The Evolving Landscape of In-Car Digital Services: Consumer Perspectives and OEM Strategies
In today’s automotive industry, connectivity has established itself as an essential component. As the demand for in-car digital subscriptions grows, consumers are increasingly willing to invest in services like predictive maintenance, advanced safety features, and autonomous driving capabilities. However, alongside this willingness, there is also rising concern regarding how automobile manufacturers handle data, particularly in light of recent studies highlighting these complex dynamics.
A recent survey, commissioned by Cubic³—a firm specializing in software-defined vehicle (SDV) services—uncovered these sentiments. The report, titled "Consumer and OEM Attitudes to the Software-Defined Vehicle," gathered insights from 8,000 participants across the United States, the United Kingdom, Germany, and Japan. Additionally, it included feedback from 60 global original equipment manufacturer (OEM) executives. To gain a comprehensive understanding of attitudes toward SDVs, two distinct surveys were conducted simultaneously: one targeting automotive executives through Sapio Research from October to December 2024 and another focusing on consumers from September to October 2024.
The research categorized digital services into three main groups to analyze consumer willingness to pay for each. The results indicated a cautiously optimistic outlook for OEMs navigating an ever-changing automotive landscape. One key takeaway from the study was the significant challenge manufacturers face: effectively convincing consumers of the value of these digital services that are integral to the SDV experience. As the need for transformation in the automotive sector intensifies, understanding consumer perspectives is vital.
Evidence from the study shows a strong potential for the SDV market, predicting to generate over $650 billion in value by 2030. Automakers estimate that drivers are willing to pay approximately £8 monthly for digital services. In contrast, consumers themselves believe they should be charged around £5.82—marking a 27% gap between the two figures. Notably, in countries with higher vehicle usage, like the U.S., this willingness to pay often increases. In the UK, respondents indicated they were willing to spend the least on such services, averaging £4.89 per month.
Delving deeper into the data, the report revealed that nearly half of global consumers (51%) expressed readiness to pay for "vehicle-based services," which include autonomous driving capabilities. Additionally, 40% of consumers worldwide were inclined to pay for "connected services," such as video streaming and music. Meanwhile, around 39% were open to spending on data services like predictive maintenance. Encouragingly, over a quarter of global respondents and a fifth of UK consumers have already paid for digital services for their vehicles. Among younger consumers aged 18-24, the figure for those willing to invest in these services nearly doubles to 44%. Interestingly, only about one in five global consumers indicated they would be unwilling to pay any monthly subscription.
Amidst these findings, concerns regarding data security and potential hacking risks remain prevalent. The study pointed out that OEMs are paying close attention to potential vulnerabilities, including interfaces, application programming interfaces, digital SIMs, infotainment systems, and telematics. A significant portion of consumers expressed worries about data practices within the industry, with nearly half of global respondents (48%) and UK respondents (46%) voicing concerns about the possibility of their vehicles being hacked.
Fortunately, the automotive industry’s approach to cyber security appears to be proactive. A remarkable 86% of OEM executives underscored the importance of cyber security in their digital services, and an equal percentage acknowledged that connectivity is crucial for safeguarding vehicles throughout their life cycles.
Looking ahead, the report suggests that automotive manufacturers need to leverage digital services for sustained revenue growth. The findings indicated that predictive maintenance, enhanced safety features, and autonomous driving capabilities are likely to generate significant recurring revenue. An emerging opportunity for the industry lies in over-the-air updates—capabilities that could transform consumer satisfaction, safety, and convenience.
David Kelly, Chief Corporate Officer at Cubic³, noted, “Until recently, most consumers viewed buying a car as a ‘one-and-done’ affair.” He acknowledged the relatively new concept of paying for in-car digital services but emphasized that a noticeable shift is underway. “Although it will take time for OEMs to convince the public of the value of these services, it’s encouraging to see younger drivers—so-called digital natives—willing to invest in them.”
In essence, as the automotive industry continues to embrace digital transformation, the interplay between consumer willingness to pay, data security concerns, and OEM strategies will be critical in shaping the future of vehicle connectivity.