Tier 1 supply 4 Consulting
4 Telecommunication
5
4 Relevance of the
Connected Car market
Cars are one of the last of very few white spots on The ecosystem includes telecommunications
the digital map. But now the digital revolution is companies, governments, insurance companies,
increasing the connectivity of cars and enhanc- garages, app developers, retailers, and auto
ing the possibilities for being connected at all suppliers. When talking to these players, they are
times. Regulations, for example the eCall, and all aware of the high importance of increasing
the growing demand for infotainment are pushing connectivity. Even though there are estimates for
the development of the Connected Car. Entertain- the future potential of the Connected Car market,
ment and other functions within the car are rather we can only begin to imagine how the market is
static, whereas smartphones are accustomed to likely to develop.
dealing with real-time data. Due to decreasing New features relating to Connected Cars may well
prices for technology and data transfer, the car be more relevant to the end customer than, for
now has the chance to become a mobile device on example, the actual engine technology. The study
wheels. This development offers new options for “The Cars We Want Tomorrow” conducted by Auto-
car manufacturers to position themselves in the Scout24 in 2013 indicates the increasing demand
market. Connected Cars enable carmakers to build for Connected Car features in the near future.
and maintain a relevant relationship with their According to this study, in particular, end custom-
customers. ers expect safety and entertainment features. This
Increasing connectivity is already being seen with will lead to a variety of very important changes
the increased numbers of smartphones and greater from the perspective of the customer with regard
volumes of global mobile data traffic. Studies to mobility. First of all, mobility itself is becoming
predict more than ten billion mobile-connected more important than actually owning a car. This
devices within the next 4 years. This mega-trend can be seen especially in bigger cities, which have
is changing customers’ expectations regarding the an increasing number of car-sharing companies.
availability of connectivity. Increasing volumes of While on the move, consumers expect the same
data will be collected and data science will create experience and connectivity they have at any other
new business opportunities. This forecast has led to time and place. Greener solutions such as electric
many studies stating that all cars will be connected mobility greatly depend on connected vehicles.
within the next few years. According to a study by Cars need to charge their batteries, but charging
MarketsandMarkets the market value for the Con- stations have limited capacities. Therefore a solu-
nected Car is expected to be close to 100 billion tion that shows the availability of charging points
US dollars by 2018. at any station would be very helpful. The Connect-
The Connected Car not only impacts carmakers, ed Car market offers a large number of possible
but also other industries. This trend can be seen in applications with many benefits for consumers.
the efforts of companies such as Microsoft, Apple,
and Google.
They are all competing with one another to ensure
that their operating systems are fitted in the info-
tainment units of new cars.
6
5 Trends affecting the
Connected Car market
Connected vehicles are becoming a mainstream
phenomenon. The way people connect with their
environment has changed radically over the past
years. Therefore the experts were asked about the
trends they see developing in the field of the Con-
nected Car. This chapter summarizes the four major
trends that were identified. They include not just
the consumer but also external trends affecting
the Connected Car market.
Increasing demand for connectivity Autonomous driving is not an immediate goal
Cars are expected to offer more and more con- A self-driving car will become standard at some
nectivity features. Today, it might still be a selling point in the future. However, it is not the main
proposition to offer certain connectivity services, focus of automakers at the present time. First,
but in the future these features will be expected as many advanced features are being developed to
standard equipment. On the one hand there are make driving easier, safer, and more convenient.
the consumers who expect connectivity every- Then new laws and regulations need to be passed
where. On the other hand, regulations and safety in order to pave the way for a self-driving vehicle.
laws require cars to be connected. Carmakers can Before all these challenges are mastered and cars
profit from increasing connectivity by providing are ready to drive on their own, customers first
new after-sales solutions, thereby bolstering cus- need to be made aware of self-driving cars. This
tomer retention. New car models, such as electric necessitates the broad acceptance of consumers.
cars, require more connectivity than other vehicles. Another factor is car-to-x communication. The in-
Their range is limited and charging stations are not frastructure needs to be able to communicate with
yet available everywhere. The availability of charg- the cars on the road. A general system to establish
ing points necessitates real-time communication in data transmission will be necessary.
order to meet the need to charge car batteries.
Laws and regulations influence the future
“While the e-mobility slowly picks up the speed, of the Connected Car
another revolution is already in full swing: Safety regulations will affect the Connected Car
the digital revolution.” market in general. The eCall is the first regula-
Dieter Zetsche, Vorstandsvorsitzender, Daimler AG tion that will immediately have an impact on the
connectivity of cars in the European Union. As
Mobile devices are important for the from 2015, all new cars will be equipped with this
connection feature. Automakers have to bow to these laws
Smartphones are a great way of connecting and accept them. Taking the eCall as an example
vehicles. First of all, most people use smartphones to connect all vehicles, the power of regulation is
regularly and are therefore accustomed to greater obvious. A car needs to be equipped with a black
connectivity. Furthermore, smartphone users box to make the eCall work. Driver distraction may
have their personal data stored on these devices. well become a topic for governments to regulate
A connection between cars and mobile devices what a driver is allowed to do while driving and
is therefore inevitable. Smartphones and other which actions need to be limited to a non-moving
devices need to be compatible with their owners’ position. Various other government plans may also
vehicles. Therefore, all types of car need to be determine the future of the Connected Car market.
able to connect with all brands of smartphones.
