“Most maps, including Google Maps, have not yet mapped the area.” – The Huffingtonpost (Sept. 2012) describing the Angelika Film Center in the Mosaic District of Merrifield, Va.

Can automakers, dealers, Tier One suppliers, and automotive app developers afford to continue requiring customers to pay ($199!) for annual map updates? My latest navigation adventure highlights the fact that the time has arrived both for “free” lifetime map updates in the car and more creative means for delivering monthly, weekly, DAILY! map updates for on-board navigation systems.

The map in the car has become the spinal cord for safety, powertrain, security, infotainment, and navigation systems.  Nearly every advanced system in the car requires access to location information – preferably on-board.

Increasingly, the on-board map is becoming a shared resource both for advanced driver assist systems and contextually aware infotainment systems.  For both of these cases context is determined, in part, by location along with weather, traffic and driver status among other things.

But there is an even more urgent issue, that I will return to, and that is the danger inherent in a driver following navigation instructions with an out of date map.  Few things are more distracting or disturbing than being told to make turns onto roads that don’t exist to enter freeways that have been bypassed.

All of these elements were brought home to me this past weekend.

My wife and I were trying to get to the relatively new Angelika Film Center in the Mosaic District of Merrifield, Va. last Sunday.  It was our first trip to this theater, so I was confident that neither the address nor the name of the Theater would be available in the on-board navigation system in my 2013 BMW 3 Series.  (This assumption would later prove to be accurate.)

To get to the theater I used Fullpower’s MotionX GPS navigation app on my iPhone 4.  MotionX is one of the most popular navigation apps on the iPhone.  Unfortunately, on this occasion, it insisted on directing my wife and I to a destination five miles away from the theater’s actual location.  (UPDATE: This was due to the fact that the Nokia map data was missing the information for my destination, according to Philippe Kahn, CEO of Fullpower.)

My wife then proceeded to look up the theater in the on-board POIs, with no success.  We then obtained the address online and attempted to enter it directly into the navigation system – ignoring the fact that the system in the car will not accept addresses that are not yet in the system.  So, in this case, we entered the street number closest to the actual address of the film center.

Half an hour after the movie’s start time we arrived at the cinema.  We accepted our fate and settled into a round of shopping and dinner and went to the next show – making for a later evening than originally planned.  (At least the toney establishment had toasted caramel popcorn!)

It was a minor event at the close of an otherwise uneventful weekend, but it highlights a huge problem that remains unsolved – on-board map updates.  (Yes, there are a few ways this unfortunate incident might have been avoided such as: a) using the Sendtocar function, which for some reason has not been working for my car; b) use the on-board Google Local Search to obtain the address – just checked and this would have indeed worked; c) ring up the BMW Assist Concierge service and have them download the address; or d) try a different mobile navigation app.)

Anyone who has been through a similar experience will appreciate the minor nightmare of not being able to find a simple destination.  You can imagine my wife and I pulling over into parking lots and side streets to double-check the entry and the results and to try a different approach.  I shudder to think about the amount of eyes-off-road time that was required before we found a solution and reached our destination.

But my minor nightmare is a terrifying reality.  Not only is the out-of-date map situation a nuisance, it is a driving hazard and a customer satisfaction failure.  It is no surprise, then, that JD Power identifies navigation systems as a source of ongoing and mounting complaints for car owners.

While JD Power is focused primarily on the user interface, it is time for the industry to confront the fact that every car being sold is going out the door with an obsolete map.  An obsolete map on board is an invitation to catastrophe for the car dealer, the manufacturer and the customer.  Yet no one seems especially worried or concerned.

The problem is most obvious in emerging markets where new cities and roads are proliferating on an almost-daily basis highlighting the limitations of digitized map in the car.  It is no wonder that Strategy Analytics’ research with navigation users in China has found the typical driver using multiple navigation systems - phone, on-board and portable navigation device – to get from point A to point B.

The good news is that the leading map makers – TomTom and Nokia – have progressed their map-building processes to enable daily if not real-time map updates on a global scale.  Nokia has even taken steps to put more of its surveying vehicles on the road while also providing for crowdsourcing of map data, something TomTom initiated many years earlier.  The problem lies in delivering those updates to the on-board system.

Most consumers these days will use their mobile phones to navigate if a destination is in a new or unusual location.  I will not delve into the shortcomings of mobile phone navigation in a car, but suffice it to say it is popular based on the findings of multiple Strategy Analytics surveys.

