Auto digital Knopfdruck

Key topic: Innovative business models

ON-DEMAND CAR FUNCTIONS: A NEW REVENUE SOURCE FOR THE CAR OF THE FUTURE

What are on-demand car functions?

The “on-demand” concept has already been successfully applied in a variety of areas such as video streaming, smartphone games, and the use of mainframe computers for data centres. The concept is that certain features are already available in a new product which can then be purchased either for a limited period or on a permanent basis. The use of on-demand functions is now also gaining momentum in the automotive industry. The term “on-demand car functions” (ODCF) means that customers have the option to add features to their car as required. Many of these services are initially available in new cars free of charge for a limited period. Once this period expires, customers are charged for the functions. Car manufacturers see a high potential to generate new revenue from this source.

What is already available and what does the future hold?

The services currently available mainly provide certain in-car information (for example latest fuel prices, news, restaurant suggestions). Services such as the intelligent search for a parking space or finding the fastest route in current traffic conditions are also ODCF. Some manufacturers are able to physically install hardware components in the vehicle. The customer can then activate these as and when required (e.g. heated seats). Administrative tasks such as checking diaries and email, or using Skype can also be activated. Many other functions have already been realised by various OEMs.

Most manufacturers are working on new concepts and functions in order to differentiate themselves from their competitors. Cashless payments at toll booths or drive-through counters is just one of many ideas being considered. Furthermore, the above option of installing hardware components can help in the development of other innovative ODCF. For instance, powerful car engines could be throttled initially. Customers who want a more sporty performance can buy a temporary increase in horsepower with just the push of a button. The possibilities of ODCF are not quite endless, but extremely diverse.

What are the challenges for OEMs?

Firstly, OEMs are challenged to identify and develop ODCF that are relevant to customers which offer them the greatest added value. If we include the megatrend “individualisation” and the growing demand for car sharing alternatives, providing the right mix of quality functions is crucial for OEMs, as customers will most probably only use suppliers who offer functions tailored to their needs. OEMs will have to make use of business cases and testing to identify the services worth developing further. These decisions also depend on the customers and their loyalty.

Secondly, OEMs need to think about how they structure in-car digital stores which consumers will use to buy applications and services. Manufacturers must weigh whether it would be worth developing such a digital store on their own, or whether they should partner with other OEMs or with other players, such as Google or Apple, in order to create the greatest added value for themselves and their customers.

Which trends can we expect in the future?

“Simple” applications and services, such as Twitter and Facebook, are unlikely to be successful on the automotive platform because customers will continue to access them via their smartphone. More likely, the trend will be towards ODCF which make the driver’s life easier (e.g. making payments via the car or the intelligent search for a parking space), or that relate directly to the concept of mobility and to the car itself. Customers may also find hardware-based components that provide additional safety or an enjoyable driving experience very attractive.

Read more

Success factors for the digital transformation

Our experts use on-demand car functions to explain which factors are critical success factors for the digital transformation.
Read more
Learn More
Find out more about our services in the area Automotive and Industry.
Learn More

More Topics

WE ARE THERE FOR YOU!

With Q_PERIOR, you have a strong partner at your side.
We look forward to your challenge!

2018-09-14T15:23:42+00:0016. May 2018|