Used cars may rely on smartphones as control
devices to operate Connected Car features. Addi-
tionally, mobile devices offer the advantage
of reducing the amount of hardware required.
7
6 Challenges for the development
of the Connected Car market
© Volkswagen AG
The increasing use of smartphones, growing urban industries to work together. Updates and upgrades
areas and greater numbers of cars on existing must be applied regularly in order to meet the
roads – the car industry will be facing a great requirements of end consumers. They will expect
many challenges going into the future. Connected the operating systems in their cars to work as well
Cars require a wide range of industries in order to as those in their smartphones.
interact with one another. On the one hand, car Furthermore, car manufacturers rely on part-
manufacturers are still responsible for the devel- nerships with mobile network providers to some
opment of the car itself. On the other hand, they extent. A stable Internet connection is a prerequi-
need to open up and work together more closely site at all times.
with telecommunications companies. The Connect-
ed Car is therefore causing a paradigm shift within Embedded vs. brought-in solutions
the car industry. This shift is also supported by Embedded connectivity systems are meanwhile
the changing needs of consumers. Car buyers are fitted in many new cars, whereas used cars are
becoming older and no longer need to own a car rarely equipped with them. In order to connect
within cities. Furthermore, the car’s specification them, a brought-in solution is required. The use
is no longer the most important criterion. of interfaces such as OBD2 to connect the car to
the smartphone might well be a suitable solution.
Monetizing the Connected Car Generally, cars need to be able to connect to end
Connecting the car will also lead to new costs. But consumers’ mobile devices using cables, Bluetooth
who will pay for these services in the future? How or other technologies, enabling them to fully
much are consumers willing to pay to connect their access the contents of these devices. In order to
vehicles? These questions are as yet unanswered. achieve a high percentage of Connected Cars on
Firstly, car buyers are used to paying for their vehi- the roads, the discrepancy between new and used
cles once only. The Connected Car requires a con- cars requires a solution. Brought-in solutions may
stant Internet connection, which might therefore solve this discrepancy.
cost subscription fees. There might be business
models similar to the smartphone or a one-time
payment when the car or the application is initially
purchased. Data and roaming costs also need to be
paid in addition to the services used.
Difference between automobile manufacturers
and Internet industry
The lifecycles of automobiles and Internet prod-
ucts, such as smartphones or apps, differ from one
another. Cars usually take much longer to develop.
A car development lifecycle takes up to five years,
whereas operating systems and apps are con-
stantly updated. The Connected Car requires both
8
© Volkswagen AG
Ownership of cars may change and introduce Data security and ownership of data
new ownership models Connected Cars transmit data to a variety of receiv-
Car manufacturers are aware of the changes in ers. These might be mobile devices, automakers,
customer behavior. The trend is heading away insurance companies and so on. But who has the
from owning a car towards the general need right to access this data? Carmakers see themselves
for mobility. Many automakers are supporting as the owners, but car buyers want to decide about
car-sharing programs in order to fulfill the need of the use of their data themselves. Who is responsi-
mobility. Traveling from one city to another could ble for the security of the data? Privacy questions
then be done by train. When the consumer has may slow down the development of the Connected
arrived in the foreign city, car sharing might well Car market. The possibilities of analyzing the data
be a suitable option as a way of accessing mobility. transmitted by vehicles have not yet been fully ex-
Therefore, it is no longer necessary to own a car. plored. Time will tell which companies are able to
Intermodal transport is increasing as a result of set up new business cases and create new business
new ownership models. This means you have the models.
option to book trains, car-sharing vehicles and
other transportation devices in just one accounting
process. Smooth transportation options are availa-
ble without the need to own a car.
”The expectations of the people towards mobili-
ty will change fundamentally.”
Dr. Martin Winterkorn, Vorstandsvorsitzender, Volkswagen AG
Compatibility between different platforms
Currently, each individual car manufacturer devel-
ops its own operating system for its vehicles. The
carmakers decide which apps will be available for
their vehicles. Closed platforms allow them to de-
cide about the level of security and reliability. This,
on the other hand, limits the number of applica-
tions in each vehicle. The automakers control the
developers and therefore regulate the variety of
services available. An open platform would allow
external developers to create apps for cars. But
the cars’ operating systems need to be compatible
with one another in order to make the use of apps
possible across different models and brands.
9
7 Outcome and use cases
© Volkswagen AG
The term Connected Car is well known within the
automotive business, but not yet among consum- Importance of identified categories
ers. Therefore the driver of the Connected Car
needs to be identified and analyzed. So who are 4 5 6
these drivers specifically?
Autoscout24 asked the opinion of 27 experts in Saftey 5.35
Germany about which use cases or trends may help
to increase awareness regarding the Connected
Car. Safety is paramount for consumers. With an Diagnosis 5.13
average of 5.35 on a scale up to 6, the experts
consider safety of great importance to the future Navigation 5.13
of the Connected Car. This opinion is driven by the
eCall regulation passed by the European Union. Car sharing 5.08
The eCall is an emergency call system designed to
help the driver and passengers in the car in case
of an accident. Cars will have telematics boxes Remote telematics 4.92
fitted during manufacturing, which will be set up
to make the eCall. The other important categories Infotainment 4.71
in the field of Connected Cars are diagnosis and
navigation. Infotainment and insurance take a
Insurance 4.33
rather less important role in taking the Connected
Car to the next level.
