Some items on our site have recently moved. Visit our News Hub for selected articles, special reports, podcasts and other resources.
Carmakers cautious with data monetization as connected services grow
04 February 2022 23:11 by Xu Yuan, Mike Swift
As Big Tech continues to face a regulatory backlash from years of unchecked harvesting of data, carmakers — who are about to unlock the huge potential for personal data collected through cars — are choosing a more cautious, consumer-oriented approach.
Connected cars are poised to offer new data-driven features for drivers and their driving experience. From highly personalized in-vehicle entertainment to biometrics-based features that might detect a driver’s mood or level of fatigue, “the fun is only starting,” Barry Napier, chief executive of Cubic Telecom, a contractor that supplies connected software to cars, said at a panel* on the potential of vehicle data.
There are risks as well as opportunities in the growing access to highly personalized data about drivers and their vehicles. As traditional carmakers increasingly embrace software-based services by accelerating their product cycle to stay current with digital services, representatives of Toyota, Kia and Hyundai say they are conscious of potentially severe consequences if data is handled in a reckless, short-sighted way.
Marcus Welz, vice president for smart mobility at Hyundai who previously worked in the tech sector, doesn't think the automotive industry should adopt the data-monetization model that has been prevalent in the tech world.
“When we talk about data, a big buzzword in our industry is data monetization,” Welz said. But "if you think about the tech industry … there are business models which are really based on collecting data and selling data. And I don't know whether this is the way we need even to think in an automotive world.”
The view of executives such as Welz suggests carmakers have well noted the reputational harm and regulatory costs that companies such as Google and Facebook are facing after decades of unfettered collection of user data to target ads. Google said this week that its legal costs in the past year alone had grown by $1.7 billion, while Facebook also reported a significant rise in legal costs in its year-end earnings report this week.
Unlike social media platforms and search engines, however, carmakers will be mindful that the purchase or lease of a car isn't free to consumers.
Need for direct benefit
Hyundai’s Welz, formerly the CEO of platform-as-a-service company Bytemark, said it is important for carmakers to use the data they collect to create “really powerful features” for customers.
Mark McClung, deputy COO of Toyota Connected, said personalization of the vehicle experience, enabled by data, could backfire on carmakers if they see data harvested from cars as only a means to bolster their revenue, such as through targeted advertising. Companies must show a direct benefit to the customer experience, he said.
Using data to target ads “just has [benefits] for monetization activities,” McClung said.
“It might make a buck today, but it's not going to create the lifelong customer that you need. And that's why everything has to come back to enhancing the person's experience in and out of the vehicle,” he said.
McClung stressed the importance of transparency in processing data generated from people’s cars as a way to build consumer trust.
He gave the example of a function Toyota recently added to its mobile app called "privacy portal." The app shows customers what data is being used, which third parties are using the data, how data is being used, the value to customers, the long-term expectations, and the ability to turn data-processing on and off. Toyota decided that to build trust with drivers, it would give consumers as much detail as possible on how it uses the data it collects.
Cubic's Napier said the ability to personalize services is the key piece that many car companies fail to see as their ability to pull data from cars grows. He said focusing on the customer and user experience is the right way for data monetization and will bring sustainability.
The industry agrees that there's huge potential for data generated from connected cars with use scenarios including insurance, finance and predictive maintenance, as well for data generated from communication between vehicles and infrastructure, but transparency, values for customer and sustainability are vital.
Car users are willing to share their data with original equipment manufacturers, or OEMs, to have better, more personalized experiences, and may even be willing to do that for activities that don't directly benefit themselves but have a positive impact on communities or society, according to panel members.
McClung gave the example of using vehicle data to identify missing children. “As long as we can show the value of how the data has been used and continue to be very transparent on who's getting that data, how it's being used, the value to societal impact, or even long term quality in the vehicle, I think we can use the data [even] if it doesn't directly benefit to that customer,” he said.
Olivier Pascal, senior manager for connected cars at Kia Europe, said that the company found some customers are willing to support the community and to share their data when they know it will benefit a greater group of people — potentially including themselves. He cited the example of traffic optimization.
The connected car sector is still in early stages. “I don't think we've got it all figured out yet. I think the industry will change tomorrow and it's going to change a year from now,” McClung said.
But the industry consensus is that carmakers’ practices, from data use to collaboration with tech companies such as Google on in-vehicle software, should be dictated by what customers want.
Consistent, good practices across the industry are also important to encourage customers to adopt connected technologies.
“Accessing the data in the right ways and having a shared language across the OEMs is key. Because then if everybody is buying into exactly the same thing, the rules will apply and people will use it in an ethical way,” Napier said.
“There's a few bad actors out there,” McClung said. “It's out there and it's on the customers’ mind. So we have to do a better job as an industry in providing the transparency.”
*The Potential Value of Connected Data, Reuters Events, Feb. 3, 2021,
No results found