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Sep 26, 2024

A new era of mobility part two: Monetizing connected vehicle data

Nigel Hughes

Nigel Hughes

A new era of mobility part two: Monetizing connected vehicle data

In the fast-moving world of the automotive industry, data is emerging as one of the most valuable assets for original equipment manufacturers (OEMs). As vehicles become increasingly connected, the vast amounts of data generated by modern cars open new doors for innovation and revenue. OEMs have realized the importance of investing in the infrastructure, tools, and talent needed to realize the full potential of this data. Their investments are bearing fruit broadly, across both internal data initiatives with improving products and enhancing customer experiences as well as external data monetization through partnerships and the creation of data marketplaces.

In this second installment of our three-part blog series, we explore the practical use cases that demonstrate the financial value of connected vehicle data. From partnerships with third-party services to the development of entirely new business models, automotive OEMs are finding creative ways to leverage data and create both direct and indirect revenue streams.

From internal use to broader data monetization

Historically, automotive OEMs have primarily used connected vehicle data to enhance internal processes. This internal use of data has helped manufacturers to improve on the following:

  • Product development: Data is leveraged to inform vehicle design decisions, improve reliability, and optimize performance.

  • Customer experience: OEMs utilize insights to offer enhanced services such as predictive maintenance, remote diagnostics, and personalized infotainment options.

  • Safety features: Data-driven improvements to advanced driver assistance systems (ADAS) and autonomous driving technologies bolster vehicle safety.

While these internal applications continue to differentiate OEMs and enhance the overall value of their products, the broader potential of data is driving a significant shift. OEMs are now exploring how they can unlock value outside of their ecosystems, expanding into both direct and indirect monetization strategies.

Direct monetization through data products

One of the most tangible forms of data monetization is the creation of data products and services that OEMs can sell directly to third-party businesses. This type of direct monetization is gaining traction as vehicles generate vast amounts of data related to performance, driving behavior, location, and environmental conditions.

Key examples of direct monetization include:

  • Telematics services: OEMs package telematics data (e.g., driving behavior, fuel consumption, and vehicle diagnostics) for insurance companies to support usage-based insurance (UBI). This allows insurers to tailor premiums based on real-time data, creating a win-win for both the OEM and the insurer.

  • Fleet management solutions: OEMs provide real-time vehicle data to fleet operators. For example, Ford and Toyota offer telematics platforms that enable fleet managers to optimize fuel use, reduce downtime, and manage vehicle maintenance schedules. This not only streamlines fleet operations but also generates additional revenue for the OEM.

  • Smart city partnerships: OEMs collaborate with smart city planners, sharing anonymized traffic, road, and location data to improve urban infrastructure and public safety. Audi’s Traffic Light Information system is a notable example, helping cities reduce congestion by integrating vehicle data into traffic management systems.

  • In-car commerce and advertising: Data is also monetized through in-car services. Platforms that facilitate transactions for services like fuel, parking, and tolls generate revenue through commissions. Additionally, OEMs can sell location and driving behavior data to advertisers, allowing them to target drivers with personalized ads.

OEMs such as Tesla, BMW, and Toyota have already ventured into direct monetization by offering subscription-based data services such as Tesla’s Premium Connectivity, BMW’s Real-Time Traffic Information (RTTI), and Toyota's Data Marketplace, where anonymized driver and vehicle data is sold to third-party developers and businesses.

Indirect monetization via enhanced service and personalization

Beyond direct revenue, connected vehicle data can also be leveraged to indirectly drive profitability by enhancing service offerings, improving customer retention, and personalizing the user experience.

  • Predictive maintenance and vehicle health monitoring: One of the most powerful examples of indirect data monetization is predictive maintenance. By analyzing vehicle data, OEMs can predict part failures and proactively recommend maintenance. This helps reduce vehicle downtime and enhances customer satisfaction, increasing the likelihood of return visits to dealerships. General Motors’ OnStar system, for instance, offers real-time diagnostics and maintenance alerts, drawing customers to GM service centers.

  • Personalized driving and infotainment: Personalization is another key area of indirect monetization. By gathering data on driver preferences and behaviors, OEMs can offer tailored experiences. Infotainment systems can recommend personalized media, optimize navigation, or adjust in-car settings based on previous behavior, creating a premium user experience that drives customer loyalty. The Mercedes-Benz User Experience (MBUX) system is a great example of this, using data to deliver a highly personalized infotainment experience.

  • Customer retention and loyalty: Data-driven services that enhance convenience—such as remote start, vehicle lock/unlock, or advanced driver assistance features—contribute to a more enjoyable ownership experience. This, in turn, increases brand loyalty and customer retention. Services such as FordPass Connect, which offers remote vehicle control and in-car Wi-Fi, make Ford vehicles more attractive, indirectly driving future sales and service subscriptions.

The cumulative effect of these personalized services creates a stronger emotional connection between customers and OEMs, opening the door to upselling premium features, extended warranties, or subscription-based services.

A delicate balance: Privacy, security, and consent

While the potential for data monetization is vast, OEMs must navigate significant challenges, particularly in the areas of data privacy and security. Consumers are increasingly aware of how their data is used, and concerns over privacy have led to the implementation of stringent regulations such as Europe’s General Data Protection Regulation (GDPR) and the California Consumer Privacy Act (CCPA).

OEMs must ensure all data sharing complies with these regulations, with a focus on anonymizing personal information and securing consumer consent. Transparency is crucial; consumers need to understand how their data is being used and what value they receive in return.

OEMs need to communicate the value to customers in order to establish trust and allow for this data exchange in mutually beneficial ways. By articulating clear benefits to consumers—whether it is improved safety features, personalized services, or cost savings—OEMs can overcome potential resistance and position themselves as trustworthy stewards of valuable data.

The future of data monetization in the automotive industry

As we have seen, OEMs are beginning to tap into the financial potential of connected vehicle data. By pursuing both direct and indirect monetization strategies, they can create entirely new revenue streams while also enhancing their core products and services. Whether through data-driven telematics platforms, predictive maintenance, or personalized driving experiences, the value of connected vehicle data is poised to reshape the automotive industry.

However, to fully capitalize on these opportunities, OEMs must continue to invest in robust data management infrastructure and form partnerships with third-party services, such as insurers, fleet managers, and smart city planners. At the same time, they must remain vigilant in ensuring data privacy and security are prioritized, as consumer trust will be a determining factor in the success of future data monetization efforts.

How Credera can help

By leveraging our expertise in data technology and architecture, we can help businesses across the automotive and insurance sectors navigate an increasingly complex field. Our focus on understanding and managing data assets, coupled with our commitment to effective governance and controls, ensures we keep both our clients and their customers safe.

Up next:

In the third and final installment of our three-part series, we’ll explore how predictive analytics is transforming auto insurance. Learn how OEMs and insurers are leveraging big data to anticipate potential risks, streamline claims processing, and enhance customer experience, creating a more proactive approach to risk management.

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