Legende?
10© Continental AG
Overall, the study resulted in over 40 different use “Market participants other than the OEMs are
cases relating to the Connected Car. Use cases are able to access car data through the OBD-2
possible scenarios for applications. The use cases interface. This allows many new use cases and
are sorted by category, but some of them are in- benefits for the driver and car owner.”
terrelated. Thus, for instance, the use cases in the Thomas Girod, Sales Manager Automotive, Vodafone GmbH
field of safety also relate to navigation. The eCall
is taken as an example to illustrate the connection
between the various categories. In order to make
an eCall, the vehicle must be fitted with a telem-
atics box, GPS tracking, and a SIM card, thereby
creating the basic technology required for other Top 10 use cases
possible applications. Tracking of one’s vehicle or
geo-fencing use cases may then be established.
1. Live traffic information (5.83)
Furthermore, a person’s driving behavior can be
analyzed by means of the extracted data, which 2. eCall (5.46)
may then be taken to determine usage-based in-
3. Accident prevention (M2M communication) (5.46)
surance premiums or to optimize one’s own driving
behavior. This leads to the finding that a combina- 4. Self-diagnosis including data cloud (5.43)
tion of different applications is very much possible
5. Intermodal route planning (5.25)
and may even be desired. If an application meets
the same basic requirements, such as technological 6. Intelligent parking – showing the availability of
standards, it offers the possibility to use the same parking spots (5.13)
standard for a number of use cases. This becomes
7. Wrong-way driver warning (5.09)
even more important when looking at used cars.
An external telematics box or OBD2 dongles might 8. Usage-based insurance (5.08)
be necessary to connect the vehicle. Therefore a
9. WLAN in the car (5.04)
standard for an app store or similar may allow the
introduction of various use cases from different 10. Synchronization of playlists (5.00)
categories.
11Navigation
• Live traffic information
• Points of interest displayed in the car
• Finding parked car
• Intelligent parking - pinpointing available
parking spots
• Counterevidence for speeding tickets
• Areally/ timely extension of navigation area
• Booking of parking spots in advance
• Intermodal route planning
• Automatic traffic sign recognition
• Locally based information about events
• Offers of available parking spots
• Electronic logbook
Safety
• eCall
• Wrong-way driver warning
• Prevention of accidents (M2M communication)
• Health check of driver
Infotainment
• WLAN in the car
• Purchasing and downloading music
Remote telematics
• Entertainment streaming into the car’s displays
• Remote control
• Synchronization via the airwaves
• Stolen vehicle recovery
• SMS messages - reading and sending
• Surveillance of the car
• Spotify and Internet radio
• Analyzing driving behavior/
• Location-based ads
optimizing fuel efficiency
• Business functions such as calendars, address
books
• Social networking in the car
• Location-sharing and tracking of friends
12Insurance
• Usage-based insurance
• Combined insurance services (e.g. bCall)
• Cross-selling offers
Diagnose
• Self-diagnosis including data cloud
• Used car check
Car sharing
• Ad hoc carpooling
• Combined booking of cars and parking spots
• Private car sharing without physically
exchanging keys
Other
• Reminder of forgotten mobile devices in the car
• Mobile payment of car tolls
• Concierge services
• Automatic information on delays
• Location-based memory function
• Leasing rate based on driving behavior
• Current car residual value sent to the consumer
13“The car will become a sensor cloud. The data Prevention of accidents (M2M communication)
is important and may help to enhance driving This use case describes the general M2M communi-
for everyone. This could include traffic, street cation. Therefore it is not just a specific car-to-car
conditions, etc.” communication aspect, but also offers many other
Dr. Michael Dinkel, Head of Software Integration, Elektrobit possibilities. Generally, it enables cars to commu-
Automotive GmbH nicate with other vehicles or even mobile devices.
Two specific examples will explain this use case.
Live traffic information A car has broken down immediately after a corner
Real-time traffic information is a service that and is hidden from view. The following car receives
shows current conditions on the roads, including the information that the car in front has broken
traffic jams and construction sites. Radio stations, down and therefore notifies the driver to slow
navigation systems, and the Internet are possible down to prevent a collision.
sources for retrieving real-time traffic information. M2M communication includes more than car-to-
The information is gathered from the police, auto- car capabilities. It could be developed further to
mobile clubs, and sensors on and nearby roads as establish car-to-mobile device communication.
well as from floating data. The latter data source Especially during the night or in other difficult
then becomes increasingly interesting. Floating driving conditions, this type of communication
data can be collected from smartphones and cars. could inform drivers that people are walking on
For drivers and their passengers, this use case the street or are even running towards the street.
