Connecting the Unconnected Car
About one third of US adults want connected car features. However, in 2015, only about 5.3% bought a new car, and the average age of cars on the road in the US is 11.4 years old. That leaves a lot of people who want smart cars that are stuck with dumb ones. Besides tacking smartphones to the dashboard (which pretty much all of us do) is there anything that can be done to "connect" the unconnected car?
Luckily for the technologically inclined owners of less than technologically advanced cars, there are already many ways to smarten them up. The automotive aftermarket frequently comes to the rescue of cars that are not fast enough, comfy enough or cool enough. It's $250 billion-plus business, and they are not resting on a pile of floor mats and new car-scented trees as the opportunity to connect otherwise unconnected cars passes them by.
Can an unconnected car really be connected?
Today's cars -- even the 11.4 year old ones -- are complicated machines. Systems from ignition to interior lights are integrated and computer controlled. Taking the dashboard out of a newer car can take days and involve hundreds of pieces of hardware (I know, I've done it!) and the thought of getting back there to add anything to it would challenge the mettle of even the most experienced shadetree mechanic. Luckily, tapping into the brains of most cars is a lot less complicated than that.
Thanks to standardized onboard diagnostic systems (currently OBDII), every car made for most major markets after 1996 has the same exact diagnostic port and speaks a standardized language. What the aftermarket has figured out is that OBDII can be used not only for diagnostics, but to access vehicle systems and much of the information that they produce. The plug is easily accessible (look for it on the bottom left side of your dash) allowing even those with limited knowledge of screwdrivers to plug a "smart" device into their car.
What connected car retrofits are available?
Connected car retrofit features run the gamut from insurance to performance enhancements. It would be impossible to cover them all here, but here's a few emergent categories:
What's the monetization opportunity?
Due to both the long life span of vehicles and the extensive amount of time it takes any OEM to go from concept to manufacture, the aftermarket is inherently positioned to profit from retrofitting cars with the latest tech. They have not nearly met the demands of the market yet, but they are early to the game in monetizing services.
Connected car device suppliers -- especially mobile operators that are looking for new revenue streams -- already seem to realize that just making the hardware is not going to be enough. Subscription- and usage-based services will generate more recurring revenue, which can be further bolstered with secondary data stream monetization.
Data streams can be used for secondary sales of additional goods and services offered to the consumer directly (e.g., personalized discounted insurance promotions) or capturing and selling the data to third parties can also generate additional revenue opportunities.
The automotive aftermarket has largely dealt in one-time sales, so their existing business system infrastructure may not be able to support new offering models like recurring revenue, and it will require expensive and time-consuming development resources in order to institute anything new.
More modern (usually cloud-based) billing systems can offer a faster, less expensive solution that allows shorter implementation timelines than their legacy or home-grown systems.
It's estimated that by 2020, 90% of new vehicles with come with built-in connectivity. But that's still not 100%. Not to mention that the long development and lifecycle of cars means that there will be plenty more room for the automotive aftermarket to provide connected car solutions. And of course, today's cars will be haunting the road in all their unconnected glory for at least another decade.
The market for connected car solutions is expected to exceed $350 million in 2017, and will continue to grow. This means cooler features for tech-savvy drivers and more opportunities for innovative automotive aftermarket suppliers. It's a win-win for everyone.
— Brendan O'Brien, Co-Founder, Aria Systems Inc.