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Connected cars mean 10x more revenue for automakers but execs are lost in translation

Automotive executives see connectivity, big data, autonomous vehicles and artificial intelligence as driving new economic models for automakers. Most of them see tremendous revenue potential and consumer value in leveraging driver and vehicle data to offer mobility services, reports KPMG research.

The KPMG study found that 76% say one connected car generates more revenue streams than 10 conventional cars.   In fact, expectations for data-driven revenue are so great that 71% say measuring OEM market share based on units sold is outdated.

There are other trends found in the study. The auto industry is lost in translation between evolutionary, revolutionary and disruptive key trends that all need to be managed at the same time. Execs are torn in between traditional combustion engines will be technologically relevant, but socially unacceptable.

Success of BEVs depends on infrastructure and application. Execs are hesitant regarding cooperation and unsolved infrastructure challenges. Autonomous driving will redefine the utility of vehicles and is the enabler for service- and data-driven business models. The full potential of technologies enabling autonomous driving can only be realized with the support of standards and full power of swarm intelligence. KPMG beleives that neither the auto nor the digital system will succeed on its own.

Many of the companies mentioned in the study are nominated for Tech CARS Awards, please vote before January 31, 2016.

Eighty percent of executives in the KPMG study agree that data will be the fuel for future business models, and 83% believe they will make money off of that data. In order to create value and consequently monetize data, 82% of the executives agree that a car needs its very own ecosystem/operating system (OS) as otherwise the valuable consumer and/or vehicle data will be most likely routed through third parties. In this case many valuable revenue streams would be lost.

In conjunction with the executive survey, KPMG surveyed 2,400 consumers from 42 countries, to compare their perspective against the opinion of the world’s leading auto executives.  KPMG found that consumers agree. Sixty percent of consumers say that as we move toward autonomous driving, they’ll only care about what they can do with the time they’re in the car, rather than the attributes of the car.  However, both executives and consumers agree that data security and privacy is the top purchasing criteria in the self-driving age where passengers are interacting with the car’s digital platform.

Gary Silberg, KPMG’s Automotive Sector Leader, said “You cannot overstate the importance of data security in the autonomous era. The massive amounts of data that is being collected presents a tremendous business opportunity for auto companies.  Addressing information security concerns is a critical priority for automakers, and one they cannot afford to get wrong.”

Of course, executives and consumers don’t see eye-to-eye regarding who should own that consumer and vehicle data.  Auto execs are split between thinking OEMs (31%) and consumers (27%) should own the data, while consumers overwhelmingly believe only they should own it.

KPMG polled nearly 1,000 executives with the world’s leading automotive companies. Read full study.