offers a variety of specific benefits. First of all, live
traffic informs drivers about the current traffic sit- “Connected Cars can increase the safety on the
uation along the planned route, allowing them to streets by far. This can even go as far as seeing
make detours if necessary and be aware of possible cars communicating with mobile devices to
delays along the way. This could save time and prevent accidents with pedestrians.“
have a positive impact on the well-being of the Wilko S. Wolters, Practice Leader, Ingenieurskunst GmbH
driver. The highly accurate information it provides
could lead to stress reduction. It therefore becomes Self-diagnosis including data cloud
possible to avoid traffic jams without having to Car owners can self-diagnose their vehicles using
rely on traffic reports from the radio. Furthermore, interfaces such as OBD2. Instead of depending on
Live Traffic usually includes radar warnings. The repair shops or garages, it is possible to diagnose
driver therefore always knows where speeding is the electronic condition of the car. The analyzed
inadvisable. data can be read in an app or sent to a repair shop
of the driver’s choice. Therefore the car can be
eCall monitored and major damage can be prevented
eCall stands for emergency call. It is an automatic before it occurs. The data can be stored in the
emergency call system that contacts emergency Connected Car Cloud and then made available for
services via the emergency telephone number further analysis.
automatically in case of an accident. They then Knowing which problems your car has or what
send rescuers to the place of the accident. The car might break down in the near future can have a
sends basic data such as the time the accident oc- major impact on the amount of money spent on
curred, driving direction, car and service provider repairs.
ID as well as whether the eCall has been triggered The automatic notification of repair shops allows
automatically or manually. Furthermore, it is pos- a vehicle to be constantly monitored. Therefore
sible to send data from the safety system on board drivers no longer need to worry about the condition
the car. These include the number of passengers, of their cars. They can rely on the repair shop to
whether the seat belts were fastened and the inten- contact them in case of damage. It is also important
sity of the accident. In every case the emergency to immediately know the reasons that caused the
call center tries to contact the integrated phone in problem, which reduces stress in case of car trouble.
the car to talk to the driver or passengers.
This use case offers great value in terms of safety. Intermodal route planning
When car accidents happen, minutes can decide Increased connectivity also makes it possible to
between life and death. Therefore the eCall may provide the driver with itineraries that include
reduce the road toll and help to reduce the inci- several modes of transport. The following example
dence of major injuries occurring due to car acci- demonstrates this type of travel planning. A person
dents. Particularly the damage caused by accidents leaves home to travel to the local train station,
that happen at night on streets with little traffic which requires public transport. Then this person
can be greatly reduced with the help of the eCall. takes a train to travel to another city. After arriving
Sending the GPS position and the driving direction at the destination, a car-sharing vehicle is needed
enables vehicles to be recovered more quickly. This to reach the final destination. When the person
saves time in cases of accidents that do not result enters the car, the navigation system could receive
in serious injury. The amount of time saved could data from a mobile device to set the address of the
be as high as 50% in rural and 40% in urban final destination. If the final destination cannot
areas. be reached by car, the vehicle’s navigation system
could send the remaining route to the traveler’s
14mobile device. Public transport, trains, and car This encourages a fair evaluation of policy rates
sharing are booked and displayed in one single and might well benefit the low-risk drivers.
route planning. This use case may go as far as Consumers now have the option to select between
including the automatic rebooking of modes of different insurance types instead of relying on the
transport if the traveler is running late any time standard premium. Drivers are able to improve their
during his journey. driving habits and even compare the results to their
family and friends because of the tracking device.
Intelligent parking – pinpointing available
parking spots WLAN in the car
Parking spots have become rare in bigger cit- The car provides a WLAN connection for the driver
ies. Therefore it might be an option to show the and the passengers. This allows various devices
availability of parking spots directly in the car. such as notebooks, tablets, or smartphones to
This means that if the desired parking areas are connect to the network and use the Internet for
occupied, the car’s navigation system will guide working, streaming, or other purposes.
the driver to the closest available parking spot. This use case offers a specific value for the cus-
Furthermore, whenever a car leaves, this specific tomer. Traveling and business trips may require
parking spot needs to be shown as available to access to a WLAN connection. On business trips it
other drivers. Therefore cars need to communicate is possible to connect all devices such as tablets,
with each other to share their location anony- smartphones, and notebooks to the WLAN and
mously. Connected Cars are able to send data to thereby reduce the number of separate SIM cards
each other. This requires a very high number of or WLAN sticks required. This use case also offers
Connected Cars in order to make this use case another benefit while traveling. The WLAN allows
possible. Another possibility might be the develop- the streaming of movies, songs, and other activ-
ment of the infrastructure to show the availability ities such as checking e-mails or connecting to
of parking. This has the major advantage of being social networks.
independent of the parked cars’ connectivity.
“Car data allows an electronic profile of each
Wrong-way driver warning car. This could be a health insurance file for the
There are two possibilities for this use case. On vehicle including user data, driving behavior,
the one hand there are cars that enter a highway amount of driven kilometers and so on…”
going the wrong way. They could receive alerts Andreas Bucholz, CEO, conexas GmbH
and warnings on their displays and possibly even
instructions on how to behave correctly after being Synchronization via the airwaves
on the wrong road. On the other hand it might This use case provides for a wireless connection
be possible to warn other drivers. This means that between the car and the home computer, smart-
as soon as someone is driving the wrong way, the phone, and other online services. Therefore play
car transmits warnings to any cars that might be lists could be synchronized with the car, which
affected and exposed to danger. Then the other means that your favorite music you listen to at
drivers receive alerts on their head-up displays. home could be automatically streamed into your
Increased safety and fewer accidents may occur vehicle. Furthermore calendars, notes, and address
from implementing this use case. books could be synchronized with the car, allowing
passengers to use these functions while in the car.
