MARKET REPORT: Vehicle OEMs running out of time to catch third-party V2X tech leaders


Automotive OEMs have an opportunity to exploit the full potential of connected services, but must act quickly as the gap between them and vehicle-to-everything (V2X) digital players widens. This is according to a new research report from Capgemini Invent exploring the road towards profitability for automotive connected services.

The ‘Connected Vehicle Trend Radar 2’, which surveyed over 3,000 customers worldwide, found that close to half (44%) of global customers do not yet have any connected services in their cars and only 51% of those that do are frequent users, meaning OEMs have yet to penetrate the connected services market effectively.

The findings suggest, that opening up the connected services portfolio to include third-party applications would be a way for manufacturers to regain pole position against their digital native counter parts: according to the report, people are already using third-party applications from major tech players, so making these accessible through their vehicle’s interface is key to bringing customers, and their data, back into the fold.

Dr Reiner Mehl, Capgemini Invent

Dr Rainer Mehl, managing director of manufacturing, automotive, and life sciences at Capgemini Invent, explains: “Manufacturers today are burdened by legacy and tend to assume that connected services can be delivered in exactly the same way that cars are produced — by simply assembling elements from suppliers instead of working as part of an ecosystem with best-in-class partners. But losing market share in connected services means missed revenue, or worse, potentially becoming a supplier to tech companies.

“In the past, drivers had to make do with what they were given by manufacturers, but this monopoly no longer exists. Tech companies successfully entered the space with smartphone services and easy connections towards the car. Now OEMs need to work harder to stay relevant — especially as customers become increasingly unwilling to accept connected services that are not current or fall short of the premium.”

The value of connected services
The number of connected cars is set to increase to 352 million by 2023, compared with 119.4 million connected vehicles in 2018[1]. This growth will come to be associated with a rapid proliferation of data that can be monetized to help reduce costs, optimize R&D, products and services, and limit emissions. However, to gather enough data to stay ahead, OEMs need a sizeable customer base in comparison with their tech competitors, and at present, usage levels are insufficient.

Traditional manufacturers need to ensure they are targeting consumers with the services they want: out of 23 use case categories investigated in the report, safety and security-related services are valued most while in-car delivery and commerce the least. Current consumer willingness to pay for these connected services is relatively low in all categories – 39% of consumers stated that services are useful but not sufficiently developed, while another 23% were unaware of their benefits. Education will therefore play a big role in making connected tools a unique selling point.

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About Author


Tom has edited Traffic Technology International (TTi) magazine and its Traffic Technology Today website since May 2014. During his time at the title, he has interviewed some of the top transportation chiefs at public agencies around the world as well as CEOs of leading multinationals and ground-breaking start-ups. Tom's earlier career saw him working on some the UK's leading consumer magazine titles. He has a law degree from the London School of Economics (LSE).