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Technology is creeping further and further into our daily lives, and the automotive industry is no exception. Connected car services represent a fusion of functionality with digital convenience, and they’re rapidly transforming how consumers interact with their vehicles.
With an expected 96% of new vehicles worldwide to be shipped as connected cars by 2030, we will explore how dealerships can adapt to and benefit from the burgeoning landscape of connected car services.
Connected car services refer to a suite of features enabled by internet connectivity in vehicles, encompassing everything from enhanced roadside assistance and emergency support to advanced infotainment systems. As automakers pivot towards a subscription-based model, these services are becoming increasingly integral to the automotive experience. Current data indicates that 66% of drivers in the United States are utilizing these capabilities, underscoring their growing significance.
For dealerships, the rise of connected car services is not just a trend to observe but an opportunity to embrace. These services offer new avenues for revenue through subscriptions and add-ons, while also enhancing customer satisfaction and loyalty. Furthermore, they provide dealerships with a competitive edge in a market that increasingly values technological innovation.
However, the integration of connected services is not without its challenges. Many consumers express frustration over the cost of these services, a lack of understanding of their benefits, and the user-friendliness of associated mobile applications.
Not to mention the recent public outrage over BMW’s heated seat subscriptions.
Despite these hurdles, surveys indicate that once consumers engage with these services, satisfaction levels are high, with a strong likelihood of subscription renewal.
A recent global consumer survey conducted by S&P Global Mobility found that once consumers experience connected services, they are overwhelmingly satisfied and very likely to re-subscribe.
In a survey of about 4,500 respondents who had experienced a free trial or an existing subscription on a 2016 or newer vehicle, and 82% said they would likely consider purchasing subscription-based services on a future new vehicle purchase.
Among previous-subscriber respondents, 85% said they would recommend their service to a friend.
The first critical strategy for dealerships in leveraging connected car services is comprehensive consumer education at the point of sale.
According to S&P Mobility and a 2023 survey by Smartcar, drivers are frustrated because of the price of connected services, a lack of education on how to use and maximize these features, and mobile applications that are not user-friendly. In fact, 28% either did not know that connected services were available to them, and/or noted the dealer did not mention or offer them.
Dealerships play a crucial role in bridging this knowledge gap. By providing detailed demonstrations and clear explanations of the features and benefits of connected services, dealers can significantly enhance customer understanding and interest. This education should not only focus on the functional aspects of these services but also on their practical applications in everyday life, making the technology more relatable and desirable to the customer.
Effective education strategies could include interactive demonstrations in the showroom, informational brochures, and hands-on sessions where customers can experience the features first-hand. Sales personnel should be well-trained to address common questions and to tailor their explanations to the individual needs and interests of each customer.
In-vehicle exposure to connected services is another powerful tool for dealerships. Allowing customers to experience these services during test drives can have a substantial impact. For instance, demonstrating real-time traffic updates, emergency assistance features, or infotainment options during a test drive can help bridge the gap between confused shopper and potential buyer.
Free trial periods are an extension of this strategy. By offering customers a free trial of connected services, dealerships provide an opportunity for users to experience the benefits firsthand, increasing the likelihood of subscription post-purchase. For example, a customer who experiences the convenience of remote vehicle diagnostics or automatic maintenance reminders is more likely to appreciate the value of these services and consider a subscription.
Here are some reasons that S&P found for why customers do not purchase or renew their services:
One of the most tangible benefits of connected car services for dealerships is the potential for new and sustained revenue streams. These subscriptions can be a source of continuous and forecastable income for dealerships, particularly if they are involved in the sale and renewal of these services.
Moreover, some connected services enable dealerships to offer on-demand features or upgrades, which can be activated even after the vehicle has been sold. This flexibility allows dealerships to upsell services based on the evolving needs of their customers, keeping the revenue cycle dynamic and customer-centric.
Connected services significantly enhance the driving and ownership experience, which is a key factor in customer satisfaction and loyalty. A satisfied customer is more likely to become a repeat customer and also offer word-of-mouth promotion, which is invaluable in the competitive automotive market.
Additionally, the data gathered from connected services can provide insights into customer preferences and behavior. This information can be used to tailor services, marketing strategies, and communications to individual customers, further enhancing the customer experience and fostering loyalty.
Offering a robust suite of connected car services provides dealerships with a significant competitive advantage. As these services become more standard and sought after, dealerships that can offer the latest and most comprehensive connected technology are likely to attract more tech-savvy and safety-conscious customers.
Furthermore, being proficient in these technologies positions a dealership as forward-thinking and adaptive to market trends, qualities that are increasingly important to modern consumers. This technological edge can be a decisive factor for customers choosing between different dealerships or vehicle brands.
Connected car services are vast and varied, with major automakers introducing unique offerings and subscription models and pricing to appeal to diverse consumer preferences. Here’s just a glimpse into some of the connected services provided by Ford, Toyota, and Mercedes:
Ford has embraced connected car technology with a range of services designed to enhance the driving experience. Key offerings include:
Toyota offers a range of subscription-based connected services, each tailored to different user needs:
Mercedes-Benz offers an array of connected services, focusing on both convenience and luxury:
Many dealers are actively integrating connected services into their sales and marketing strategies. Recognizing the appeal of these features, especially to tech-savvy consumers, dealerships are investing in training staff to better understand and sell these services. They are focusing on showcasing the practical benefits of connected services during test drives and through in-showroom demonstrations. By doing so, they aim to demystify the technology and highlight its value proposition to the customers.
However, there's also a degree of caution among dealers regarding the long-term implications of these services. There is an awareness that the shift towards subscription-based models might alter traditional revenue streams, particularly post-sales services. Dealerships are therefore seeking ways to balance between immediate sales benefits and long-term customer engagement and retention strategies.
The rise of connected car services has not only transformed dealership strategies but also caught the attention of legislators. Legislative efforts in various regions are underway to address the complexities that come with subscription-based vehicle features. These efforts primarily focus on consumer rights and data privacy concerns.
For instance, lawmakers in some states in the U.S. have proposed bills that aim to regulate these features. The core of these legislative efforts is to ensure that consumers are not unfairly charged for features that traditionally did not require ongoing payments. There is a growing concern that essential vehicle functionalities could become locked behind paywalls, compelling consumers to pay subscription fees for features that used to be a one-time cost.
These legislative actions also delve into the data privacy side of things. With vehicles collecting vast amounts of user data, there is an increasing call for regulations that safeguard consumer privacy and set boundaries on who gets to see that data.
Dealerships appear to be adapting to the trend of connected car services with a blend of enthusiasm and caution, but adapting nonetheless.
Time will only tell how connected services evolve. We’ll be here to keep you updated all along the way.