Usage-based insurance According to the experts, the personalization of the
Pay as you drive (PAYD) and pay how you drive car is the key value. One expert gave the example
(PHYD) are parts of the usage-based insurance of a shared car. If a husband and wife share a car,
scheme. This type of automobile insurance calcu- they should easily be able to set up their calendar,
lates its costs based on the vehicle type and its notes and favorite music within the car. Further-
actual driving record. Factors such as time, place, more, it is entirely up to the driver or passenger
and distance are measured. They add up to the to decide which music he or she wants to listen to.
driving behavior that serves as the basis for the
insurance premium.
The difference to traditional car insurance is the In the following, the top 3 use cases are displayed
consideration of driving skills. The safer the driver for each category. The results are ranked according
is, the less he or she needs to pay for their cover- to the evaluation of the experts. The explanations
age. If car owners choose this type of insurance, for each use case can be found in the appendix of
they will be evaluated concerning how, when, and this study.
where they drive.
The most important value for customers is the
potential to reduce the cost of their insurance
policies. The better the driver, the less he needs to
pay. This might be interesting especially for young
drivers who need to pay a lot at the beginning of
their driving careers. They might reduce their rates
by adopting safer driving behavior.
15© Volkswagen AG
Top 3 use cases: Remote telematics Top 3 use cases: Diagnosis
• Stolen vehicle recovery (4.88) • Self-diagnosis (5.43)
• Remote control (4.70) • Automatic data transfer to repair shops (5.13)
• Fuel efficiency analysis (4.67) • Check-up of used cars (4.65)
Use cases in the field of remote telematics are not Diagnosis is considered the second most important
the main factors driving the Connected Car market. factor driving the Connected Car market. There are
However, overall, remote telematics is ranked in the already some applications on the market that allow
middle of the available categories, just below car car owners to check the electrical status of their
sharing. The experts mentioned five use cases and cars. Major breakdowns may therefore be prevent-
evaluated them all with a lesser importance than oth- ed due to early detection of problems in the car.
er categories. The other two use cases are the analysis The ability to check one’s car could lead to further
of driving behavior and the surveillance of the car if, uses for this application. One day, it may even be
for example, children take the car unasked. possible to make a full car inspection of a used car
before buying it.
Top 3 use cases: Infotainment
Top 3 use cases: Insurance
• WLAN in the car (5.04)
• Synchronizing play lists (iTunes etc) (5.00) • Pay-as-you-drive (5.08)
• Spotify and Internet radio in the car (4.92) • Additional services (e.g. bCall) (4.63)
• Cross-selling of insurance policies (3.96)
The results of the infotainment use cases are sur-
prising, as infotainment is ranked low compared to The Connected Car offers new business models
the other categories. The respective use cases are for insurance companies. Besides being able to
evaluated higher. Two infotainment use cases are introduce new policies based on driving behav-
ranked among the top ten use cases. Other possi- ior, they can also offer additional services. Some
ble applications include entertainment streaming, insurers offer breakdown calls or other services in
social networking, location sharing, business func- addition to their regular policies. If a telematics
tions, and voice control for messaging services. box is installed in the car, they may either find use
cases concerning the data or create cross-selling
„Augmented Reality offers so many new benefits opportunities.
to the Entertainment applications of the car. Just
imagine if you travel and always know where
your favorite music is played. Information about
live concerts or bars and clubs may be sent into
the your car and based on your location and the
music you listen to in the car.”
Steffen Holly, Head of Media Management & Delivery, Fraunhofer IDMT
16© Audi AG
Top 3 use cases: Navigation Top 3 use cases: Car sharing
• Live traffic information (5.83) • Ad hoc car-pooling (4.83)
• Intermodal route planning (5.25) • Combined booking of cars and parking (4.78)
• Intelligent parking – showing the availability • Private car sharing without physical key
of parking spots (5.13) exchange (4.58)
Navigation has been considered a major driver Car sharing may greatly benefit from Connected
of the Connected Car market. The importance of Cars. Being able to pick up people along the road
navigation applications can be seen when looking may be an interesting concept for car-pooling com-
at the top ten use cases. The top three use cases panies. Car sharing tends to increase their field
displayed above are all ranked among the top ten of operation, especially in bigger cities. Therefore
use cases overall. Other use cases, such as locally new concepts such as the combined booking of a
based information, electronic logbooks, the finding vehicle and a parking spot may become possible.
of a parked car, or point-of-interest information are Concerning private car sharing, a Connected Car
also included in the navigation category. provides the option to rent cars out the same way
as car-sharing companies.
“The eCall is certainly an important step towards
the Connected Car, but there will be also other Top 3 use cases: Other
drivers to force connectivity onto the market.
These definitely include driving data related use • Mobile payment toll (4.74)
cases.” • Leasing rate based on driving behavior (4.30)
Thomas Becher, VP Business Development, TomTom Telematics • Location-based memory function (4.22)
Top 3 use cases: Safety Some use cases simply do not fit into the chosen
categories. In general, these are rather unpopular
• eCall (5.46) and ranked at a low level. The use cases may be-
• Prevention of accidents (M2M communication) (5.46) come interesting at some point, but are not among
• Warning of wrong-way driver (5.09) the main topics of focus today. Further possible
applications include the sending of the current car
As the most important factor of the Connected Car, residual value to the owner of a car. Another future
safety has a few very important use cases. Besides option is to remind drivers if they have forgotten
the well-known eCall, the safety applications offer any mobile devices in the car.
enhancements for the driver and other road users.
