Car data paving the way to value-creating mobility – McKinsey
Article Synopsis :
Technologies such as big data, robotics and IoT are paving the way for a future where people will feel more safe and secure in their cars and traffic jams and accidents will be far less frequent. Car data is gaining prominence and the capability to harness it is becoming a substantial competitive advantage—in industries beyond insurance.
McKinsey’s “Car data: paving the way to value-creating mobility” is the summarized findings of a large-scale knowledge initiative to study car data and its possible value creation models for a variety of industry players.
According to the report, by 2030 the expected growth of the value pool from car data and shared mobility could add up to more than USD 1.5 trillion and will be a key theme for the auto industry.
High-level research findings include:
- Data Privacy is critical. Despite the stated concerns, 71% of the surveyed drivers (customers) would be willing to share data in exchange for tangible benefits such as free app usage or free content. The willingness to share the data is directly proportional to the familiarity to the app and better understanding of the tangible benefits in exchange for data.
- Data Connectivity will help customers use their data as a currency to pursue the benefits they would want. The benefits could be convenience, safety, time and/or cost savings.
- China will become the hotbed for this revolution of sharing data for benefits with their car manufacturers or smartphone manufacturers compared to the US and the EU. Survey results indicate 93% of Chinese customers are willing to share their location data with the manufacturer of their car. Chinese consumers also show higher willingness to pay for data-enabled content and services through subscription models and declare a significant interest in self driving vehicles.
- Car data monetization opportunities will grow incrementally as car data generates value through increased revenues, reduced mobility cost, and increased safety and security. In the future, car OEMs may try to monopolize the marketplace and several technology giants develop software to evaluate, combine and monetize the data.
- Autonomous driving is predicted to be 15% of global car sales and will have an impact on the value of car data. It has the ability to transform a car into a moving retail store and a digital experience centre.
- New business models have the potential to transform transportation into a service with mobility being offered for free to customers.
Per the research, between now and 2020 most players will compete to build digital capabilities around big data, human-machine interface, and services setup. Beyond 2020, the new value propositions suggested in the report combined with autonomous driving technologies will pave the way for a new scale of transformation with a new and different set of unique challenges.
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Digital Insurer's CommentsHow to monetize connected-car data? It’s not just a question for insurers. Today 8 of every 10 cars rolling off of assembly lines have native telematics capabilities and manufacturers, OEMs, retailers, service providers, mobility providers, high-tech giants, authorities, and yes, insurers, have a keen interest in this development.
Data privacy and cyber risk are key issues. While many legacy insurers cite them as insurmountable, reasons to do nothing, others are forging ahead to solve the problems creating winning digital solutions in the process. Auto insurance as we have come to know it will transform radically over the next decade. Whether the transformation comes from within the insurance industry, or from without by digital-native enterprises, remains to be seen.
Record amounts of venture capital are flowing to InsurTech startups aimed at this market segment.
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