Automotive the way we see it

Connected cars –
consumers look beyond
transportation
The next generation of connected cars brings the convenience of home
and office on the road driving loyalty and revenue.
Beyond the car With changing customer expectations, Customers definitely expect
Cars were once used solely to OEMs are investing in the development more from automotive
travel from point A to point B. The of connected cars. In recent companies and dealers as
very term “automobile” – a device times, the focus has been on voice
digital disruption impacts
capable of movement – sums up recognition and personalized
everything we required. That is no assistant apps for automated use. every facet of our lives.
longer true. Paying bills, buying Noise reduction using technologies The desire for connected
fuel, ordering food and organizing such as HaloSonic from Harman and car services is strongest in
activities all need to be options when fibre optic microphone technology emerging markets and growing
the driver slips behind the wheel. from VocalZoom were also adopted
overall (41% of respondents say
by some OEMs. Others are looking
This change is being driven by the for competitive advantage in that they would like them in
Internet of Things and by a culture that exploring niche technologies such their next car).”
increasingly equates being disconnected as gesture-based interfaces and
Mathew Desmond,
with being lost. Consumers now handwriting recognition. Also
expect their car to be an extension in the mix are authentication,
Automotive Practice Lead,
of their home or office space. personalization and driver monitoring. Capgemini

Figure 1 – OEM Start-up Initiatives

CRM/Payment Services, content, Software System Integration Hardware Infrastructure

and apps

Customer Account Services App Store Software/car/user Components DB/cloud

Players involved Infrastructure Streaming content OS/platform interface Car Design & Mobile network
Mobile Apps manufacturing Mobility infrastructure
Premium and value
OEMs
1 eg.,
Audi, BMW, Ford, GM,
Mercedes-Benz, Toyota,
VW
Automotive Suppliers
2 eg., Bosch, Continental,
Delphi, Denso, Hella,
Magna

Digital Players
3 eg., Apple, Google,
Microsoft, NAVTEQ,
Spotify, TomTom

Telecom Players
eg., Telefonica,
4 Vodafone, AT&T,
Verizon, Deutsche
Telekom
Automotive Insurers
5 eg., Allstate,
Progressive,
StateFarm

(Historical) Core Business New Activities

Source: Capgemini

2 Connected cars – consumers look beyond transportation

 Automotive the way we see it

Moving towards personalization Moving towards autonomy

Human-machine interface (HMI) software and smart mobility The autonomous car is coming and it will change
domains with voice recognition, artificial intelligence (AI) and the car ownership model. Autonomous driving and
over-the-air (OTA) technologies have all experienced significant contextually connected services are key areas of AI.
innovation recently. Car manufacturers are already moving fast Volvo, JLR, Ford and Mercedes-Benz are already active
in this space. Last year, Ford, BMW and Volkswagen integrated in these areas. The technology behind autonomous
Alexa, an intelligent personal assistant developed by Amazon. hand-over—the ability for the car and driver to safely
This caused a stir in the industry with its zero-licensing cost. transition control back and forth—has flooded the R&D
More partnerships are expected in the near future. For pipeline of OEMs with biometric solutions built around
example, Volvo is using Microsoft Suite in their vehicles. voice, heart rate, facial, iris and fingerprint recognition.

In fact, 12 out of 14 key OEMs have launched mobility With the entry of technological giants such as Google
service offerings either as a pilot or fully-fledged service and Apple into the connected and autonomous car
and others, such as Ford, GM and BMW, are innovating segment, automobile manufacturers are forced to
in the space with seemingly little concern for the return develop innovative capabilities and make cultural
on investment (ROI). Software-defined cars are leading changes to compete with them (Figure 2).
the way to the next generation car-as-a-service model;
this combines infotainment hardware and services as Thirteen OEMs are investing $7.1 billion USD to fuel
a subscription package. OEMs are looking at OTA as a the development of self-learning AI in cars. Toyota has
potential revenue stream generator by offering business- planned to invest $1 billion USD in the next five years
to-consumer (B2C) solutions. With Delphi acquiring to develop the in-house capability for AI. One of the key
Movimento and Thundersoft acquiring Rightware, Tier 1 motives is to accelerate the development of the fully
suppliers are already bolstering their software capabilities. autonomous car and personalized user experience.
Voice recognition is moving out of traditional use cases
Companies like Maluuba (part of Microsoft), iNAGO, such as infotainment and towards integrating vehicle
Promptu, Sensory and Baidu are working on interesting users’ manuals into the system; these manuals can be
areas such as natural speech assistants, AI-enabled speech accessed with the help of voice recognition. Similarly,
assistants and voice biometrics. These are expected to gain Volkswagen’s introduction of gestures on the 2017
traction in the near future as the technology evolves. Golf shows it is an innovator in the mass market.
(Figure 1)