Car makers Ford, GM and Toyota Motor Europe have tried with varying success to enable display in the car of smartphone-based navigation instructions.  Ford was first with this approach and has had the most success.

But smartphone-based navigation defeats the integration of the map – the application spinal cord of the car – into advanced safety, powertrain and infotainment systems.  While smartphones can, indeed, deliver a contextual experience to the driver, the on-board map is necessary to properly anticipate workload demands on the driver based on the integration of on-board sensors with map-based and other inputs.

So, smartphone integration, while attractive and a useful car-selling proposition falls short of a fully integrated experience.  But that doesn’t mean the smartphone can’t provide another means to solving this dilemma.

At the recent North American International Auto Show in Detroit, Johnson Controls showed a solution from NNG using the smartphone as a map updating tool.  While the details were not clear – including whether the entire map or just portions of the map will be updated or, indeed, what the cost will be – the concept is spectacular.

Any driver getting into a car ought to be able to update the on-board maps on demand as needed.  Given current connectivity options, the smartphone is the smartest and best solution to this problem.

The fact that Johnson Controls is the first to show this approach publicly reflects the power of a newcomer entering the market.  While NNG works closely with other Tier Ones, such as Harman, it is Johnson Controls that put the concept front and center in its booth in Detroit, although no press release was published.

Based on conversations with competing navigation software providers, the likelihood is that competing systems and solutions will soon be on display.  The bottom line is that, once again, the smartphone represents the solution to a hazardous driving condition, not the source.  At stake is the mitigation of driver distraction, enhancing the driving experience and assuring the highest level of customer satisfaction.

 

2012 will be remembered as the year of usage-based insurance. But in retrospect it is a lot of sound and fury signifying nothing. Is usage-based insurance the silver bullet to simultaneously reduce traffic congestion, carbon emissions and highway fatalities?

The ultimate objective of UBI programs is to modify driving behavior or reward existing good driving behavior. (Yes, I know, insurance companies are looking to reduce churn by rewarding their best customers and stealing their competitors' best customers, but let's look at it from the consumer's perspective.) Some progress was made in 2012, but there is ample room for improvement in the area of on-board/embedded systems, OBDII plug-ins, aftermarket systems and smartphone apps.

So where do we stand at the outset of 2013? 

First, it is important to understand the key objectives of driver behavior modification: 

1.  Increased safety
2. Reduced emissions
3. Increased fuel efficiency
4. Lower insurance premiums

I start the year off in a new 2013 BMW 3 Series with a remarkably distracting BMW Apps iPhone integration (not reviewed here).  In trading up from my 2011 BMW 3 Series I have pleased my wife by moving to remote keyless entry, but disappointed her with a car that has no seat warmers – unlike its predecessor.  Like its predecessor, it also lacks a backup camera or sensors.  (Clearly out of step with the impending U.S. mandate.)

Still, the new car does come with a turbo-charged four cylinder engine and start-stop technology significantly reducing fuel consumption while increasing horse power.  There are multiple sources of feedback around green driving in the car and there is a toggle near the shifter to select driving style – Sport or ECO PRO.

With ECO PRO, the driver can extend the range of the vehicle by adjusting driving style according to cues in the instrument cluster.  It is no surprise that a German car company offers such a function since an hour-long drive on the Autobahn can produce dramatically different fuel consumption – and, hence, range – results based on speed.

A system for discouraging speeding in a BMW is a stroke of genius, particularly for me, given the fact that my record of violations spiked following the acquisition of my first BMW.  (There is no app – not even Coyote or Trapster – that would have saved me.)

The ECO PRO driving mode introduces a series of instrument cluster symbols and signals making very subtle (it IS a BMW after all) suggestions primarily based on reducing acceleration.  ECO PRO also ties into the operation of climate control systems for maximum fuel savings.  The system is even able to calculate and display for the driver the estimated percentage of fuel savings based on the settings selected.  The driver can also control the timing and nature of the driving tips offered by the car.

This system can provide a history of fuel consumption including energy recovery.  And, yes, it can also control the rate of cabin heating or cooling and the output of the seat heater – if there were one.  Similar systems are available from other car makers, but I am most familiar with the BMW offering and it is emblematic of an industry trend.

In contrast to this system of buttons, settings, alerts, icons and statistical analysis, my wife’s Toyota Sienna is equipped with an aftermarket Pioneer Aha Radio which periodically provides an “ECO Graph” of her driving performance.  I personally think my wife is something of a lead foot, but she thinks she is performing pretty well in this report.

