Just when I think I get a handle around the main the issues I think Canada’s car dealers are facing, another issue pops up that has me diving down yet another rabbit hole to try to figure it out.
This time, it’s trying to figure out what the rapidly emerging world of vehicle subscription services, connected vehicles, and even in-vehicle subscription services will mean for dealers — and particularly for their bottom lines.
What prompted this curiosity in particular was interviews I did recently for some of the speakers at the upcoming CADA Summit in February, most notably John Possumato, Founder and CEO of DriveItAway, and an expert on ride sharing and mobility as a service, and Warren Ritchie, author of “Competing in the Connecting World: The Future of Your Industry is Already Here.”
While both men are experts in different areas, the picture they paint of how the worlds of Silicon Valley and the auto industry are colliding is fascinating. The traditional picture of one vehicle one owner and one revenue stream based on that transaction, and the service revenues that follow, is starting to fade. What exactly it’s being replaced by has yet to fully emerge, but it’s coming.
The disruptions are also coming from many sides and some of the technologies intersect, and others introduce new complexity few of us fully comprehend.
Our connected cars are just another mobile device joining this ecosystem of selling valuable and profitable data
In the area of vehicle subscriptions alone, the analyst firm Frost & Sullivant expects 16 million vehicles to be part of subscription services by 2025 in Europe and North America. “Vehicle subscriptions offer a new form of temporary car ownership with the flexibility and convenience to switch programs, swap vehicles, and have no or low down payments, no penalties and a worry-free ownership experience,” says the firm, adding that “the existence of dealerships is threatened as car buying migrates to online platforms,” but that “vehicle subscriptions offer an opportunity for dealerships and new entrants to add value to their archaic business models.”
Archaic business models? Ouch.
But that view of the dealership world is not uncommon among those tech experts who are developing tools for this industry.
Even bigger changes are coming around the industry’s four-letter word: DATA.
In an article in Information Age, some commentators predict that autonomous cars will create up to 4,000 gigabytes of data per day — or more than 1,400 terabytes per year.
Even with today’s level levels of autonomous vehicle technology, connected cars generate about 25 gigabytes of data — per hour, according to Tuxera.com. To understand how much data that is, imagine a laptop with 240 GB of storage that can hold about 30 DVD movies. In this environment, the laptop would run out of storage in less than a minute. A typical smartphone with 32 GB of storage would be out of room in under seven seconds.
The types of data, and the information it will provide about each and every one of us: our habits, locations, entertainment choices, behaviours, and preferences will be increasingly valuable to all the same companies who now harvest and monetize this data from our computers and smartphones. Our connected cars are just another mobile device joining this ecosystem of selling valuable and profitable data.
Dealers need to understand this world, and fight hard to carve out a role where they too are benefiting from these new revenue streams — starting with any updates to their franchise agreements. The OEMs aren’t the only players in this game, but they too need to safeguard the interests of their dealers.
