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Carmakers in pole position to lead the personal data race

Johannes Stock • Global Head of Design

Facebook’s ongoing Cambridge Analytica scandal has shone a light on the darker side of the data economy. Five months after the full scale of Cambridge Analytica’s harvesting of user data was revealed, the scandal is still grabbing headlines.

The fall-out for Facebook has been painful. Not only has the social network unwittingly painted itself as the villain of personal data - something it will suffer from for years to come - but it has also tarnished the broader market in the eyes of many consumers. There is now a growing need for a ‘good guy’ to emerge who will champion the rights of consumers and show the world what a healthy data economy could and should look like. Automotive brands are in pole position to take up that role.

Big data – who’s in control?

The volume and value of personal data online has grown exponentially over the last five years – so much so that The World Economic Forum has described data as the “new asset class” – on a par with oil. Consumers to date have arguably been passive in their relationship with brands over their data, often turning a blind eye to how companies have extracted value from it. Thankfully, this is beginning to change.

With the headlines generated by various data scandals and initiatives like DECODE, people are waking up to the innate value of their personal data and the potential for it to be abused. And because of new legislation like GDPR, consumers have more opportunities to defend themselves against data hungry corporations.

Looking further ahead, consumers will likely become "suppliers" in the data economy, actively demanding that companies deal transparently with their data and expecting a concrete countervalue in return from brands. There are already start-ups helping consumers to do this. Citizenme for example allows consumers to collect, store and obtain valuable insights from their data and Billmonitor analyses consumer phone bills and helps users select contracts individually tailored to their needs.

Data in the driver’s seat

This new relationship between brands and consumers represents a key opportunity for the automotive sector. Data, as well as the customer services it helps to underpin, is going to become more and more important for auto brands. A PwC report predicted that by 2030, 20% of the automotive industry's profit potential will come from data-driven service offerings rather than new car sales.

It’s a trend that’s being replicated across many sectors. Where once the brand itself was the most valuable asset a company owned, brand loyalty will increasingly be built on the long-term individual services a company can offer its customer.

But car companies will need to learn from Facebook’s mistakes or risk killing the golden goose before its long-term value bears fruit. Taking the usage of data seriously, there lies a golden opportunity ahead, if auto brands can worry less about how much money they are going to make from consumers’ personal data and instead start fighting much harder for their data rights.

If auto players are to seize the high ground as the good guys of the data economy, the aim must be to strengthen their trusted positions by offering much greater visibility into their use of data. Consumer research from Label Insights found transparency was the top factor behind brand loyalty, with 94 percent of people saying they'd be loyal to brands that are completely open.

Uber learned this lesson the hard way following its own high-profile data scandal. Since then, the company has shifted its approach and now offers a transparency report to all customers and asks third parties to provide warrants and/or court orders to access any data. Uber was recently awarded five stars in The Electronic Frontier Foundation’s annual "Who Has Your Back" report, which evaluates companies on their user privacy standards.

The data-value exchange

Just as important as data transparency though will be creating a healthy value exchange with customers that treats them as equals. Auto brands must enable customers to profitably contribute their own personal data into the ecosystem to get the best possible personal benefit – for example, allowing them to pay for digital services with their data rather than money. There are start-ups and platforms like Datacoup that already facilitate this kind of exchange.

With data flowing more easily between the brand and its customers, a host of value-added service opportunities begin to emerge. Most cars today come fitted with a multitude of sensors that produce statistics on everything from tire pressure and fuel consumption to how hard an owner brakes or accelerates. All this data can be effectively used to deliver useful services to customers based on their driving habits. McKinsey & Co. predict vehicle data could give rise to a $750 billion market by 2030.

The opportunity to explore new types of innovative partnerships that deliver a more holistic service is also emerging. BMW’s partnership with Parkmobile, a mobile payment platform for parking services, is a case in point. BMW drivers are now able to access Parkmobile’s system from their cars and plan and pay for parking spaces before setting off.

Redefining the auto business model

Further up the chain, the personal data economy allows brands to create totally new value propositions, with the potential to disrupt entire markets. For example, armed with rich vehicle and driver data, carmakers could launch new insurance products and use the data insights co-generated with customers to offer helpful suggestions on how to improve driving and lower the cost of premiums. This would give auto companies a significant advantage over traditional insurance providers.

However, reaching this ambition should be considered a long-term play. Amazon invested millions of dollars in creating the infrastructure and only in the second phase did it begin launching a managed services offering. Building the infrastructure will require carmakers to redefine the role of data in their overall service strategy and develop a vision that prioritises the customer above all else. Auto brands were some of the first to implement data platforms as the foundation of a data business. Now they should move away from the engineering approach they took to build it and embrace a more customer-centric outlook to utilise it for more complex services.

Creating and maintaining an ecosystem that enables customers to be a part of the data value creation will also be crucial. This will involve launching new ventures, start-ups or services that boost trust while encouraging and incentivising users to share their car/mobility data. Blockchain is now being touted as a possible technology for facilitating this more decentralised ecosystem. Next, a brand will need to build the underlying system or data platform. To gain speed and orchestrate an emerging ecosystem of partners, brands should adopt cloud-based, open-source technology and use a simple API to allow strategic partners to easily plug in to the system.

With the infrastructure in place, carmakers can launch lighthouse initiatives that demonstrate the potential to the wider organisation, start generating new revenue streams and amplify existing ones. After that, the amount of data a carmaker can generate and the potential new services it can launch become virtually endless.

It’s a complex race, but the companies that can get ahead and learn to put the consumer first will be able to make endless use of unlimited amounts of data and bring profit to new levels. Auto brands must move into the starting grid and show the world that the data economy is about so much more than just Facebook.

Want to gain more insights? Then head to futurice.com/automotive, to learn more about our approach to the changing world of the Automobile industry.