Unfortunately, the report appears at random intervals and fails to explain what, if anything, my wife is doing well or how she can improve.  For her, the driving feedback is simultaneously interesting, intriguing and frustrating.  She thinks there should be rewards – anything from gold stars to insurance discounts – associated with her good driving.

There is no doubt that she is correct.  Her driving experiences in 2012 included a brief stint testing Progressive Insurance’s SnapShot usage-based insurance OBDII plug in.  The device annoyed her with loud beeping during hard braking, but wirelessly delivered a graphical presentation of her driving behavior to a Website. (There are a wide range of third-party offerings with Website dashboards charting driving behavior and providing driving tips.)

Progressive offers SnapShot in Virginia, where my wife and I live, but after mailing the device back to the company, the insurer never responded with an evaluation or offer of coverage.  SnapShot claims customers can save up to 30% in the program. 

Whether that is actually true or not depends on how much you trust an insurance company.  Progressive more or less discourages drivers the company determines will not benefit from the program.

My wife briefly tested another OBDII plug-in from a company called GridLoyalty.  Founded by a former Intelligent Mechatronics executive, GridLoyalty promised a range of affinity offers based on driving behavior.  Unfortunately, most of the affinity offers were associated with organizations – such as convenience stores – in the Las Vegas area.  While the device provided wireless feedback to a Website – a la Progressive – there were no offers in Virginia.

In the year past, insurance companies and their third-party partners, crowed about the wonders of usage-based insurance.  Even government regulators embraced usage-based insurance as a tool for reducing driving and, therefore, congestion and emissions.  Studies show that drivers in UBI programs tend to drive less in general and after joining the programs.

In spite of the enthusiasm and publicity surrounding UBI programs and more than five years of market availability there are still fewer than 2.5M users of these systems around the world.  There is good reason for this lackluster consumer response.  The programs offer minimal savings and require a significant surrender of privacy.

The daily relevance of an insurance discount is less a benefit than a sword of Damocles swinging over the head of the driver in case that driver deviates from his or her previously safe pattern of driving.  What is missing are daily rewards and/or penalties.

MetroMile, an insurance startup, is introducing a pay-per-mile based offering that the company hopes to expand to other value propositions such as vehicle service and warranty offers.  The MetroMile offer is a step in the right direction, but falls short.  What is really missing is a more comprehensive affinity program tying vehicle use to offers and discounts for driving-relevant products and services such as fuel, parking, restaurants and tolls.

The MetroMile offer (Company Website: http://bit.ly/ZRHooE) is attractive for its simplicity relative to offerings from insurance companies.  But what is necessary is for local governments, tolling authorities, roadside franchise operators and such to coalesce around wireless payment systems to enable a more broad-based program of driver rewards and, yes, penalties – ie. drive less, save more.

Implications:

Car makers, such as BMW, are already delivering on in-vehicle systems designed to modify driving behavior.  The next step is actually rewarding that good behavior with more than just insurance discounts based on intrusive tracking systems. 

A free cup of coffee, tank of gas, parking space, hamburger or oil change ought to be enough to convince nearly any driver to be willing to share their location information and vehicle data.  Though distracting, BMW Apps does provide smartphone-based vehicle information feedback while also enabling some limited remote operation of the vehicle - illustrating the fact that there is a role for the smartphone in this new value proposition.

And what about traffic management authorities able to reward drivers - from specific neighborhoods and/or on short notice via smartphone apps or other alerts! - for NOT driving on days when high levels of congestion or pollution are anticipated?  Or maybe specific drivers are granted HOV lane access or other driving privileges on demand or for a particular time of day - or for a premium as in the Washington, DC area.  There are clear opportunities for public-private collaboration and/or direct consumer engagement.

Is there a future for usage-based insurance?  Yes, there will always be consumers who will do anything for a discount of any kind.  But usage-based insurance is likely to remain a niche application for the foreseeable future.  That niche role will be a disappointment to governments hoping for UBI programs to provide a market-based means for reducing emissions and traffic.

But if car makers are able to build more effective affinity programs, then UBI programs will benefit from the expansion of vehicle data sharing.  The question is which marketing partners and OEMs will lead the way in 2013 and what will these programs look like.  And, finally, is it possible to retrofit a 2013 3 Series with seat warmers?