Other use cases in this field are a digital driver
control and a health check for the driver. The last
mentioned possible application checks the health
status of the driver and monitors, for example,
the blood sugar level.
178 Position AutoScout24
© AutoScout24 GmbH
As we have seen, there are a great number of There aren’t any applications with a major
relevant use cases for the Connected Car. As a value for the customer on the market
very important player in the used car sector and Overall, the survey showed that there is uncertain-
operating an online garage marketplace, Auto- ty about the future development of the Connected
Scout24 plans on taking part in the Connected Car Car market. Cars will become more and more con-
market. AutoScout24 therefore draws the following nected and will be available with new functions.
conclusions: Today there isn’t one particular use case or idea
that would immediately boost the popularity of the
Connected Car Cloud as a driver for the Connected Car. There are numerous applications
success of the Connected Car and functions available when purchasing a new
Smartphones have changed the way consumers car, especially in the premium segment. But all of
interact with their environment. A Connected Car these show only minor enhancements for driving
Cloud offers new opportunities for both drivers and the car itself. Connecting used cars requires a
and passengers, including access to information mobile device. These vehicles aren’t equipped with
and navigation as well as entertainment. An on- telematics boxes to connect themselves. Therefore
board system or an after-sale solution is required a retrofit solution is required. Even if there are
to handle data. The data may be sent to car manu- applications that offer an enormous potential, they
facturers or other service providers. A cloud offers do not reach most cars.
drivers and passengers access to apps for navi-
gation, infotainment, or other information either Real Open Source offers more diversity for
with an embedded system or a retrofit device. the Connected Car market
The best solution in order to push the Connected
Car market and increase customer awareness would
be an open platform and a real open source con-
cept. This would allow all-in-one solutions for both
new and used cars. Instead of the walled garden
solutions on the market today, creating an open
platform offers more scope for individualization.
This leads to a greater chance of reaching a broad-
er market than relying only on solutions created by
car manufacturers. However, car manufacturers are
not likely to open their businesses in the fore-
seeable future. Telecommunications and Internet
companies are forcing their businesses towards
the car market. The first step in this direction has
been taken with the establishment of the Open
Automotive Alliance and other alliances between
car manufacturers and companies such as Google
and Apple.
18An open platform enables external developers to Consumer needs and problems are
create applications and functions for a variety of not yet identified
vehicle brands. There are many advantages if real This study showed the expectations of the key
open source becomes the standard in cars. This is market players and what they expect the con-
especially true for the used car market. Even after sumers to be interested in. Most of the use cases
buying a used car, functions related to the use cas- discovered offer some value and benefit to drivers
es previously mentioned can be set up in the car and passengers. However, a key question remains:
individually. Overall, this study displayed the wish What exactly does the consumer want? It might be
and maybe even the need for an open platform. diagnosis, increased safety, or infotainment fea-
tures. Safety is often mentioned as very important
Used cars have a major impact on the in consumer studies, but potential customers are
development of the Connected Car usually not willing to pay a higher price for more
The used car market is playing an important role safety features such as the eCall. Therefore the
in the development of cars. If cars tend to be question still remains unanswered: What is the
more than 10 years on the street, than even if the customer willing to pay for and how much? As soon
eCall remains mandatory for any new car in 2015, as actual customer needs are identified, the Con-
it will take until 2025 before nearly all cars are nected Car market will boost itself. The answers to
connected for eCall. So for most people who own these questions are even more difficult today, due
and buy used cars, it won’t be before the end of to an obvious change in consumer behavior. Car
the decade until the broad awareness of Connected buyers become older when they purchase new cars
Cars is raised among them. Furthermore, they will and owning a car is no longer as important
miss many of the latest functions available only as it used to be.
for new cars. This isn’t very different from earlier
times, but in the specific case of the Connected
Car, where machine-to-machine communication
will take place, it has a great impact on the cars on
the street. If every car transmits data, e.g. for crash
protection and other safety reasons, an older car
without the relevant functions will not take part in
the communication process. Therefore the safety
issue cannot be solved completely and the devel-
opments of such features need to take used cars
into account. The challenge of connecting almost
every car may also be solved with retrofit solu-
tions. AutoScout24, for example, offers an OBD2
solution to make the connection possible.
199 Summary
© Daimler AG
Despite the challenges and possible risks concern- Who will pay for the mobile data? These questions
ing the Connected Car, it will play a major role in are still unanswered and there are numerous
the future of the car in general. All experts agree options to answer them. Laws abandoning high
on the importance of increasing connectivity. mobile roaming costs in the European Union, for
Automakers need to develop global solutions and example, certainly give this topic a boost. By 2016,
open themselves to other market participants in cars will be able to connect in European countries
order to push the Connected Car. Applications at the same cost as in Germany, for example.
