The Connected Car Data Monetization Landscape

Car manufacturers generate revenue through vehicle sales and post-sale services. As newer business models such as mobility-as-a-service and vehicle-as-a-platform evolve, additional revenue streams are emerging. Whereas conventional businesses generate nearly 90% of revenue, over the next decade, this share is expected to shrink to about 70%. Vehicle-as-a-platform is relatively new with a below 1% share in revenue. However, it’s expected to grow 1.3x year-on-year over the next decade, making it the fastest growing automotive business segment. It comprises two revenue streams: data monetization and platform-as-a-service, the former being the focus of this post.

Car data will gain increasing prominence on the automotive industry landscape, due to its high monetization potential. Use cases are categorized around few value creation drivers – direct revenue generation, cost savings, and safety augmentation, adding to a potential incremental revenue of USD450 – 750 billion by 2030.

Leading players are generating revenue through the sale of products/services, tailored advertising, and the sale of data to third parties.

Honda, with driving data on about 3.7 million vehicles, provides that data to commercial facilities such as electric boards displaying road conditions, at about 4 million yen ($36,000) a month. It has partnered with location-data startup Nightley to analyze drivers’ behavior. The data is being tapped to determine consumer demand, gauge the effectiveness of advertising and for planning retail outlet expansion. Monthly subscriptions start at 200,000 yen.

Toyota Motor has teamed up with NTT to develop technology that controls the flow of traffic in an area after detecting congestion. It is constructing infrastructure to utilize the data and monetize it through partners, such as Uber Technologies. The automaker has collaborated with Japan’s Aioi Nissay Dowa Insurance to analyze driving data and offer discounts on auto insurance.

Wejo, a British startup backed by General Motors, operates a trading platform for connected car data. It collects real-time data from auto companies, processes and provides the information in ready-to-use formats. Sompo Holdings in combination with Microsoft, is investing $25 million in Wejo that will give the insurer a single-digit stake. The objective is to leverage the partnership to develop new business areas and insurance products.

An Israeli rival, Otonomo, runs a similar platform where BMW, Daimler and 14 other automakers are sellers. Data buyers come from insurance, payment, and advertising industries, as well as local governments. Otonomo takes a 35% cut of sales while auto companies pick the rest.

Otonomo’s platforms make considerable changes to the raw data from suppliers to produce legal information that is ready for sale, complying with over 15 different privacy regulations based on customer location. It is focused on six vertical markets—insurance, transportation, financials, vehicle fleets, car dealerships and smart cities. Receiving an average of 4.3 billion data points per day from over 40 million vehicles, at about 110 data points per vehicle per day, it collects over 150 data parameters.

Otonomo has published car data value for key segments, reporting that fleet operators have the largest value at around $25, insurers at $15 for usage-based-insurance applications and car dealerships at $15 per-vehicle per-year. Other segments have lesser rates, typically measured in dollars per million data points. The financial industry pays around $30, smart city projects $40-80 and transportation projects $100 per million data points.

Based on mileages and number of registered cars, the overall market (data aggregators, OEM, Telematics and Mobility players) is poised to grow at CAGR of 200%, reaching $38 billion by 2026.

External monetization of data by insurance carriers is growing due to an increased focus on open insurance. Some already monetize their data, creating newer revenue models. Allstate firm Arity, for instance, is using telematics data to open new markets. By providing valuable insights to motor vehicle dealers and repair shops aside from supplying data to billboard advertisers, connected car data will have a substantial impact on the mobility landscape.

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