The automotive collision repair business in the U.S. grew 3.3% in 2011 to $38.7B, in spite of a decline in miles driven and the number of collisions, according to the latest report from the Automotive Aftermarket Industry Association. Cars are lasting longer, being driven less and getting in fewer accidents, the report notes, citing multiple insurance and automotive industry sources.

The 2012 edition of the AAIA’s Digital Collision Repair Trends: Industry Statistics & Analysis arrives just a week before Telematics Update’s Insurance Telematics event in Chicago. Insurance and automotive industry executives will convene next week to discuss usage-based insurance and the insurance implications of car sharing and EVs, among other topics.

The AAIA is most focused on the concerns of the independent car repair shop industry, of which there were 40,279 as of 2011, down from 46,700 in 2001, according to the report. Insurers and independent car repair shops generally share the same objectives.

Not all car dealers embrace the collision repair business, but for most it is an essential element in their revenue portfolio. Every OEM wants to see its cars repaired with genuine OEM parts. The accident aftercare business is a strategic one for both new car dealers and OEMs and telematics – a topic not covered in the AAIA report – can serve as a lead generating device for the dealer channel.

The study reports that the average number of vehicle miles driven declined in 2008 for the first time in two decades. The total was 2.96 trillion miles in 2011, down 1.2% from 2010. Roadway congestion has also leveled off, according to the report.

The declining rate of vehicle usage has likely contributed to declining collision rates and declining insurance claims, both of which are cause for concern to both insurers and repair shops. Most of this decline is coming in the developed world where more well-equipped cars are available with better educated drivers. In developing markets around the world rising levels of vehicle ownership have brought to the fore issues of security, theft and rising accident rates setting the stage for very different insurance priorities. (Preventing fraud has also emerged as a core issue throughout Europe.)

The proliferation of collision avoidance technologies including adaptive cruise control, blindspot detection, back-up cameras and lane departure warning have certainly contributed to the decline in collisions in the developed world. But the U.S. saw a slight uptick in vehicle ownership last year after a leveling off between 2008 and 2010 – rising slightly to 240.5M vehicles in 2011, according to data from Polk, which was a contributor to the report. More cars usually translates to more miles driven and more accidents.

Polk also contributed average vehicle age data to the study. Polk reports that the average car on the road in the U.S. is 11.1 years old, continuing a steady unbroken yearly rise from 8.4 years in 1995. Polk analysts say that the U.S. can expect to see the overall rate of vehicle ownership to resume its climb as the economy recovers and that the average age of a car will peak.

Vehicle age is a critical factor in determining the repair destination. AAIA says that slightly more than one in three (36.9%) of vehicles in the one year-old category have its collision repair work performed at new car dealerships. The percentage drops substantially after the first year as consumers seek independent repair channels to fulfill their collision repair needs.

So the megatrends represent a mixed bag of good news and bad news for independent repair shops. Cars that last longer are more likely to be brought to an independent repair shop for repairs, but not if there are fewer accidents.

AAIA says that in 2010, independent repair shops contributed 86.3 percent of total sales in the collision repair industry, with dealership body shops making up only 13.7% of total sales. “Previous experience” and “convenience” were the most important factors in selecting an outlet for collision repair work, the study states.

Insurers and independent repair shops have a common cause in capturing a larger chunk of the collision aftercare market. For new car dealers, the best opportunity lies in leveraging vehicle connectivity technology to better identify, respond to and capture post-collision opportunities.

Telematics has a role to play in this scenario, but no car maker has found the solution to this challenge yet. Until OEMs can solve this problem their aftersales divisions will continue to miss out on billions of dollars in revenue while dealers battle insurers and independent shops for profitable collision repair opportunities.

The news from General Motors, reported by the GMAuthority a week ago, was that 1,849 Volts were sold in July a 125% increase over the year ago period and a 100-unit improvement compared to June 2012. I couldn’t be happier to hear some good news about the Volt – with its clever dual-mode, extended-range powertrain, but the GMAuthority report proceeded to tout the minimal sales of Volts to “fleets.”

For some reason the word “fleet” continues to be a dirty word in Detroit and other automotive capitols, at least in North America. When an automotive executive hears “fleet” the normal association is to rental car fleets where cars are sold at steep discounts to clear out inventories and make up for shortfalls in retail sales.

