The Connected Car Is With Us, But Big Hurdles Still Need To Be Jumped

Author

Neil Winton, Contributor

September 21, 2015

FRANKFURT, Germany – The world’s automotive industry has embraced the connected car, but it remains to be seen if buyers actually want the impressive options available, or whether they will even work consistently without huge infrastructure investment.

And if the connected car is going to lead seamlessly to autonomous ones, big technical problems need to be sorted.

As the biennial car show started here this week, Volkswagen CEO Martin Winterkorn set the tone.

“By 2020, we will have transformed all of our new cars into smartphones on wheels,”  Winterkorn told news agency Bloomberg.

Volkswagen is Europe’s biggest carmaker, with market share approaching 25 per cent.

GM Europe president Karl-Thomas Neumann bragged that the new Opel-Vauxhall Astra small family sedan, unveiled at the show, would boast most known high-tech gizmos. (GM’s Opel sells cars in mainland Europe, while Vauxhall sells the same ones with its brand in Britain. The Astra competes with the VW Golf and Ford Focus).

The Astra would be connected to the internet in the fastest possible way, according to Neumann. It would be set up for personal connectivity with the well-established OnStar system, and the new generation IntelliLink infotainment that is compatible with Google’s Android Auto and Apple’s CarPlay. You could also opt for Lane Departure Warning, Collision Alert, Collision Imminent Braking and computerised parking, just like upmarket BMW’s, Mercedes and Audis.

These claims echoed all around the Frankfurt Car Show, including the stands of workaday mass car makers. If new cars were faster, sexier and cuter than anything heretofore, that was being kept in reserve.

According to a survey from management consultancy McKinsey, car buyers can’t wait to get their hands on this stuff.

“Customer demand for car connectivity has risen considerably over the past years, and customers’ willingness to pay is increasing as well,” the report said.

Manufacturers are on top of the trend too.

“What’s more, 90 per cent of automotive executives believe that their organization’s business model will change or broaden because of connectivity and autonomous driving,” the report said.

Autonomous cars will happen when most and eventually all of the driving is done by computer.

The report’s author, Hans-Werner Kaas, senior partner and head of the McKinsey Automotive & Assembly practice in Detroit, said buyers in China in particular, Germany and the U.S. are increasingly demanding connectivity as a base demand before they decide on a new car.

“Chinese customers are especially willing to switch: 60 per cent stated that they would switch their brand for improved connectivity features,” Kaas said.

As carmakers plough billions of dollars of investment into high tech features, they must have taken a sharp intake of breath when they read a recent survey from automotive consultancy J.D.Power. The survey said at least 20 per cent of new car buyers have never used 16 of the 33 technology features they’d bought. It also found that 35 per cent said they ignored computerized parking, 33 per cent don’t switch on head-up displays, and about a third said they never used in-vehicle apps.

McKinsey’s Kaas was unphased by this, and said buyers will embrace new technology if they are informed about it.

“We did additional research on this point and found a real lack of education. Many consumers have little experience of advanced technology and how to use and benefit from it. Therefore we need a lot of consumer education in how to use and relate to it,” Kaas said in an interview.

Ricky Cooper, European and Asian vice-president for San Francisco–based Digital Realty, said all this technology needs secure and reliable data processing for the full value to be extracted, and more importantly, to make sure that when autonomous driving comes the public is kept safe from hackers and systems failures.

For connectivity and autonomous driving to succeed, a huge investment programme is required to install data processing centers. These will need to be installed close to motorways and city centers.

“There’s a need for smaller data centers in close proximity to cars to enable security and regulate speeds on motorways,” Cooper said in an interview.

If consumers are going to be willing to buy autonomous cars when they start becoming mainstream in five to 10 years time, massive investment is required around the world in data centers to make all this work. Currently much of this communication is unreliable.

“Mobile phones break down a lot. Unless you get connectivity right you won’t be able to do much. Unless you get localized smaller deployments of data centers in areas where you want cars to drive it will slow the pace of technology becoming mainstream,” Cooper said.

Who is going to pay for all this?

“The automotive industry probably won’t. It might be new companies like Uber which will consider taking on the investment for the infrastructure,” he said.

“A robust technology infrastructure will need to underpin the cars of the future if they are to succeed. The large amount of data that will be produced will need to be processed, managed and stored. It is up to the automotive, software and data centre industries to work together and create “digital center” ecosystems so the services of connected car services are delivered, from speed alerts to in-car entertainment,” he said.

The Frankfurt Car Show is open to the public through September 27.

This article was written by Neil Winton from Forbes and was legally licensed through the NewsCred publisher network.


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