Generation Y, consumers born between 1982 and 2001, are set to become early adopters of connected cars. Jeremy Slater explores the opportunities for telematics
If you watch popular TV car shows such as Top Gear in the UK or similar programs elsewhere in the world, an item on the latest in-car gadgets is expected in almost every episode.
Invariably, the latest cool gizmo will be part of an up-scale model from a pricey brand.
But as telematics become increasingly common, these devices are now turning up as standard in more basic models.
This is partly due to the fact that telematics systems are becoming cheaper to produce and fit, but also because of a new type of automotive consumer— the millennials.
Members of the millennial generation, or Generation Y as they are called in the US, were born between 1982 and 2001 and have grown up using more technological devices than any age group before them.
They tend to be more tech-savvy than their elders, but as consumers they do not have the same buying power as older generations.
This has encouraged OEMs to put more telematics into their mid-range cars.
Technology as a key differentiator
Such devices also tap into the eco-consciousness of this generation.
According to a survey by rental car company Zipcar, 67% of respondents said they would like to drive less. (For more on eco-consciousness, see ‘Green telematics: The eco-driving opportunity’.)
The biggest reason is the high cost of owning a car, including filling the tank.
“This report confirms that new technologies and services make it possible to have access without ownership,” says Zipcar CEO Scott Griffith.
So manufacturers need to offer more bang for buck if they are to persuade these consumers to keep driving.
Telematics is key to achieving this because when millennials do decide to buy an automobile, they list in-car technology as one of the most important attributes, according to the Deloitte & Touche report Gaining Speed: Gen Y in the Driver’s Seat.
By next year, this demographic will make up 40% of the car-buying market in the US; in Europe, the numbers are predicted to be similar.
Millennials want more high-tech bells and whistles, such as built-in Bluetooth and Internet connectivity in their vehicles, more human-machine interfaces (HMIs), and devices like haptic controllers. (For a comprehensive survey of HMIs, check out TU’s Human-Machine Interface Report.)
In essence, the millennial consumer wants his or her car to be an iPhone on wheels.
Millennials also appreciate having a good deal of information about the car model on-line, and they are keen on devices that improve a car’s performance, such as curb parking features.
“Our findings point to technology as a key generational differentiator,” says Craig Giffi, vice-chairman and automotive practice leader, Deloitte LLP.
“For baby boomers, technology is largely utilitarian and defined by safety features, whereas Gen Y views technology as a more personal feature. They see their cars as personal technology cocoons, and expect so-called ‘cockpit technology,’ where they can continue to run their lives uninterrupted, from messaging to music to the latest smart phone apps, 24/7.”
Connecting the car
A recent study by US market research firm iSuppli indicates that sales of telematics systems in Europe are expected to grow by a factor of five between 2008 and 2016, from 4.9 million units to 24.8 million units.
With best selling European brands such as Opal, Cadillac, Chevrolet, Saab, and Vauxhall, US giant GM is expected to sell more than 1.4 million telematics units in 2016, a 41%, increase from the 210,000 units sold in 2008.
Rival Ford plans to sell 1.7 million units, up from 190,000 units.
According to iSuppli, PSA Peugeot Citroen has the highest sales of telematics systems in Europe, including embedded and mobile systems: Sales are expected to grow from 620,000 units in 2008 to 3.1 million units in 2016.
Volkswagen plans to sell 3.2 million units in the same year, while Italian carmaker Fiat expects to sell 1.6 million units.
BMW and Mercedes-Benz, the leading European luxury brands, which included telematics units in their cars before the mass market makers, plan to enhance their offerings, too.
BMW plans to sell 1.3 million units in 2016, and Mercedes-Benz forecasts sales of 1.4 million.
European OEMs are reacting to this increase in demand.
Last year, communication technology company Marvell and Harman announced an integrated Wi-Fi connection through its Marvell Mobile Hotspot (MMH) technology.
The 2010 Audi A8 is the first on the market to feature the factory-installed mobile hotspot.
“Up to eight devices can be supported, from smart phones to tablets and other advanced mobile devices,” according to the iSuppli report Wi-Fi in the Car—Past and Present.
“Marvell’s Wi-Fi software architecture is optimized for low power consumption on battery-powered consumer electronics, enabling passengers to connect to the vehicle’s network without affecting the battery life of their connected devices.” (For more on connected devices in the car, see ‘Telematics and in-car apps: Making infotainment cost-effective’ and ‘In-car telematics services: There’s an app for that’.)
If rapid growth is to continue, manufacturers will need to make sure their offerings appeal to the need for connection among millennial consumers.
Jeremy Slater is a regular contributor to TU.
For more on the millennial generation, join the industry’s key players at Content & Apps for Automotive Europe 2011 in Stuttgart, June 21-22.
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