Monetizing data created by the
fleets, and adding it to the balance
sheet and P&L
Data is more like the currency of the 21st century. Businesses capable of accessing data, managing it wisely, and drawing constructive insights, outperform the competition. In fact, the business model based on data monetization is no longer reserved for the Silicon Valley giants. Even companies whose products and services are not directly related to data trading are trying a hand in this field. The automotive industry is one sector where data monetization brings the greatest benefits.
Connected cars are slowly growing to win a significant share of the automotive market. The sensors and other connected IoT devices result in cars generating massive volumes of data on how they are used, who uses them, where they are, and what surrounds them. With the increasing interest in shared mobility and advanced vehicle autonomy, the amount of data connected cars produce will only continue to grow.
And that brings us to several questions. Who can use the data generated by these cars, and how? Should market players consider vehicle data monetization?
Together with our automotive experts from CloudMade, we will explore the answers to these questions and more.
Market predictions and trends for monetizing data created by fleets
Connected vehicles generate massive amounts of data through in-car microphones, cameras, and sensors. Alongside offering valuable insights into a driver’s behavior and preferences, these devices also observe passengers and bystanders. Meaning this enables the collection of many non-critical data along the way.
According to McKinsey, the overall revenue pool from car data monetization could average $450-$750 billion globally by 2030.
Among the trends that contribute to a greater inflow of connected vehicle data, the following are the most important:
- Diverse/shared mobility
- Autonomous driving
The trends that will revolutionize the way we travel and use vehicles today offer an excellent opportunity for OEMs (Original Equipment Manufacturers), fleet managers, fuel retailers, insurance companies, toll providers, and companies dealing with parking or traffic.
How will fleets benefit from connectivity?
Once a vague promise, the benefits of connected cars are finally being realized by several areas of the fleet now—from improved safety and efficiency to vehicle access and sharing, regulatory compliance, determining fleet suitability, creating algorithms to lower fleets’ total cost of ownership, better tools for preventative and predictive maintenance, and more.
Currently, we are only at the tip of the iceberg. Yet, tapping into the data across various manufacturers and models and then drawing conclusions from it all isn’t so simple.
9 Enablers of connected vehicle data monetization
The following nine developing enablers are helping collect connected vehicle data, process it, and turn it into actionable insights.
#1 – Embedded modems
Nearly 85% of the new vehicles are equipped with OEM-embedded modems, and its first operational benefit is quite clear—avoiding the installation and uninstallation of aftermarket devices. The direct connection also offers more flexibility and pinpointed services, like remotely verifying a car’s mileage or engine health and waking up the vehicle to identify its location in the order-to-delivery process. With embedded modems, vehicles would no longer require a full-scale telematics subscription for those services.
#2 – Automotive data service providers
The diversity of data sources has resulted in the rise of many automotive data service providers, including Wejo, Smartcar, Motorq, and Otonomo. These startups act as the link between vehicles and the consumers, automakers, dealers, and fleets that need the data.
Though their business models vary, generally, their cloud-based platforms combine and standardize data across multiple OEMs. Then a streamlined pipeline of normalized data is then offered to third-party developers, fleet management companies, Telematics Service Providers (TSPs), and the OEMs that use the data for numerous applications.
#3 – TSP marketplaces
TSPs like Samsara, Geotab, GPS Trackit, and Verizon connect are growing marketplaces of third-party applications that address various areas of fleet, including fuel management, route planning, maintenance, DOT compliance, video telematics, driver training, and more.
For fleets, these marketplaces mean access to solutions via a pre-integrated dashboard on their existing telematics systems, eliminating the need for expensive enterprise solutions with separate connections.
#4 – OEM fleet telematics
Currently, we are also witnessing a lot of automakers entering the market as service providers to leverage data from their vehicles. While most of their offerings revolve around consumer-facing infotainment apps, Ford Motor Company and General Motors put forward their own versions of fleet telematics systems.
Automakers understand that their consumers own vehicles from several brands, many of which are connected through aftermarket telematics systems. Hence, these OEMs aren’t necessarily competing with the already established TSPs. Instead, they are trying to offer applications that address specific fleet aspects like fuel levels, tire pressure monitoring, and diagnostic trouble codes (DTCs).
#5 – High-speed data towers (5G)
Fleets’ bandwidth requirements are growing. For example, vehicles today can generate almost 25 GB of data per hour, which used to be 10 MB a month previously with a fleet device on a 2G network. Though 3G and 4G networks are handling the needs of connected services well, the data pipeline should improve to accommodate the rising data needs.
This is possible with 5G, which is nearly 100 times faster than 4G. With 5G, fleets can simultaneously connect more devices and sensors to tap into greater real-time visibility of fleet activity. The fast data transfer takes decision-making from reactive to predictive, thereby giving way to new trends like telematics and predictive maintenance.
#6 – Smart components and devices
Smart components are a new and growing factor in the maintenance of fleets. It includes IoT sensors equipped on parts, such as brakes, transmission, tires, and batteries that can transmit the health of those parts. The technology also includes smart devices on farm equipment, vocational tools, trash dumpsters, traffic signals, etc.
