The automotive industry is currently changing faster than ever before. Several factors are accelerating this transformation: the trend towards electromobility, digital B2B and B2C commerce via marketplaces, highly innovative competition from China, and previously neglected data management. These forces compel all market participants to rethink their existing processes. The last point is particularly crucial for long-term success, as data plays a central role in future business models.
The Status Quo
The global industry is in crisis—lockdowns, political unrest, and growing inflation also affect the automotive sector. Resulting supply chain problems have caused production halts for several manufacturers, costing OEMs billions.
Competition is fierce—innovative tech companies like Tesla are increasingly in demand and seeing rising stock prices. It is expected that more tech giants will venture into the automotive sector—Apple has long been working on an electric car, which, according to ADAC, will hit the market in 2026.
Why are tech companies able to succeed as disruptors in such an established market? They rely on data-driven business models. This is exactly where established European OEMs should start rethinking. The focus of development should no longer be solely on hardware, i.e., the car, but also on software and data structures.
It is becoming increasingly important to generate revenue not only from the product but also in the aftermarket throughout the entire life cycle of the car. For this, data and software are indispensable.
Connected Car as a Revenue Driver for the Aftermarket
According to McKinsey forecasts, OEMs, suppliers, and service providers can generate up to $310 more in annual revenue per vehicle by 2030 through the strategic use of data from connected vehicles. This can be achieved through various functionalities.
What is meant by connected vehicles, or Connected Cars? The term refers to a vehicle connected via wireless technologies to the internet, communication networks, other vehicles, infrastructure, and service providers. Data is exchanged both within the vehicle and with external systems. This connectivity allows the car to send, receive, and process information, enhancing the convenience of the driving experience. Moreover, companies can better tailor their aftersales strategies to the target audience through the data, as illustrated by the following examples:
Paid Infotainment Systems
A Connected Car offers advanced entertainment and information options for drivers and passengers. This can include internet access, music and video streaming, real-time navigation, traffic information, weather reports, and more. Partnerships with media and entertainment companies can be established, benefiting services like streaming platforms.
Data Analysis and Monetization
Connected Cars generate a wealth of data, such as vehicle condition, driving behavior, and location data. Companies can collect, analyze, and monetize this data by providing insights for insurance companies, traffic planning, urban development, and other industries.
Maintenance Based on Driving Behavior
Telematics systems can monitor and analyze vehicle data in real-time, such as speed, mileage, fuel consumption, and technical conditions. This data can be used to predict maintenance needs, optimize vehicle performance, and prevent accidents.
Subscription-Based Services
Manufacturers can offer functions and upgrades through software updates and encourage customers to subscribe to access advanced features or services. Tesla, for example, already uses this model with its FSD (Full Self-Driving) subscription in the USA. The subscription is billed monthly and can be canceled at any time. It includes features like lane change assist, automatic parking, parking space display, and traffic sign recognition.
Smart City Services
Connected vehicles can transmit real-time information about traffic, road conditions, and parking availability to urban infrastructure systems. Cities can use this data to improve traffic flow and enhance the efficiency of urban transportation systems.
Advertising and Personalized Marketing
Companies can send relevant advertisements to drivers and passengers based on their location, interests, and habits. This can also lead to lucrative partnerships. For example, a charging station near a coffee shop chain could display offers and voucher codes to drivers charging their cars. The average charging time at a public station is 30-60 minutes—this time can be monetized by converting these drivers into customers of the coffee shop through personalized coffee discounts.
Car-to-Commerce: The Car as a Digital Wallet
The Car-to-Commerce (C2C) model takes things a step further by enabling seamless shopping opportunities within connected vehicles. Drivers and passengers can make purchases directly from the cockpit. This model is already gaining traction in the USA: A study by Visa shows that Americans spend over $200 billion daily while in their cars—mostly via smartphones. This presents a significant opportunity for manufacturers to integrate payment platforms directly into automotive software, making mobile purchases even more convenient for customers.
According to a 2022 study by IFH Köln and BBW Automotive, there is also a substantial market for the Car-to-Commerce model in Germany. German consumers indicated a willingness to make purchases while driving, with groceries leading the way at 30 percent. Following this were offers and services in the leisure and sports sector at 27 percent. One in five respondents also considered purchasing car accessories and spare parts from their vehicle.
Some major manufacturers are already utilizing this technology. In March, Mercedes-Benz announced that it would use Visa technology to enable payments directly in the vehicle. With the Mercedes pay+ system, vehicle users can book and pay for various digital services using a fingerprint sensor on the cockpit display.
This model offers manufacturers not only the advantage of earning from each cockpit transaction but also provides valuable insights into customer behavior. This allows for more targeted service offerings and strengthens brand loyalty.
Stable Data Architecture for Customer-Oriented Solutions
For implementing such Connected Car options, building a stable data architecture is essential. This information forms the foundation for genuine customer centricity and long-term market success. To achieve this, companies must link customer data from various online and offline channels, break down data silos, and create accurate customer profiles. An optimal customer experience in the future will no longer be possible without customer data and its analysis.
Reading Tip: In our blueprint, The Challenges of Digitalization for the Automotive Industry, we outline concrete solutions for the lack of data flow and market fragmentation, which hinders the implementation of unified digital solutions. Download now for deeper insights, expert opinions, and actionable recommendations!
