COMET News - March 2014
During the event it became clear that, next to the smartphone, the car is the most connected device on the planet. It also offers automakers a chance to boost service revenues, which can easily outweigh the product revenue. One manufacturer told me, on the condition of anonymity, that the net profit to the manufacturer on the sale of the average car at the time of sale is around $700. Remaining revenue is generated from financing and services. Connected service revenue, over the life of the car, is a potential gold mine for the car business.
Even the way “life of the car” is defined is changing. A representative from Volvo asked me to imagine a future in which car ownership was essentially virtualized and commercialized as a monthly fee. In this future, as the car communicated its performance back to home base, the components could be replaced as needed by the manufacturer, and all normal costs of ownership would be bundled into a monthly fee. Over a decade, every part of the car might be replaced and/or upgraded, which strains the common definition of a single physical object.
Every manufacturer and brand has a connected offering today. Here’s a non-exhaustive list:
- Chrysler: Uconnect
- BMW: ConnectedDrive
- Chevrolet: MyLink
- Nissan: NissanConnect
- Toyota: Entune
- Lexus: Enform
- Ford: MyFord Touch
- Mazda: Mazda Connect
- Mini: Mini Connected
Further emphasizing its universal importance, connectivity is no longer a costly upgrade. Subaru, for example, announced that Aha Radio service, a platform that brings web-based content into vehicles through a smartphone connection, would be standard on all upcoming models. Subaru also had a stellar media event after opening day that offered media some hands-on interaction with the new Legacy while enjoying fine food and drinks and one of Chicago’s top cover bands.