need to be set up for upgrades and updates. Consumers are changing their buying behavior and
This may be another challenge for carmakers, the average buyer is getting older. So what are the
specifically because they were used to developing future criteria for buying a car? Is it still the brand
their products in longer cycles than the digital or the power of the engine? These factors may cer-
market. Furthermore, the connectivity of a vehicle tainly play a role when making a buying decision,
is already achievable by means of mobile devic- but connectivity may also be an important factor
es. Many people who own smartphones or other as well, along with user-friendliness. The features
devices can make their vehicle “connected,” but the Connected Car offers need to be easily accessi-
to set up valuable applications, the capability to ble in a straightforward way. The human-machine
extract vehicle data is required. This is necessary interface therefore needs to be optimized, which
for diagnosis, tracking, analyzing driving behav- could include touchscreens with new functions or
ior, and so on. Connectivity requires consistent other solutions. One possibility could be voice con-
service. This means that the infrastructure needs to trol. Which of these options will become standard
be enhanced in order to offer service and network remains to be seen.
access everywhere. To conclude this study it should be mentioned
This study covered over 40 use cases and possi- that awareness of the Connected Car is very high
ble applications concerning the Connected Car. among the key players. This is true of the carmak-
Many of them are likely to be available in the near ers, the telecommunications industry and all of the
future. Some will need to be available in every other participants. New entries are also likely to
car in order to comply with regulations and others launch themselves onto the Connected Car market.
may become available as add-ons or in app stores. Their strategies will be adapted to take part in this
In order to set up app stores, standards need to market. New mobility concepts and intermodal
be established. It remains to be seen whether route planning will enhance the way we travel. A
the initiative comes from the carmakers or from high degree of vehicle connectivity is required to
alliances with companies such as Apple, Google, or establish these new models. The future of mobility
Microsoft. is the Connected Car.
The monetizing of the Connected Car remains a
challenge. Who is going to pay for these services?
20Appendix
Remote control Analyzing driving behavior/optimizing
Smartphones could well be used as tools to re- fuel efficiency
motely control one’s car. It is possible to lock and Increasing gas prices also increase the cost of
unlock the vehicle as well to start the engine by owning a car. Therefore it might be helpful to ad-
means of an app. Furthermore, sounding the horn just one’s driving behavior. The car can record the
or flashing the lights may become possible via style of driving in terms of braking, accelerating
remote control. In comparison to existing remote and the distance traveled. This use case could be
controls, an app and a vehicle being connected via interpreted as a kind of driving coach. It may even
the Internet, these features would be accessible give real-time feedback to the driver as a method
from all over the world. of instant learning. However, improved driving
behavior is not just about saving fuel. It is also
Stolen vehicle recovery helpful to lower maintenance costs, e.g. for brakes,
Tracking the vehicle and being able to recover a suspension, or transmission. The necessary data
car after it has been stolen is an interesting use can be retrieved using the CAN network or the
case. In the era of the Connected Car, it will be OBD2 interface.
possible to track down the current position of the
vehicle and then to slow it down until it comes to Purchasing and downloading music
a complete standstill. The number of stolen vehi- This use case goes further than merely synchroniz-
cles is likely to decrease greatly once every car is ing play lists with the car. Music stores may find
equipped with a system of this type. It is already their way into the car and no longer be available
common in Southern Europe, the USA, and South only on computers and mobile devices. This inno-
Africa. There are many privately owned companies vation would allow the driver to search for music
offering this service. to purchase while in the car and download the
desired music.
Surveillance of the car
Drivers can track their vehicles at any time, Entertainment streaming into the car’s
enabling them to know where their car is and how displays
fast it is traveling. For instance, if parents lend Movies, songs, or other entertainment features
their vehicle to their children, who may have only could be streamed into the car’s displays. Using
recently received their driver’s license, the parents mobile devices to stream movies to the head-up
are able to set geo fences, restricting the area in display may be dangerous due to driver distrac-
which the children are allowed to drive. If they tion, but if the car is equipped with rear seat
pass the invisible geo border, the car owner can be entertainment systems, this use case makes it pos-
notified. This is also possible concerning specific sible to stream movies for the back seat passen-
speed limits that can be set up individually. gers, transforming the car into an entertainment
cloud connected to any mobile device.
21© Volkswagen AG
SMS messages – reading and sending Business functions such as calendars,
Voice control would make it possible to use mes- address books
saging services while driving. The car would be The car could become a second mobile device or
able to receive and send messages. This capability personal assistant. A Connected Car Cloud, for
would be possible if the car connects to the mobile example, would make it possible to connect the car
device and functions as an extension of it, or if with one’s computer and mobile devices. The data
the car is set up with a SIM card that has the same stored on these devices would then be automati-
specifications and number as the cars used in cally transferred to the car. For people working in
the mobile device. Then the car could be used for sales or other jobs requiring a lot of traveling it
messaging. might be helpful to have access to this information
at all times.
Spotify and Internet radio
A Connected Car can stream data while on the Social networking in the car
move. The only requirements are a stable Inter- This use case is nothing more than Facebook in the
net connection and a telematics system with the car. It creates access to social networks while in the
corresponding applications. An existing Spotify car. The need for social network access in the car
account could then be used not just at home or is questionable and doesn’t necessarily add much
with a smartphone but also in the car. The driver value to the Connected Car.
would then have a larger variety to select his or
her favorite music. Location-sharing and tracking of friends
It might be interesting to know where your friends
Location-based ads are and if they are in the area near you. The use of
Corporations could send advertisements directly GPS location technology in the car could interact
to the car. This could be achieved by setting up either with smartphones or by itself to send the
geo fences around a specific place or store. The driver an alert when friends are within a prede-
Connected Car would then offer a variety of new fined radius. It would also allow others to see
advertisement options for companies. For exam- where you are driving and possibly even how one
ple, if the driver is getting closer to a fast-food is driving, which might be an attention-grabbing
restaurant, he or she would receive a coupon for feature. This use case is comparable to a running
that particular restaurant on the head-up display app for smartphones.
of the car.