Smart components and devices significantly increase the flow of information into the fleet operation. Therefore, the main task for fleet managers will be to bring together the separate signals into a single dashboard for better decision-making.
#7 – Over-the-air (OTA) updates
OTA updates for vehicles mean lower downtime enabled by the changes made to a vehicle’s electronic control units without the owner going to a service center or dealer. OTA updates initially focused on infotainment features like maps and in-vehicle apps. However, currently, it is expanding into drive and engine controls, especially for the electric fleet.
#8 – Machine Learning/ Artificial Intelligence
The importance of ML/AI in enabling vehicle autonomy is starting to get the appreciation it deserves. They play a crucial role in every aspect of fleet-based on-demand-mobility services.
ML and AI add value to all components of the fleet data monetization value chain by automating tasks, enabling insight-based decisions, and innovative business models. For such models to be possible, extensive data sharing among the value chain members is necessary. An example of this value exchange is put forward by Mitsubishi Motors.
The company developed a mobile application for its car owners to collect driving data. The OEM offers rewards like gift cards and oil changes to the participating drivers in exchange for the driving data collected through the application. The data is then monetized by offering it to car insurance companies.
Fleet operators can leverage AI to exploit the data gathered and thereby offer enhanced customer experiences through services like personalized vehicle cabins for each passenger, optimized transport price to increase the share of wallet, multimodal transportation plans to fit customer preferences, etc. Additionally, the data could also be used to optimize the fleet’s overall financial and operational performance by maximizing uptime and revenue miles.
#9 – Big Data analytics
Fleet data used to be stored in ledgers and hard drives in the pre-telematics era. They were then analyzed by the owners of the data for decision making, and fleet management companies had to gather metrics from fleet customers to make extensive comparisons.
Thanks to the growth of telematics, fleet operators can now gather larger data sets and parse them by region, driver, fuel type, mileage, and vehicle class to begin with, and then by upfit type, engine characteristics, traffic density, topography, revenue-per-stop, and more in the later stage. These data sets could also be studied in various arrangements.
Nevertheless, to be able to generate insights that influence vehicle design, the data needs to get bigger. Meaning, companies should gather data from hundreds and thousands of vehicles across user types, fleets, and regions.
For this to happen, fleets and their drivers should choose to let their data be aggregated and analyzed. A few TSPs, fleet management information systems providers, and third parties offer fleets the option to release their data to the provider.
Vehicle data monetization – 4 practical use cases
All cases of data collection in a vehicle can be potentially turned into a benefit concerning one of these three areas:
- Generating revenue
- Reducing costs
- Increasing safety & security
Data monetization can be based on one or a combination of activities from different areas. Currently, revenue data is frequently generated by selling new functionalities and services in the automotive market. Typically, they are directly linked to the vehicle and are aimed at the driver (direct monetization).
With the deployment of a massive number of sensors, the future of the car will know and read the driver’s needs. Hence, such vehicles can be used for tailored advertising. And the third way of generating income is by selling data to advertising companies, which will further use it to promote third-party brands. Nevertheless, this business model for data monetization causes the most distrust among consumers.
Below, we look at a few of CloudMade’s use cases that leverage data.
1. Micro-targeted service
Being able to enter the car wash without waiting in line, and a suggestion where you can find free parking space. Who wouldn’t take advantage of such opportunities in bustling cities for a small charge or exchange their vehicle’s registration number? Our solutions suggest third-party in-app services, like a car wash and parking based on customer purchases and affinities.
2. Insurance risk optimization
Who wouldn’t prefer paying less for vehicle insurance? Our system analyses driver behavior while driving and habits, evaluating them according to the regulations to tune individual pricing and negotiate bundled pricing with providers.
3. App-mobility predictions
Think options that simplify commute tasks like real-time road traffic updates, navigation shortcuts, nearby filling stations recommendations, current fuel prices, etc. And all that through voice commands and questions you ask while driving.
4. Predictive maintenance
As a car becomes much like a smartphone that gets new functions every now and then, it becomes an ideal platform for advertising activities. Particularly systems that analyze vehicle usage and health over the lifecycle and predict optimal times for servicing and maintenance.
Connected and autonomous vehicles create new business opportunities for data monetization. Nevertheless, strategic partnerships become crucial for OEMs due to organizational, technological, social, and regulatory issues.
Players in the car data monetization market have already started collaborating with entities like public institutions, high-tech suppliers, and customers.
Communicating the value of shared data to consumers is the first step to vehicle data monetization. Once this is done, automotive market players will have to abide by the following rules of car data monetization.
- Ensure transparency in data usage.
- Offer customers an option to choose what is shared and state the purposes clearly.
- Provide customers access to the gathered data.
- Invest in data security, and never misuse information.
- Never use data against your consumer’s wishes.
- Provide customers the option to edit and change their data sharing preferences.
Winning customers’ trust is vital for the overall progress in leveraging connected vehicle data. In fact, any advancement in the field should be based on customer-centered principles and the idea of building a comfortable and safe environment for drivers.