Figure 2 – Autonomous Driving Market: Definitions for Levels of Automation

1 2 3 4 5

The driving mode- The driving mode- The driving mode- The driving mode- The full-time
specific execution by a specific execution by one specific performance by specific performance by performance by an
SAE Definition

DAS of either steering or or more DAS of both an automated an automated automated driving
acceleration/ steering and accelera- driving system of all driving system of all system of all aspects of
deceleration with the tion/ deceleration with aspects of the dynamic aspects of the dynamic the dynamic driving task
expectation that the the expectation that the driving task with the driving task, even if a under all roadway and
human driver will human driver will expectation that the human driver does not environmental
perform all remaining perform all the human driver will respond appropriately to conditions that can be
aspects of the dynamic remaining aspects of the respond appropriately to a request to intervene managed by a human
driving task dynamic driving task a request to intervene driver
Capability F&S Definition

One of the core Two (or more) core Under specific operating System can bring vehicle The driver is out of the
functionalities of the functionalities are conditions, the system to safety while in loop; under all operating
vehicle’s operation is performed by the system controls the vehicle; automated mode even if conditions, the system
performed by the system while monitored by the driver needs to intervene driver does not intervene can control the vehicle
while monitored by driver when requested when requested appropriately
driver

Adaptive cruise control Tesla Autopilot City/Highway pilot with City + highway pilot, Fully autonomous
Emergency braking Traffic Jam Assist minimal driver with minimal driver vehicles
Lane keeping assist intervention—Audi involvement
Autopilot Fully auto parking

Source: Capgemini 2016 2018 2025 2030

3
Moving towards safety
Governments and regulations may help drive AI innovation in
the name of safety. For example, the U.S. Department Of
Transportation in association with the National Highway
Traffic Safety Administration (NHTSA) announced plans for a
regulatory proposal that would make it mandatory for auto
manufacturers to install vehicle-to-vehicle communication
devices in every automobile they produce in the near future.
Driver-assistance technologies like parking assists may also be
included as a part of mandatory safety features in vehicles.

According to Capgemini’s Cars Online 2017, Beyond the Car

study, six of the top 10 OEM start-up initiatives are related to
safety and driving experience. Monitoring the performance
and age of parts, for example, can redirect the driver to a
dealer if immediate attention is required. This provides three
benefits:
1. A solution to a problem before it becomes more expensive
to repair
2. Avoids stranding the driver
3. Increases service and re-purchase loyalty

Increased competition
Automotive suppliers are trying to establish direct
relationships with end customers to help reduce their
dependence on OEMs. For example, Bosch’s fun2drive
app allows customers to monitor their vehicle functions
and provides direct connectivity to the nearest Bosch
service center.

Some digital players are trying to enter the market by adapting

their smartphone platforms to automotive customer
requirements. The objective is to expand the reach of the
technology ecosystems into the vehicle and integrate their
infotainment OS and software platforms into the car. Others in
the media-streaming business, such as Pandora, Spotify and
Deezer, have already formed partnerships with select
automotive OEMs.

Telecom players are another potential entrant. With 36 million

cars with preinstalled SIM cards expected to be sold
worldwide in 2018, telecom companies are expecting
significant revenue from connected cars.

Insurers are already offering telematics-based coverage

options. However, there are opportunities for insurers to offer
innovative value-added products to drivers as well as OEMs
and suppliers. And many start-ups are targeting various
technology and data points in cars, although they tend to act
as scouts for OEMs who plan to invest on quick ROI areas.

4 Connected cars – consumers look beyond transportation

 Automotive the way we see it

Our Cars Online 2017 study showed 57% of

global customers would likely switch from their
current car brand to one offered by Google or
Apple. It is clear—the time is now
for automotive companies to channel
customer loyalty in their direction
amidst digital disruption.

