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Consumers crave connected cars but not connected costs

June 10, 2015

Consumers are warming to connected cars but cooling on associated costs. – AFP/Relaxnews pic, June 10, 2015.An estimated 16% of new cars taking to the roads in the US in 2015 will do so with some form of Internet connectivity, and consumer interest in the technology is piquing, especially when it comes to web-enabled services that can potentially take some of the stress out of modern motoring.

However, the same cannot be said about consumers' willingness to pay a premium for such services. Research and insights firm Strategy Analytics surveyed consumers in the US, across Europe and China regarding how in-car connectivity should be funded as part of its latest report and found that interest in all payment models is falling.

"A high level of consumer interest does not always translate to a willingness to pay for it," said Derek Viita, the report's author. "Most consumers remain unwilling to pay for in-vehicle connectivity using the monthly payment models that OEMs have tended to favour. Free models for connectivity remain highly desirable across all regions and age groups. Interest in connectivity supported by in-vehicle advertising rose over the past year."

Strategy Analytics also found that consumers are against making a one-off lump sum payment for future connectivity and are instead increasingly interested in the possibility of adding a car's connectivity to their existing smartphone data plan.

As such the report, published Tuesday, is very much in line with research conducted by Parks Associates earlier in June and focused on US consumer opinions. Nearly two-thirds (61%) of respondents said that they would plump for bundling in-car data consumption with their existing smartphone plan.

Strategy Analytics found that services focused on navigation, finding parking spaces, delivering live traffic updates and weather alerts were most desirable for consumers. However, interest in apps and services focused on social media remains very low.

This finding runs contrary to most resent research conducted into the causes of car crashes and teen driving distraction. A May study from AT&T conducted in the US found among smartphone-owning drivers, 27% admitted using Facebook while behind the wheel and 14% Twitter.

As for connected car adoption rates, Parks Associates says 44% of car owners in US broadband households already have some kind of advanced connected car feature.

"The demand for connected car features is growing, encouraged by consumer expectations of a smartphone experience in all aspects of their life. Today, the connected car market overlaps with the market for mobile services and smartphones," said Jennifer Kent, director of research quality & product development, Parks Associates.

"But this ecosystem must innovate beyond the smartphone experience in order to expand, and connected car players should develop assets or foster partnerships across adjacent connected ecosystems, such as the smart home and smart cities ecosystems." – AFP/Relaxnews, June 10, 2015.