There is another kind of fleet business, which is commercial fleets, and commercial fleets are increasingly interested in green technologies as represented by the Chevy Volt. The roster of corporate incentives for private employee vehicle purchasing is growing (See: http://www.hybridcars.com/corporate-incentives.html) but GM remains on the outside looking in.

GM remains locked in an out-of-date mindset that associates fleet sales with all things negative. The Volt, now in its third year, may be outselling the Nissan Leaf but it is no secret that the sales volumes for this innovative and cosmetically attractive and socially acceptable green machine have been disappointing. It is also no surprise that most of the executives responsible for the initiative from its inception have been exiled from GM, with many joining competitors - including some that touted fleet sales.

The Volt accounted for 10,666 units sold in the first seven months of 2012, a 270% increase over the same time period last year. The Leaf moved 3,543 units, down 26.3%. Both figures were reported by GMAuthority.

GMAuthority further notes that Volt sales have gotten a lift in California where the state has granted solo access to carpool lanes for Volts – adding that “about 1 in 3 Volts are now sold in the Golden State.” This local demand translates to a 34-day supply of Volts in California vs. a 52-day supply everywhere else.

In a separate bulletin from GMAuthority, the news source comments on attractive new lease rates for Volts. All of these efforts have the flavor of too-little-too-late to make the Volt the kind of viral success it was intended to be.

I still nearly catch my breath every time I see a Volt on the road - partially because it is such a rare occurrence. The attractive styling – in contrast with the dowdy Leaf and Toyota Prius – combined with the ecological cred still imparts a powerful aura to the car. But steep dealer markups in its early restricted availability days and the cold shoulder turned to the corporate fleet market have consigned this loss-producing car to a highway heading to nowheresville.

It’s not too late for GM to wake up to the private/retail sales opportunities in the corporate marketplace. But it is a shame to consider the thousands of units in potential sales that have already been lost.

Cross Country Automotive Services (CCAS) and AAA have almost simultaneously launched mobile EV charging programs in the U.S. CCAS described its program as “the nation’s first mobile charging warranty roadside assistance program." AAA announced in July its first roadside assistance truck with the capability to charge electric vehicles.  These programs are the precursors of ubiquitous mobile EV charging services, removing range anxiety from the psychological barriers to EV acceptance, but leaving sticker shock yet to be overcome.

Both programs are offered in a limited number of cities and are clearly targeting the earliest of adopters – ie. purchasers of Nissan’s Leaf EV – while anticipating the arrival of more Leaf-like vehicles.  The AAA program appears more forward looking than the CCAS program in that it offers two charging level options along with all of the usual roadside assistance services (tire replacement, battery charging, etc.) and, if all else fails, it can tow the customer’s vehicle.

CCAS says its mobile chargers may be mounted on small trailers and consist of 10 kWh propane-powered generators that charge the disabled electric vehicles. One of the AAA vehicles shown earlier this year features a removable lithium-ion battery pack for mobile charging.

AAA describes its program as a pilot via which the organization will evaluate the appropriateness of different technologies for use in different geographies around the U.S.  Other vehicles will be equipped with generators powered by alternative fuels and other power sources.

Both the CCAS and AAA programs offer emergency charging assistance – five or more miles of range for as little as 15 minutes of charge - to drivers whose EV batteries have been depleted.  Available to both service providers and dealerships, the CCAS chargers offer the capability to quickly and safely charge multiple vehicles concurrently through a Level 2 charging protocol, delivering consistent utility grade power. In addition, the charger is capable of back-to-back services without the need to recharge any onboard batteries.

AAA says its mobile EV charging roadside assistance vehicles can provide Level 3 (DC fast charging) and Level 2 (AC quick charging) to electric vehicles.

The seven initial markets for the CCAS program are: Los Angeles; Phoenix; Nashville (Tenn.); Portland; San Diego; San Francisco and Seattle. The company says the first mobile charge within the program was successfully completed on August 26 in Phoenix, taking only 15 minutes to provide driver with an additional 5 miles. Cross Country will be adding additional mobile charging units to other areas throughout its national service provider network across the country.

AAA announced it initially will deploy its trucks with mobile electric vehicle charging capability in six metropolitan areas across the U.S. as a pilot program, including Portland, Seattle, the San Francisco Bay area, Los Angeles, Knoxville (Tenn.) and the Tampa Bay area. The phased rollout will begin later this summer and continue into the fall. Let the charging begin.

