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How Mobile is Changing the Car Economy

April 20, 2016

Every other announcement within the tech-focused circles goes that mobile-automotive partnership really holds great potential for the future, which exactly means a leap towards the advent of connected cars. Being a critical challenge on the worldwide consumer electronics agenda, connected vehicles require an exceptional tech maturity, advanced risk management, and a carefully vetted business strategy more than any other component of the IoT environment. So the chances are that today’s conventional business and sales strategies would soon become no longer feasible. In the meantime, we witness them upending one way or the other due to the “all-mobile and connected” fever. Let us then contemplate what kind of changes are just around the corner from the car ownership and pricing perspectives.

From Car Sharing to Autonomous Driving

Car Sharing


Much like the cloud that’s linked to vehicles through semiconductor chips, wireless tech, mobile apps, and onboard computers, the car itself is about to become a part of readily available public infrastructure tailored to user needs. The widespread adoption of manifold car-sharing services speaks for that like nothing else.Having examined a pile of car market-focused researches and forecasts, we realized that mobile-powered street rental services like Zipcar, DriveNow, and car2go were sort of a first shot in the battle for car sharing. The next wave hitting the market gave the world a bunch of ride-sharing taxi and carpooling front-runners that quickly gained intense popularity. We surely mean Uber, Sidecar, Lyft, and others. As of now, the highest expectations are all about autonomously driving cars. Giving a fresh start to the next-gen car-sharing incentives, the advent of driverless vehicles is set to be a true milestone for the automotive industry.

Get a Load of That: New Car Pricing Approaches

From a customer standpoint, an increasing diversity in the car sharing sector along with the oncoming self-driving vehicles era both seem to be good news. The same could hardly apply to the car industry decision makers. It is them, not their target audience, who are to overcome all challenges due to the global shift in business order. Along with a plethora of unique opportunities springing from the new ownership models, car sharing and smartphone-to-car connectivity entail major changes in monetization approaches. Therefore, let’s try to comprehend the new pricing strategies that carmakers get armed with to drive maximum value. Seems like the trick is to offer as many flexible payment options as possible, all in line with specific customer requirements.

Sales Agreement


Today’s pricing programs may include not only conventional payments by instalments or in a lump sum, but such options as an all-inclusive flat rate or even a novel pay-per-use scheme. Thus, introducing a brand-new model, Citroen CEO explained the underlying difference between the financing approaches. The all-inclusive contract covers a 3-years’ loan of the car, 45,000 kilometers mileage, tech service, and insurance. The pay-per-use approach adherents instead capitalize on paying for the use of the car only, meaning that they pay a fixed monthly rate (lower than the all-inclusive one) along with a fee for the exact distance driven.

The story goes that there’s an obvious appeal and perhaps a considerable demand for mileage-pegged car loans: irregular or low distance drivers unwilling to buy cars would definitely appreciate the offer.

Mobile vs. Automotive: a Blamestorming Session

Given that car manufacturers will soon intensely struggle to win the mass mobility and connectivity race, the best way for them to make it is to plan ahead. As of now, the tendency is to seek partnership with forward-looking mobile industry players, build closer customer ties, and create new revenue streams. Both sides participate in the initiatives like the GSMA’s Connected Car Forum, combining their efforts to form an interactive environment for sharing expertise. Alongside a considerable “smartness surge” all across the automotive market, we witness ride-sharing services operating by an Uber-like principle, fleet management solutions, mobile valet parking services, and the like getting in on the trend.

Gorilla Safety

Seems like it’s time for us to sit back and flip through headlines going like “Chrysler plans to connect cars partnering with Sprint Nextel” or “AT&T becomes GM’s mobility fellow”. But the rest is not silence, by no means. All across the tech-focused reports, researchers are fountaining with calculations and forecasts. Among the major clashes they see the difference between the automotive and the mobile industry lifecycles. Pretty obviously, carmakers will not manage to keep up with operating system upgrades every other week or a steady flow of new apps.

Another tech constraint is web connection itself: should it be embedded or brought-in? Car manufacturers believe that a built-in system ensures stronger performance stability, while mobile operators insist on a brought-in smartphone integration and consider it as the only cost-efficient option. Incidentally, who’s going to cash in on providing data access and roaming? These are definitely not customers. For a driver it’s much easier to just tether personal phone to the car via Bluetooth or USB cable and keep it at fingertips all the time.

Connected Car


Quite a number of intricate issues within the car economy makeover are still lurking in wait. Which one is worth a particular attention?

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