22Points of interest displayed in the car Locally based information about events
Based on fuel level or other factors, the car could Geo fencing offers a variety of interesting ap-
show nearby gas stations or similar places in the plications for consumers. Connected Cars on the
head-up unit. The car could recognize how long the one hand are able to analyze the music the driver
driver has been behind the wheel and therefore prefers. On the other hand they can send certain
motivate the people in the car to stop for a break information into the head-up display, based on
at a nearby cafe. The vehicle monitors basic things their location. If cars are within a predefined area
such as tire pressure or fuel level and the duration or in a foreign city, they could receive information
of driving and gives advice concerning point of about events according to the music played in the
interests close to the car. car. This could be of greater value to people when
they are traveling. In addition, the consumer does
Finding parked car not need to manually search for these entertain-
The car automatically sends its GPS location to ment events as they are simply shown in the car.
an app installed on the driver’s mobile device.
Especially when the car is parked in unknown areas Offers of available parking spots
or bigger cities it might be helpful to remember This use case relies on geo fencing. When a car
where the vehicle is parked. The app then guides reaches the center of a city or an airport it could
the driver to the parking spot. receive offers for available parking spots. These
might be special offers or just regularly availa-
Counterevidence for speeding tickets ble parking spots. It might be an advantage for
If the driver is able to track his or her speed at any consumers driving into cities if they are able to
time, this data may be used as counterevidence check parking options before even arriving at their
if stopped by the police. Then both sides have destination.
evidence to settle the case. The two measurement
options may also help to calm the situation if the Electronic logbook
driver is confronted with speeding accusations. Business drivers or company cars could be
equipped with an automatic logbook. Therefore the
Automatic traffic sign recognition driver no longer needs to fill out the information
There are already a few cars on the market that can manually. Solutions for automatically logging this
detect traffic signs. Most of these cars use cameras data add value, especially to fleet management
to analyze the shapes and colors of traffic signs. operations. Electronic logbooks could increase
This use case does not relate directly to Connected efficiency and reduce the car’s carbon footprint.
Car features, but it is necessary for self-driving
cars. If autonomous cars are introduced to the
market, traffic sign recognition will be installed
in every vehicle.
23© Volkswagen AG
Health check of driver Mobile payment of car tolls
Some car companies, for example Ford and Toyota, The customer value may be quite low for this use
have been developing health solutions for drivers. case, but connected vehicles offer the possibility
There are features such as monitoring the glu- to calculate the exact distance driven on specific
cose level for diabetics or warnings for areas with roads. Therefore it might be possible to charge a
a higher risk of allergic reactions. Any of those flexible toll. However, the regulations and laws
health monitoring apps require additional sensors. might be the biggest obstacle to setting up such
If they are built in, other health checks can be a system. The technical aspects are practically
done while driving. An impending heart attack accomplished when cars are connected.
could be shown with an alert in the car’s display,
possibly resulting in increased safety for the driver Booking of parking spots in advance
and other road users. Another possibility would Parking spots have become rare in big cities. The
be to set the navigation system to avoid certain search for an available parking spot can be both
high-risk allergic areas or even high air pollution. stressful and exhausting. It can take up to an hour
This might be extremely helpful for someone who to find a suitable parking space in the center of
suffers from breathing problems. cities such as Munich or San Francisco. Therefore it
could be a good idea to introduce the possibility of
Digital driver control booking the parking spot prior to arrival. It could
Drivers could be tired and may have been on the be possible for commercial parking lots or garages
road for a long time. Instead of merely analyzing as well as for private parking areas. The booking
the time spent driving, the entire driving behavior of such designated parking spots could be done
could be analyzed to tell the driver when there is online or by using an app. Drivers and their pas-
a higher risk of having an accident. Factors such sengers may see the most value in the time-saving
as the average position in the car lane, reaction aspect. It is far less stressful to be able to book the
time and many more factors could be evaluated. parking in advance than looking for vacant spaces.
Then the car may suggest taking a break, including This could be useful on a shopping trip in a bigger
possible places to rest nearby. city and allows for better planning and more effi-
cient use of time when traveling.
Used car check
Buying a used car is a stressful situation for most Combined insurance services (e.g. bCall)
people. They could look for the car’s specifications If a car is already equipped with a telematics box,
and the basic car data such as age, kilometers insurers may be able to sell additional services,
driven, and so on. The physical appearance can such as breakdown assistance. Even though the
be evaluated only from the outside. With an app eCall will be a mandatory feature in any new car
and the mandatory interface to the car it could built as from 2015, a bCall might be helpful for
be possible to check the electronic systems of the used cars. It would enable drivers to have the same
car. The value for consumers is tremendous if they safety functions as in new cars.
are able to check the entire car. It could save them
from a nasty surprise.
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