Regulating future mobility solutions

In-vehicle connectivity is not a new trend. Nearly 40% of European automakers (OEMs) already offer an embedded connection within the vehicle and by 2025 it is expected that every car sold in Europe will be connected to the internet. This connectivity has been mandated by the European Union’s eCall mandate which, since April 2018, has required that all new cars and light vans are fitted with an embedded SIM that enables an automatic emergency response call in the event of an accident.

Many OEMs’ have tried to build on this functionality by developing a range of connected features, including navigation, infotainment and concierge services, with the aim of gaining extra revenues from customers subscribing to their proprietary connected car ‘platforms’. More recently, automakers have adopted a “freemium” model that sees them provide consumers with complimentary access to embedded connectivity. This change in strategy has been precipitated by poor activation and retention rates for vehicle manufacturers’ own paid-for connectivity services. By building connectivity into the price of the car, much larger quantities of vehicle data can now be collected and monetised.

The user experience of digital features in a car is still a key differentiator in the buying process, but OEMs are now placing greater importance on the internal benefits and indirect revenues that vehicle data can bring.

Automakers can use vehicle data to help them hit important reliability or quality KPIs whilst also making the same data available for third parties to purchase so that they can enable their own set of use cases. In the case of rental and leasing companies, vehicle data can bring a wealth of operational and asset management benefits.

Data is frequently described as the ‘oil of the automotive industry’, supplying huge benefits for those who can put it to good use. The comparison to extractive industries does not end there, with automakers consistently referred to as ‘sitting on data goldmines’.

For OEMs, getting to a stage where a continuous flow of vehicle data can be realised has required huge expenditure in technology (e.g. vehicle electronics, over-the-air updates and data analysis), operations (e.g. marketing, CRM activities and dealership training) and legal frameworks (e.g. data privacy, security compliance and security measures). Having invested in the development, operation and maintenance of connected car platforms over many years, automakers now believe that they have a right to control and monetise this data ‘resource’.

Innovation and competition

It is very difficult for OEMs to differentiate their connected services when they are working with a limited number of software and hardware suppliers that are very quick to replicate and commoditise any new features or use cases that emerge. OEMs are now investing heavily in new technologies such as artificial intelligence, autonomous safety features, predictive maintenance and e-commerce services in a bid to assume market leadership.

Regulatory requirements including the eCall mandate and the General Data Protection Regulation (GDPR), which heavily scrutinises the collection, processing and storage of personal data, have given automakers less room to innovate and differentiate themselves within the marketplace.

Vehicle manufacturers are also competing with consumer electronics giants including Amazon, Apple, Google and Facebook. These companies have the financial means to invest in emerging technologies and are much better versed in data processing, analysis and storage. In the last few years we have seen OEMs acquiesce to the screen duplication systems of Apple CarPlay and Android Auto on the back of consumer demand. As a result, automakers face a very real battle over the coming years for the continued control of data coming from vehicles.

Data regulation and protection

Data protection regulation was overhauled in May 2018 with the introduction of the new General Data Protection Regulation (GDPR), applying tougher rules and penalties over how data is collected, stored and used. The Information Commissioner’s Office has yet to produce specific guidance for the automotive industry but GDPR will impact upon all BVRLA members.

Competition law policymakers favour a ‘light touch’ approach to legislation which supports innovation and helps businesses to thrive. The BVRLA believes that many sectors will suffer if legislation does not catch-up to create an open and fair competitive environment for all parties in the connected vehicle supply chain.
The BVRLA is collaborating and managing conflicts of interest and tension within the supply chain to realise the full potential of connected vehicles.

Real clarity over the impact of GDPR in the wider fleet sector will most likely only become apparent as the new regulation is tested in court. This uncertainty has already led to some companies shelving business plans that were reliant on driver profiling information. European motorists organisation, the FIA, believes that “almost all car data is personal” due to the ability to combine numerous data sets to infer identity. The BVRLA is acutely aware that drivers must be allowed to control use of and access to their data.

In addition, some BVRLA members remain committed to using OBD-based aftermarket telematics devices or ‘dongles’, but have expressed concerned about the prospect of automakers reducing or blocking the data currently available through the OBD port as a security and privacy measure, in response to highly-publicised vehicle hacks and concerns over GDPR.

Access to data

Operators are also exploring the opportunity to work with OEMs and their embedded vehicle platforms. These relationships are at an early stage, with frustrations around the lack of understanding of the vehicle rental and leasing sector’s business requirements and use cases. There are also concerns about the cost of data, particularly if the alternative routes for accessing this information are gradually closed off.

Regardless of the approach taken, the BVRLA firmly agrees that allowing OEMs to have monopolistic control of vehicle data would lead to ‘market distortion’. Data supplied to fleet operators and their aftermarket service providers via an OEM-controlled gateway must be provided on the same terms (timing, quality, format, cost) as the manufacturer itself to ensure fairness and equal opportunity for the entire automotive supply chain.

The group is designed to support the BVRLA’s policy work in this area by members providing expertise, knowledge and case studies which demonstrate how members are adapting their business models and overcoming potential obstacles to meet future mobility challenges. To get involved contact BVRLA Senior Policy Advisor, Catherine Bowen