Will the Connected Car Give Auto Sales Its Next Big Boost?

In 2015, automakers and dealers saw incredible, record numbers for new car sales, closing the year at 17.47 million units. While 2016 continued the momentum, it looks like sales totals will come in just shy of the record, around 17.4 million. Not too shabby to say the least. So, what’s next for 2017?

According to industry organizations like the National Automobile Dealers Association (NADA) robust sales will continue, but not spike back up to record totals. Many industry analysts are even saying that sales have peaked. However, you can expect a third straight year of 17 million plus, showing that the market will actually be stable in 2017. And this can certainly be perceived as a positive sign since the auto market has seen much worse just a few years back.

Needless to say, we’ll see how this all plays out in the coming year. With our overall U.S. economy expected to grow – 2.6% in GDP and around 150,000 jobs per month – auto sales will benefit. Another factor to keep an eye on are gasoline prices, which have been low enough recently that the sale of SUVs and crossover vehicles have surged past sedans. And last but not least, low interest rates have also helped up until this point, but hikes are coming in 2017, so we’ll see how that works out.

Now that we have a better picture of where we are and where we’re going in 2017, you may wonder what’s next? What will drive sales to the next level?

Like many industries, technology will likely be what’s next. More specifically, the Connected Car.

Actually, connectivity has been around for years, just not in a fully realized format. Navigation, cars with WiFi capabilities and driver assist functions are all part of the current Connected Car universe. Some automakers offer embedded connectivity which uses a built-in antenna and chipset and others utilize tethered connections that enable drivers to connect to their cars via our smartphones (Bluetooth).

As for the capabilities of the Connected Car, they fall into four key categories:

  • Navigation – Real-time weather and traffic, as well as alerts on optimal depart times
  • Diagnostics – Vehicle health reports, software updates, apps for teen drivers and more
  • Safety – Sensors for traffic, parking and collisions, roadside assistance, vehicle tracking
  • Infotainment – Music, WiFi hotspot, voice commands, location-based help and offers

With new advances in all of these areas just around the corner, the possibilities are truly endless. And eventually, it will lead to a rise in autonomously driving vehicles where drivers become passengers and are able to engage with their cars in ways that you might never imagine.

All of this means that the vehicles consumers are buying now could be replaced far sooner than they typically would – instead of keeping it for 10+ years, they may want to trade up. And for those buyers who will simply be on the hunt for a new vehicle to replace their 2012 Corolla, the lure of tech will be strong. That means the demand for a Connected Car could certainly give sales its next big boost.

In fact, according to BI Intelligence, Business Insider’s premium research service, 94 million connected cars are expected to ship in 2021. That’s 82% of all cars shipped in that year. Compared to 21 million connected cars in 2016, that’s a huge jump and major potential for sales.

So, what is the Connected Car hype all about? The connection is a gateway for both the provider and consumers. It’s a win-win. Let’s look at a few examples:

  • Internet connectivity facilitates software updates, which make recalls easier and more efficient.
  • Data on how consumers use and drive cars can be analyzed to improve the next year’s model, giving consumers exactly what they want and automakers vehicles that sell better.
  • Driver data can also benefit dealerships as it details when service alerts are needed for a car, allowing the dealership to be a partner to the consumer and helping the consumer to keep their car better maintained.
  • Automakers can also cross-sell products and services to customers, which is more to their benefit, but for loyal customers, it can be perceived as a positive way to build the relationship.

Of course, this is just the tip of the iceberg and the race to capture market share is on. Along with automakers, you have a number of other players in the game, from all the major wireless carriers to tech companies like Google and Apple. Even Amazon and Pandora are vying for space on touch screens in current and future Connected Cars. And when autonomous vehicles become a reality, Uber hopes that their own branded vehicles will become the new norm for ride-hailing and taxi services.

With 2017 right around the corner and claims of a peaked auto sales market, the outlook might not seem all that exciting. But when you step back and look at the bigger picture, one that incorporates booming and dynamic Connected Car technology, you’ll see that the future is on track to be anything but status quo. And we’re very excited to see how it evolves.

Want to learn how Spireon can push you into the connected car world? Contact us today.

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