Connected cars and premium recalls on the rise

Farzad Henareh

Farzad Henareh, VP of commercial and business development at Stericycle Expert Solutions, explains how the car industry is coping with non-automotive players entering from the digital arena.

Cars are getting smarter thanks to the digital revolution and the world’s insatiable thirst for convenience and security in the daily driving experience. While cars cannot quite think for themselves just yet – evidenced in the recent Uber malfunction where a woman lost her life when the autonomous technology failed to see her in its path – they are being programmed to respond and predict just like their smart phone cousins.

By 2020, it is anticipated that one in every five cars will be connected to the internet. And with this band of new technology comes a fresh generation of non-automotive operators entering into the car manufacturing arena.

A recent report by McKinsey looked at the opportunity this presents. By delivering services through the car including internet radio and driving assistance application, car manufacturers can and will recognise an area for differentiation and, more importantly for them, future profits.

However, with this opportunity comes a lot of hard work and OEMs will have to commit to keeping pace with technology updates and manage their product and service development cycles around this.

This will present a number of challenges. As with most technology and service offerings in their infancy, there will be teething issues. Not only that, competition will become fierce. If we look at the duration of time drivers in the UK spend on average in their cars, it is around 50 minutes a day. This presents a window of opportunity to monetise digital media revenues. This makes it hugely attractive to those inside and outside the traditional automotive industry.

Those teething issues, coupled with the new partnerships that will be borne out of the opportunity that will see technology firms working hand in hand with automotive giants, will also transform the recall management process.

Automotive recall is fast becoming the number one recall category ahead of toys. There are a number of reasons for this such as regulation changes due to fuel emission targets or airbags failing to meet the EU standards. However, in the past two years, connectivity or tech related recalls have increased suggesting the big players are competing to differentiate in the networked car arena.

To be clear, this increase does not mean that networked cars are less safe than their un-connected counterparts, but what it does suggest is that as more manufacturers dare to differentiate with connectivity, the likelihood of having to issue a recall notification will also increase. There is a lot of fine-tuning to do in the future such as on the impact on insurance premiums, but I am confident that with new players entering from the digital arena, this premium car segment will grow at light speed.


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