Is it too Early for Connected Cars?

A recent Frost & Sullivan report on the global connected car market indicates that 90 percent of OEMs in North America have deployed connected telematics solutions. But are these solutions being used by consumers? No, according to a new J.D. Power report. The report finds that automakers are spending billions of dollars on new technologies in cars and light trucks that aren’t being used, particularly built-in connectivity.

The J.D. Power 2015 Driver Interactive Vehicle Experience (DrIVE) Report measures driver experiences with in-vehicle technology features during the first 90 days of ownership. Here are the key findings:

At least 20 percent of new vehicle owners have never used 16 of the 33 technology features measured.
Five features that owners most commonly "never use" are in-vehicle concierge (43%), mobile routers (38%), automatic parking systems (35%), head-up display (33%), and built-in apps (32%).
14 technology features that 20 percent or more of owners do not want in their next vehicle include Apple CarPlay and Google Android Auto, in-vehicle concierge services and in-vehicle voice texting.

The findings do differ by generation. For example, the number of features not wanted by at least 20 percent of Gen Y1 owners increases to 23, specifically for technologies related to entertainment and connectivity systems.

"In many cases, owners simply prefer to use their smartphone or tablet because it meets their needs; they're familiar with the device and it's accurate," said Kristin Kolodge, executive director of driver interaction & HMI research at J.D. Power, in a statement. "In-vehicle connectivity technology that's not used results in millions of dollars of lost value for both consumers and the manufacturers."

However, ABI Research forecasts the shipments of connected in-vehicle infotainment (IVI) systems equipped with one or more smartphone integration technologies will grow over the next five years, reaching 35.1 million units globally by 2018.

One of the big reasons why these technologies aren’t being significantly used today is that consumers don’t find the technology useful.

Kolodge said “the technologies owners most often want are those that enhance the driving experience and safety, which are only available as a built-in feature rather than via an external device. In-vehicle technologies that most owners do want include vehicle health diagnostics, blind-spot warning and detection, and adaptive cruise control.”

However, some of the blame can be put on auto dealers because they didn’t explain the features and/or the features weren’t activated when the vehicle was delivered so the owner didn’t even know they had the technology.

So, are automakers investing too much time and resources in technologies that consumers don’t use? Automakers shouldn’t worry yet. Current reports indicate the connected car market is still relatively small - in the millions of dollars.

But this will change over the next five years. Navigant Research, for example, forecasts a market size of about $96.3 million in 2016 for the global connected vehicle system market. It’s expected to reach $36.6 billion by 2025. ABI Research expects the connected automotive infotainment systems market to grow at a compound annual growth rate of 33.8 percent over the next five years, driven by connected navigation and in-car Wi-Fi.

In order to drive increased adoption it’s going to take work by both the automakers and auto dealerships. The answer is three-fold according to Kolodge. Automakers need to design the technology to be intuitive; they also need to explain and train the dealerships on how to demo the technologies to consumers, and dealers need to show consumers how to use the in-vehicle technology.