5
OEM opportunities Interest is coming from Fiat Chrysler (with a direct partnership
The growth in connected cars is estimated to outpace overall with Google), GM and Renault Nissan. OTA is expected to be
automotive growth in the next five years, led primarily in Asia used as a service delivery interface for generating new revenue.
and North America. BI Intelligence, the research arm of OEMs need to use safety and driving experience to create a
Business Insider, expects connected car sales to rise at a CAGR new digital driving standard that connects the driver, car and
of 50 per cent in North America over the next six years, led environment. This is also an opportunity to generate new
largely by greater demand in the U.S. In fact, 97 per cent of new revenue streams. Despite the revenue associated with the
car shipments in the U.S. are expected to have Internet traditional navigation accessory, OEMs should consider a
connectivity by 2020. This is up from 20 per cent in 2014. “Connected Vehicle” app for smart and real-time navigation to
increase customer consideration and the adoption of
Premium and value OEMs are making significant connected-car additional services. Consumers are expecting connected
investments in order to capture a significant share of new features on cars and will look for these services.
revenue streams. They are attempting to extend their activities
from hardware into deploying a software operating platform A clear trend towards the usage of high-end processors such as
for a potential app store, as well as into the development of Tegra will mean high-quality content in the cockpit. Networked
specific apps and other services including content delivery. displays will also become more popular. Central display sizes are
Embedded Android is expected to consolidate the Linux market expected to increase with the trend towards portrait mode, for
and offer OEMs more avenues to sell app-related services. better clarity within restricted interior space. Combined
heads-up-displays will have high penetration in the medium-
For example, Mercedes-Benz offers a wide range of and small-segment cars, considering their cost effectiveness
connectivity services and products including the “Mercedes and ease of integration inside the dash by 2018.
me” online platform. BMW’s “ConnectedDrive” offers an
integrated platform including infotainment, navigation and OEMs selling directly have a competitive advantage over
safety features. Tesla sees connectivity as one of its key pure-play online retailers because they can deliver a consistent
priorities and offers 17-inch built-in touchscreens to enhance its omnichannel experience. They can offer all car models online,
customers’ digital experience. as well as servicing and warranty. They can also provide a
complete offer that includes the vehicle, financing and
insurance.
Figure 3 - Data Monetization Activities

Usage-based Connected Data feedback for Optimizing emergency

insurance, navigation/ OEMs resulting in assistance providers
tolling, intermodal better R&D services
and tax navigation

Truck platooning Improving road

Geo fenced Predictive services infrastructure for
solutions maintenance transport authorities

Connected Stolen vehicle Early-stage recall Coaching drivers

navigation tracking and theft reduction and based on their
protection software updates Driving style
OTA
updates
add-ons Mobility
FMS solutions
solutions and content
delivery

Direct Revenue Opportunities Data Monetization Indirect Revenue Opportunities

Avenues
Source: Capgemini

6 Connected cars – consumers look beyond transportation

 Automotive the way we see it

Conclusion
By 2018, new business models around multi-modal
services, UBI and maps will evolve. Engaging drivers will
be the key differentiator and will remain a top priority.
However, there is still no consensus on how data will be
managed for these services and whom customers and
OEMs will trust with this data.

Biometrics will help drive personalization. Within

biometrics, brain wave and heartbeat detection are
gaining prominence with shared mobility
authentication, access and personalization as key focus Smart mobility, cybersecurity and
areas for OEMs. Vehicle security is an ongoing concern software-defined cars remain the key
for OEMs who are developing advanced forms of
areas of interest across Europe, North
biometric security features like iris, heartbeat and brain
wave recognition to help eliminate theft. Automotive America and China. A huge value
OEMs are also increasing their R&D efforts to develop chain transition is underway and early
precision biometric driver monitoring, customization adopters of disruptive technologies
features using facial and eyelid monitoring and steering
are being rewarded.“
inputs as well as heart rate and breathing pattern
analysis.
Todd Martin,
These technologies will work to deliver the next
Vice President,
generation of the connected car, and please buyers North America Automotive Leader,
looking to take the convenience of home and office on Capgemini
the road with them.

7
 Automotive the way we see it

Capgemini’s Automotive Practice

Capgemini’s Automotive practice serves 14 of the world’s 15 largest
vehicle manufacturers and 12 of the 15 largest suppliers. More than 7500
specialists generate value for automotive companies every day through
global delivery capabilities and industry specific service offerings across
the value chain, with a particular focus on our AutomotiveConnect
propositions for OEMs and suppliers. For more information visit

For more information visit For more details contact:

www.capgemini.com/automotive Todd Martin

Vice President, North America
Automotive Leader
todd.a.martin@capgemini.com
About
Capgemini Mathew Desmond
Automotive Practice Lead
mathew.desmond@capgemini.com
A global leader in consulting, technology services and digital
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