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Connected Cars Establish a New IoT-Powered Ecosystem

February 3, 2015 0 Comments

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It wasn’t very long ago that a manufacturer had very little contact with a customer after they purchased a vehicle, until it was time to sell them another car. Truly, the Internet of Things (IoT) is radically changing this relationship. With the IoT-enabled connected cars of today, the vehicle has become a hub for an entire ecosystem of connected services to enhance the owner’s experience. Additionally, the growing prevalence of connected cars allows manufacturers to establish an ongoing relationship with customers, as well as developing incremental revenue streams over the life of the vehicle.

Today, there are 23 million cars on the road that are connected to the Internet, with predictions that this number will increase to 152 million over the coming period. GM vehicles are already well known for providing additional Internet services, including OnStar safety and security features. Over the past year, a growing number of cars in the U.S. are being equipped with 4G LTE mobile hotspots, with additional services being planned for the future. With an increasing number of car manufacturers getting involved in adding connected IoT services to new vehicles, the connectivity of cars is surely going to continue to grow over time.


In this article, we’ll look at a variety of these new connected car services to see how IoT is providing the foundation for these developments.

Mobile hotspot

 A growing number of car manufacturers are introducing in-vehicle mobile hotspot capabilities to allow the driver and passengers to stay connected while on the road, making the days of having to be disconnected while in the car a thing of the past. GM is one such manufacturer, but there are more companies introducing this functionality in recent times. Audi equips its vehicles with Gemalto-enabled mobile hotspot services through its Audi Connect service, and Ford’s new Sync 3, powered by BlackBerry’s QNX, is now included in more than 30 million vehicles spanning 250 models.

With car manufacturers leveraging IoT platforms that enable connectivity via a network of mobile operators, passengers are able to connect their various devices to the car to access all types of Internet services.

Over-the-air updates

Over-the-air (OTA) software updates in cars can be greatly valuable by removing the need for a dealership visit. These updates work in a similar way to software updates on smartphones. In the past year, over 60 million cars were recalled in the U.S., many of which were attributed to software glitches. The extreme cost and burden that recalls place on the driver and manufacturer can be lessened with OTA updates.

OTA updates are becoming an industry standard, with many new players joining GM and Audi in this initiative. Chrysler Uconnect, Mercedes-Benz mbrace, BMW ConnectedDrive and the Toyota Entune systems now regularly send firmware OTA updates to fix software glitches in their vehicles.

Infotainment services

The ability to connect devices via Bluetooth to make calls and navigate are functions that are used by an increasing number of drivers. Now, connected car manufacturers are adding the ability to use popular streaming apps, such as Spotify and Pandora, to the mix.

For marketers and business owners, these IoT platforms provide an easy way to monetize the services of content providers. For example, vehicle manufacturers, premium content providers and even brick-and-mortar retailers can use IoT to give vehicle owners a free trial of their services or other types of offers.

And this is just the tip of the iceberg. In addition to getting the service to the car, providers can use IoT to track usage patterns, prompt drivers to try out new features, or to upgrade the service that is available. To deliver and monetize these services to cars, IoT has become the strategic platform.

Enhanced safety and security

Even after an accident has occurred, IoT enables the vehicle to assist with safety and security. For example, IoT empowers pre-installed services like Volkswagen’s Car-Net with 24/7 automatic crash notification, which will automatically alert emergency services when an accident happens.

In some situations, this functionality could be the first to send emergency services to a person in need, thereby making a huge impact on the personal outcome of an accident.

Determining usage-based insurance

Usage-based insurance is another emerging value-added service that is enabled by IoT, which tracks the behavior of a driver to establish a personalized insurance rate plan. In the past, insurance companies had to rely on basic information, such as age, average mileage and accident history. Now, IoT provides a whole new world of customization possibilities.

One such example is Allstate’s Drivewise program, which utilizes a small device that is deployed in a vehicle to collect information about driving style. Allstate issues data points for a multitude of factors including speed, brake activity and the time of day that the vehicle is being used by a specific driver. Subsequently, customized rates can be determined for each driver, which can also work as an incentive for safer driving behavior to reduce premiums.

A new relationship with customers

Overall, it is clear that IoT is turning cars into powerful hubs, which allows developers, manufacturers and service providers to offer value-added services and truly change the relationship that they have with their customers.

By strengthening this relationship, manufacturers can enhance brand loyalty while developing new revenue streams throughout the life of a vehicle.

There’s no question that it’s an exciting time for the auto industry, with manufacturers and developers reaching out for new ways to grow based on IoT services, and with drivers enjoying increasingly robust functionality in their cars.

About the Author:

The DrivingSales News team is dedicated to breaking the relevant and the tough stories affecting car dealers. Have questions for DrivingSales News? Reach the team at news@drivingsales.com.

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