The Dutch automotive industry is not ready for a large-scale embrace of so-called 'connected vehicles', cars connected to the internet. These vehicles will bring substantial changes. However, managers underestimate the speed at which these changes will take place. As a result, the industry is not well prepared and cannot take full advantage of the benefits that these types of vehicles offer. If parties do not take action, some Dutch automotive companies will soon have no future.
This is what KPMG warns of in its study 'The Connected Car is here to Stay'. For this study, KPMG talked to various players in the Dutch automotive industry, including suppliers, leasing companies, importers, dealers and insurers. KPMG points out that global changes in the automotive industry will have an impact on Dutch players in this sector, but the Dutch automotive industry is too small to have an impact on these changes itself. With the survey, KPMG therefore aims to map the views of Dutch automotive companies on the embrace and impact of connected vehicles on the Dutch automotive industry.
What is a connected vehicle?
KPMG defines a connected vehicle as a car that is connected to its environment (in many cases the internet) via a mobile data stream. The car is equipped with a SIM card that allows it to send data from the car to cloud servers that collect this data, as well as to set up data streams from cloud servers to the car. The concept of the connected vehicle also involves vehicles connected to each other via local networks.
Data from connected vehicles can relate to a variety of things. Examples include:
- safety information such as when airbags were triggered;
- data on the status of functionalities such as fault reports and driver assistance systems;
- information about vehicle usage, such as fuel consumption, speed and pedal use;
- data about users, such as settings of infotainment and navigation systems.
'Car becomes a data-generating unit'
The survey shows that the Dutch automotive industry increasingly sees the car as a data-generating unit, something that will impact their business model. For example, 92% of dealers, importers, leasing companies and insurers surveyed said they have vehicles that collect data. KPMG predicts that the amount of data collected by cars will only continue to increase, making big data and analytics increasingly important.
To take advantage of this data, it is necessary for parties to train their staff to analyse it. There is still a lot of work to be done in this area. For instance, only 33% of companies report employing data specialists who can analyse data from connected vehicles. KPMG also states that many companies do not have the technologies needed for this.
Data and connectivity platforms
However, it is only possible to analyse data if companies actually have access to it. In practice, this is far from always the case. For example, in 50% of cases, data currently collected by connected vehicles appears to be stored on servers of the car manufacturer, the Original Equipment Manufacturer (OEM). Companies in the automotive industry have no or limited access to this.
Companies say they see several ways around the OEM. For instance, importers can develop their own apps that deliver information about the vehicle to the driver. Leasing companies and insurers are connecting their own devices to connected vehicles to offer new services that meet driver needs. KPMG itself, however, expects that the key to success lies in close cooperation between different parties in collecting data and offering data services. However, the organisation expects that this will require balancing conflicting interests of different parties involved.
Data security and privacy
Data collected and stored by cars presents opportunities, but also risks, according to KPMG. The Dutch automotive industry recognises these risks. For example, 27% see it as a high risk that vehicles will be hacked and drivers will lose control of it as a result. 64% rate this risk as low. In addition, 55% see privacy issues arising from the recording of users' locations and destinations as a major risk, while 45% rate this risk as low.
KPMG points out that the collection and storage of data on cars and, specifically, users of these vehicles is subject to the EU Data Protection Directive. Key components of these regulations are 'Data protection by design' and 'Data protection by default', which stipulate that manufacturers must include data security in the design of the car.
KPMG cites confidence in the safety of vehicles and personal data collected as a result as being of great importance. To this end, the organisation advocates the inclusion of a new assessment area in the Euro NCAP test: a cybersecurity assessment for the connected car. This test should ensure that the data security of connected vehicles is in order.
Action plan
Finally, it appears that companies in the Dutch automotive industry expect data generated by vehicles to change their business models. Leadership from management is seen as crucial to ensure companies remain relevant. At the same time, respondents believe that the Dutch automotive industry is not yet ready for a large-scale embrace of connected vehicles and to take advantage of the benefits these cars offer.
To change this, KPMG has drawn up an action plan, which includes
- developing a digital strategy;
- defining a business model for the future;
- setting up or participating in a data and connectivity platform.
KPMG also recommends a stronger focus on data privacy and security. This is necessary to strengthen users' trust in connected vehicles and guard companies' brand reputation. KPMG argues that in many cases, both points are important building blocks for embracing innovations, new products and new services.
Research
More information about the research and action plan prepared by KPMG can be found in KPMG's research report.
By: Wouter Hoeffnagel
Photos: Shutterstock
