Smart phones on four wheels

It was at a recent conference in New Delhi when Enrique Penalosa, the outspoken critic of cars, said, “Human life is permanently threatened by cars and today it’s normal for children to grow up feeling at risk being killed by a car.” Penalosa has been credited with the creation of model townships and bus corridors as Mayor of Bogota, Colombia.

By 2025, the world auto market would have grown to 100 million cars annually or 270,000 new cars each day. Now take into account the ever increasing number of people moving into urban areas and this throws up a picture of choc-bloc traffic, lack of space and quality time. Was there some truth in what Penalosa said and does this, in turn, mean alarm bells for the auto industry?

For the moment, this doomsday prediction seems highly unlikely to happen. The auto sector has already received a lifeline from digital connectivity and smart phones. Carmakers are racing against time to develop technologies that will keep vehicles connected at all times with infrastructure, drivers, other vehicles and third parties to stream information and services.

Dieter Zetsche, CEO of Daimler, presented the F015 Luxury in Motion autonomous vehicle concept at the Consumer Electronics Show in Las Vegas. It is an auto robot that not only stops at a hand gesture but also creates an optical illusion of a zebra crossing, telling the pedestrian to cross first. Simultaneously, rear LED lights inform the vehicle/driver about the pedestrian crossing. This is a car that can meet social obligations and teach people traffic sense.

Let us examine what the world could witness when these auto robots become a reality. While the technology already exists, experts predict the industry is in for disruption as automated drive assistance systems, connected cars and autonomous cars (robots) will form new transportation modes threatening the core business models of OEMs.

A recent report by KPMG titled Me, My Car, My Life suggests that as the value of the car will increasingly reside in software and electronics, sales will rely not on horsepower but processing power. This, in turn, will offer new alternatives to ownership. The report projects a decline in US household car ownership with a rise in mobility-on-demand services like car sharing or taxi apps like Uber.

Why own a car when its value slides by 11 per cent the moment it is taken out of the showroom and then stays idle for 90 percent of its time? It makes sense for OEMs to provide new alternatives wherein a single car can handle mobility demands of multiple users and is more efficient than a household car. This also ensures better use of urban space and the environment.

Over the last two years, companies such as Google, Tesla and telecom service providers have come forward to support and develop competing products which could be termed ‘smart phones on four wheels’.

However, deployment of a connected car concept in reality is quite complex with companies having only scratched the surface. The focus thus far is infotainment that provides quick access to basic phone functions, planning route/maps, offering music and Wi-Fi connectivity. In the long-term, mere infotainment will not be a compelling enough reason for customers to pay for a service. New ‘killer applications’ will be developed that will attract them and also create a viable business model.

A case in point of such a service provided by OEMs is to remotely switch the heating system as the car approaches home. This has caught on in the Nordic regions. Insurance companies in Europe are expanding user-based insurance (UBI) schemes this year that lower premium payments by a whopping 40 per cent. The premium is linked to the actual number of hours driven recorded onboard by the car and the information is relayed back to insurance companies. Over 25 million subscribers in Europe are expected to opt for UBI schemes by 2020.

Since parking a car is time consuming and cumbersome, a smart parking service could do the trick in reducing driving/congestion and boosting revenue for municipalities. Ecommerce is another application that can help reduce logistics roadblocks and streamline truck movement.

In addition, companies can use connectivity like a free public ‘eCall’ in Europe or DSRC (dedicated short range communication) in the US to make driving safer. These will provide immediate accident assistance and also help other vehicles in the vicinity to change their travel routes. Likewise, vehicle to vehicle and vehicle to infrastructure communications will help develop applications to travel safely at an intersection.

Where does this leave India and will consumers in this price-sensitive market be willing to pay? To answer this question, one only needs to look at vehicle thefts which saw a 59 per cent increase to 22,223 robberies last year. Today, criminal cases are largely cracked using smart phones and insurance companies can offer UBI-based applications with smart tracking of vehicles in case of thefts. Going forward, we should expect solutions to come from within India especially with the emphasis on developing smart cities. Entrepreneurs will be motivated to develop applications and the public-private model could evolve to creating information highways across the country.

The writer is AVP, Symphony Teleca

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