Automotive data monetisation is the process of generating revenue from capturing data generated by cars, drivers and mobility systems. A McKinsey report states that an average car generates 25 gigabytes of data per hour, a number that is set to rise exponentially with the emergence of electric and autonomous vehicles. This data has the potential to enable automakers to achieve cost and revenue benefits, and create a competitive advantage in the market.
3 Benefits of Data Monetisation
Data monetisation in the automotive sector can provide several benefits to automakers. Connected cars can provide a unique customer experience while simultaneously delivering cost and revenue benefits to mobility companies, including OEMs, suppliers, dealers, insurers, fleets, tech players, and beyond. By monetising data from these vehicles, automakers can generate new revenue streams and improve their bottom line.
Connected car data provides valuable insights—often obtained from driver interactions with vehicle systems—that are unavailable from other sources. By analysing this data, automakers can gain a better understanding of their customers’ needs and preferences, which can help them develop new products and services that meet those needs.
Automakers can also use data monetisation to improve their operational efficiency. By analysing data from connected cars, they can identify areas where they can reduce costs and improve their supply chain management. For instance, they can use data to optimise their production processes, reduce waste, and improve their inventory management.
Finally, data monetisation can help automakers improve their customer experience. By using data to personalise their products and services, they can create a more engaging and satisfying experience for their customers. For instance, they can use data to offer personalised recommendations, provide real-time traffic updates, and offer remote diagnostics and maintenance services.
Despite the benefits, automakers have been slow to adopt data monetisation techniques
While other sectors have been aggressively generating value from data, most autoplayers are just recognising the value of data monetisation. There are associated challenges as well. For one, OEMs are struggling with connectivity or related software developments, resulting in poor customer reviews and delayed start of production. Only a few have got the software-defined car right, and even fewer have monetised vehicle data.
A second challenge is the lack of end-to-end access to raw data per car each day. Those companies that do successfully differentiate themselves by focusing on providing end-to-end access to 1 to 2 terabytes of raw data per car each day to enable continuous product and service improvements.
A third challenge is generating customer interest and differentiating their services. Customers already receive many connectivity services – seemingly free but often paid for with their data – on their smartphones. Of the executives surveyed, 84 percent reported this as being a highly relevant challenge for car data monetisation, but only 50 percent believed their organisations were prepared to address it.
To overcome these challenges, automakers can take several steps. First, they can focus on generating customer interest and differentiating their services. For instance, they can offer personalised recommendations, provide real-time traffic updates, and offer remote diagnostics and maintenance services. Second, they can improve their connectivity and data monetisation capabilities. For instance, they can use data to optimise their production processes, reduce waste, and improve their inventory management. Third, they can provide end-to-end access to raw data per car each day to enable continuous product and service improvements.
Automotive data monetisation is a rapidly growing field. The market is expected to reach a value of USD $450 to USD $750 by 2030. And, like we said earlier, to capture the full value of car data, automakers need to focus on three value-creation models – revenue generation, cost reduction, and enhancement of safety and security.
Automakers also need to be aware of the regulatory environment surrounding car data. Governments around the world are introducing new regulations to protect consumer privacy and data security. Automakers need to ensure that they are complying with these regulations and that they are prepared for any future changes to the regulatory environment.
When they address these challenges and concerns, automakers will have the opportunity to unlock the full potential of car data and create a competitive advantage for themselves in the market.
Merit’s Expertise in Data Aggregation & Harvesting for the Global Automotive Sector
Merit Data and Technology excels in aggregating and harvesting automotive data using AI, ML, and human expertise. Our capabilities include:
- Crafting end-to-end data pipelines and scalable data warehouses
- Designing compliant governance solutions for seamless integration
- Utilising high-volume, high-velocity data tools for nuanced insights
- Extracting retail product attributes and audience data
- Aggregating industry-specific data points for informed decision-making
Trusted by leading automotive brands, Merit drives innovation and efficiency by delivering refined, actionable insights.
- Enormous Data Potential: The automotive industry stands to gain significantly from data monetisation, with an average car generating 25 gigabytes of data per hour. This figure is expected to increase substantially with the advent of electric and autonomous vehicles. This data can offer valuable insights into customer behavior, driving patterns, and vehicle performance, creating opportunities for revenue generation and cost reduction.
- Benefits Across the Value Chain: Data monetisation can provide benefits to various stakeholders in the automotive ecosystem, including original equipment manufacturers (OEMs), suppliers, dealers, insurers, fleets, and technology companies. By analysing connected car data, automakers can enhance customer experiences, improve operational efficiency, and develop new products and services tailored to customer needs.
- Challenges in Adoption: Despite the potential benefits, the automotive industry has been slow to adopt data monetisation techniques. Challenges include issues with connectivity and software development, limited access to raw data, and the difficulty of differentiating services in a market already saturated with connectivity offerings. Overcoming these challenges requires a focus on customer interest, improved connectivity capabilities, and providing end-to-end access to substantial amounts of raw data for continuous improvements.
- Privacy and Regulatory Considerations: As data becomes a valuable asset, automakers must address privacy concerns and comply with evolving regulations. Transparency about data usage, minimal data collection, and robust security measures are essential to maintaining consumer trust. Governments worldwide are introducing regulations to protect consumer privacy, and automakers need to stay informed and ensure compliance to avoid reputational damage and legal consequences.
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