Connected car consumers will make automakers compete

A report from McKinsey & Company shows that automakers will have to compete for the connected consumer. Researchers found that car buyers are willing to change car manufacturers for better connectivity and connected car features.

Their latest survey reports there is the need for automakers to adapt to a rapidly changing consumer environment.

  • In the past yswitcheroo1ear, the number of customers declaring they are willing to switch brands for better connectivity features has almost doubled, to 37 percent.
  • Nearly a third of customers are now willing to pay for connected services in a subscription-based model, up from 21 percent a year ago.
  • Overall, consumers rate driving-related features as more important than driving-unrelated ones. There is a significantly higher willingness to switch OEMs for driving-related functionalities (e.g., connected car or automated driving functionalities) (55 to 60 percent) compared to driving- unrelated functionalities (e.g., services that offer constant access to communication and information) (41 percent) see chart.intersestindrivingrelatedservices

So how can the industry both understand this changing environment and capitalize on the growing appetite for car connectivity?

McKinsey authors suggest that for all players—incumbents and newcomers alike—the first step is to recognize that the landscape is evolving quickly. Connectivity and autonomous-driving functionalities are creating a multitude of new business models and monetization opportunities, especially as consumers prioritize driving-related applications, such as connected navigation and networked parking, above those unrelated to driving, such as email and music streaming.

Capturing these opportunities requires scale, speed, and agility—and that likely means today’s world of competing original-equipment manufacturers (OEMs) will evolve.

To provide the connectivity consumers are increasingly demanding, McKinsey believe OEMs will need to collaborate in a common ecosystem, for instance, by adopting a communication protocol to share real-time information such as road, weather, and traffic conditions gathered from sensors on their connected cars. Such cooperation would allow OEMs to reach sufficient scale to reap benefits from network effects but still allow them to keep brand-specific differentiating factors in their quest for customers.

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Auto Trader’s Vehicle Technology Shopper Influence Study found that in-vehicle technology makes or breaks purchase decisions. J.D. Power’s latest Vehicle Dependability Study found that when voice commands and Bluetooth don’t work, the owners don’t like it and may not buy that make/model car in the future.

Technology now matters in car buying decisions.