Shipments of new connected vehicles will decline at least 15 per cent in 2020 due to COVID-related supply and demand disruptions, according to global tech advisory firm ABI Research.
The company, which is based in New York and has offices in the United States, United Kingdom, and Singapore, said lower in-dealership auto retail sales are the cause of the decline in shipments of both connected vehicles and connected car platform subscription growth. They also anticipate a decline in OEM research and development.
“In the short term, a few OEMs may temporarily postpone immediate projects that add additional value to customers to concentrate their efforts on actions to reduce costs of ownership and to make their supply chain resilient and agile,” said Maite Bezerra, Smart Mobility and Automotive Analyst at ABI Research. “However, investments and adoption of connectivity packages should remain constant due to standard fitment, such as eCall.”
Automakers with less liquidity will be in a different position than larger OEMs that have more substantial investments in in-house solutions; they will have to give preference to providers offering turnkey, low-cost solutions that check off the most basic regulatory requirements.
Larger OEMs on the other hand will be in a better position to migrate to third-party offerings and benefit from those lower costs.
On infotainment, OEMs may be looking to leverage partnerships and collaborative work as it is considered more cost-effective. They may also give up control over Google or Amazon solutions offered with their systems to reduce costs, according to ABI Research.
Concerning infotainment, off-the-shelf solutions from providers like Google and Amazon are likely to benefit from the OEM situation, as automakers may be willing to lose control over their systems to decrease costs. OEMs will also be looking into leveraging partnerships and collaborative work, which is more cost-effective.
“With the decrease in new vehicle sales, which was already in decline before the COVID-19 outbreak, automakers will have to find strategies to decrease the churn rate of connected services and maximize revenue from registered vehicles,” said Bezerra.
Some OEMs and other players in the connected car space are also trying to track and trace applications using car connectivity to help countries fighting the COVID-19 pandemic. Some of the providers and vendors include HERE (with ENEL X, providing things like free estimation movement in Italy), Mojio (tracking the efficacy of social distance measures in the U.S. and Canada), and TomTom (tracing the lockdown efforts).
