Connected Vehicles in India: Industry Transformation, Barriers and Strategy

connected vehicles in india future

For a long time, the Indian car industry’s competitiveness has been centred on purchase and maintenance prices, fuel efficiency, and engine power. The old standards of competitiveness are shifting as hardware becomes more commoditized and software-based services become more premium.

This transition is being driven by technological advancements and innovation, particularly by tech behemoths like Amazon, Apple, and Google. Consumer attitudes about automobiles are being influenced by new competitive factors such as linked features and services, vehicle design, and interior user interface and experience.

This rivalry is also being accelerated by the increase of electric vehicles and the development of driverless vehicles. Connected automobiles and services will, without a doubt, be a key distinction in our time.

The automobile sector is being transformed by connected cars

According to a global Capgemini report, Connected Vehicle Trend Radar 2: The Road to Profitability for Automotive Connected Services, by 2023, more than 350 million connected vehicles will be on the road worldwide, accounting for nearly 24% of all automobiles, up from 8% in 2018. Linked vehicles were first introduced in the late 1990s when General Motors began selling its OnStar service to consumers. As technology has advanced, connected cars have increased dramatically.

In the next several years, India’s connected automobile industry is predicted to increase by more than 20%. In India, all luxury and premium automobile OEMs provide linked services for all models, although the services provided by OEMs differ depending on whether they produce for the mass market or not. Across non-luxury, non-premium OEMs, the availability of connected services ranges from 20–70 percent (as a percentage of automobiles sold with TCU-/dongle-based linked services as an option). Given the value-conscious nature of the Indian market, several OEMs provide free connected services for up to three years.

Infrastructure, service providers, drivers/passengers, other vehicles, houses, and OEMs/dealers are all touchpoints where connected automobiles have generated huge possibilities for automotive participants to tap into new sources of revenue. Across the value chain, there are opportunities to increase revenues, lower expenses, and reduce working capital. Many of these new possibilities will need the creation of new business models.

Across the value chain, connected services are also causing a dramatic change in value pools. And as a result of this transformation, new entrants are increasingly focusing on specific, and in many cases tighter, portions of the automotive value chain. Mobile, cloud, analytics, and computing advancements have paved the way for these newcomers. It’s no surprise that technologically powerful firms like Apple, Google, Amazon, and Otonomo are spotting and pursuing such possibilities…and posing a challenge to incumbents.

Obstacles in the path of the connected trip

Despite the vast revenue prospects associated with linked services, research suggests that customers are still unwilling to pay for the connected services that OEMs provide. According to research conducted by Capgemini, 44% of consumers do not have linked services in their automobiles. And just 51% of people who have them use them.

According to user feedback from India, the perceived value and quality of connected services vary by OEM — the more premium the OEM, the better the connected services; however, the greater mass-market penetration, the lower the perceived value and quality.

Many OEMs still regard software-based linked services as a “twin” of their hardware products, with the OEM acting as the only supplier of these services in the middle. Because of the considerable disparities between the creation and supply of services and those of automobiles, this approach must alter. The lack of innovative methods of working has resulted in the creation of linked services that continue to fall short of client expectations.

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