When you connect car lovers with e-commerce, you end up with a potential marketplace of $265 billion by 2023, according to the latest Juniper Research report.
The report predicts the number of connected vehicles will jump from 330 million in 2018 to more than 775 million by 2023.
That means connected car commerce could exceed 8.2 billion transactions by 2023.
What are connected cars?
What exactly is a connected car, according to Juniper Research?
“The term ‘connected cars’ refers to devices installed in the vehicle which allow M2M (Machine-to-Machine) communication or machine-to-human interaction. M2M is communication between 2 single machines with no human interaction. In terms of vehicle telematics, this allows data to be sent from the vehicle to another location and used for vehicle conditioning or to monitor driver behavior,” the report says.
Juniper notes telematics should not be confused with consumer infotainment services, as the majority vehicle-specific smartphone applications included in the scope of the report are classified as telematics applications.
5G will speed up connected car commerce
While 4G speed allowed consumer infotainment and in-vehicle services, 5G speed is expected to enable the rapid growth of “vehicle to everything” (V 2X) services by interconnectivity, faster speed, reduced latency, and increased network coverage.
OEMs are expected to introduce 5G radio and services in their luxury brands initially until legislation and more consumer demand increase broadly.
Juniper anticipates that automotive OEMs must adopt new business strategies that adapt to increasing connectivity in vehicles. They must increase the value proposition for drivers by bundling services into a single subscription for example.
What connected car services are on the horizon?
Consumers can now make mobile app payments while in their vehicles, but integrated units will allow wireless connections and tokenization to provide end-to-end payment solutions such as toll roads, fuel refills, connected parking and EV recharging stations.
Monitoring and maintenance of vehicles is also a future connected car payment service, in addition to third-party retail apps that will be developed to enable every kind of service such as food delivery.
With increasingly complex parts, the introduction of blockchain technology will enable automotive OEMs to monitor manufacturing processes, hardware supply chain and consumer engagement levels.
Privacy and other barriers to growth
For connected cars to reach their market potential. Juniper says there needs to be more collaboration between stakeholders, including automotive OEMs, network operators, and payment solutions providers.
Provision of APIs and development platforms for third-party developers of in-vehicle apps is essential to the creation of new, innovative OEM services.
Juniper predicts more than 370 million in-vehicle digital voice assistants will be used by consumers in 2023. With smartphone apps and options, OEMs will have to open up access to vehicle systems by developers.
This opens up security of data and driver distraction concerns which must be carefully addressed.
Connected car commerce will be less than 1% of transactions
Research author Sam Barker said, “Until the market gains new entrants from outside the automotive ecosystem, the increase in transactions will be driven by convenience for the user, rather than the creation of new services themselves. By 2023, we expect that in-vehicle commerce transactions will be less than 1% of mobile and online transactions globally.”
While still expected to be a small portion of total mobile and online sales, average annual growth will be 18.7% over the next five years.
With a well-defined market and with the right products, connected car commerce presents substantial opportunities for OEMs and savvy product and service marketers.him
You can download a free copy of the Juniper Research, whitepaper Connected Cars: How 5G, Connected Commerce & Blockchain will disrupt the Ecosystem here.