Additional insight:

http://bit.ly/qlP7i1 - When is 54.5 mpg not 54.5 mpg? US CAFE Targets May Disillusion US Car Buyers - Insight - Ian Riches - Automotive Electronics Service 

Best Buy reported some disappointing financial figures last week blaming stalled consumer demand for TVs – including new IPTVs and 3DTVs. Going unmentioned in the company’s earnings call was its ongoing outreach to Detroit with a deal to sell and install EV charging stations for the Ford Focus EV and its plan to sell and install OnStar’s aftermarket mirrors. It’s time for Best Buy – and other large box retailers around the world – to seek closer ties to domestic car manufacturers to leverage the emerging connected and electric vehicle opportunities.

The Best Buy-partner announcements:

Best Buy-Ford Sync: http://bit.ly/eNGZ18

Best Buy-Ford Focus EV Charging Stations: http://bit.ly/e0CHWF

Best Buy-OnStar: http://bit.ly/eoJGeq

 

Best Buy understands the importance of connectivity as its Best Buy Mobile strategy has clearly become the engine of growth for the company. Best Buy Mobile is gaining more square footage in Best Buy’s large box stores – absorbing floorspace previously dedicated to selling shiny discs. And the company says it intends to open 150 Best Buy Mobile standalone stores in the U.S., bringing the total to 325.

 

The importance of Best Buy Mobile to the future of Best Buy is important to understand on two levels. The arrival of smaller Best Buy Mobile stores reflect Best Buy’s need to explore alternatives to its existing large box retail store model – built around destination shopping. And it also reflects the wider so-called “connections” business strategy of selling hardware that comes with a connection and, usually, a service subscription.

 

The category cited on the Best Buy earnings call as generating the single largest sales increase was mobile broadband and Wi-Fi connectivity devices, up 50%. The only category garnering more attention from Best Buy merchants than mobile broadband devices and, of course, smartphones themselves (where Best Buy claims a 6% U.S market share) is tablet computers. Best Buy has seen significant sales from tablets and expects even bigger numbers in the future, hopefully replacing sales lost from other computing platforms.

 

This is precisely where the automotive industry outreach comes into the picture. Traditionally at odds with the automotive industry, Best Buy has suddenly become the go-to retail partner for auto makers seeking stronger customer relationships. Car makers are themselves wrestling with the rise of the smartphone and table computing platforms and their influence on consumers.

 

Best Buy is experiencing this outreach from Ford and OnStar at precisely the moment it is experiencing the most competitive heat from online retailers and audio and video content streamers. Ford and OnStar need Best Buy’s trained sales people to explain new connectivity solutions to their customers – and to validate device compatibility, as in the case of Ford Sync. Best Buy needs Ford and OnStar to connect with new car buyers who may be considering aftermarket purchases.

 

 Best Buy fields an army of connectivity experts in its stores – which is precisely the marketing force needed by car makers bringing systems such as MyLink, Sync, Entune, mbrace and Uconnect to the market. But is Best Buy missing the boat even as it welcomes Ford and OnStar aboard? Yes!

 

The challenge facing Best Buy is preserving the relevance of its large box retail stores – where growth has eased or ceased altogether – in a market where consumers have almost perfect visibility to product assortments, information, and pricing online and gasoline is expensive. It is no coincidence that Best Buy launched two new online-to-store initiatives in 2010: Ship to Store and Friends and Family guest pick up.

 

Best Buy touted the improvements in its online-to-store initiatives in the past year. The company said in its earnings call that the number of in-store pick-ups for online sales grew to 40% from 35% in the year-earlier period. And 80% of big screen TV purchases made online were picked up at physical stores.

 

Best Buy’s large store future is inextricably linked with the pervasive car culture in America and elsewhere. It is a strange irony, then, that the mobile electronics department has become a virtual afterthought buried in the back of most Best Buy stores and frequently unstaffed.

 

One of the indications that Best Buy has not recognized, on its own, the opportunity presented by its new-found auto industry connection is the disconnect between the OnStar initiative and the Ford initiatives. The OnStar mirror is handled by the mobile electronics department, while the Ford Sync initiative is handled in the mobile phone department – and never the twain shall meet.

 

Normally such a disconnect would be rational and tolerable except for the fact that smartphones and tablet computers are playing an increasingly important role in the automotive market. What better marketing environment than a large box Best Buy store for companies such as Apple and RIM and Motorola (and?) to tell their tales of in-vehicle integration?

 

The opportunities to be derived from leveraging auto maker relationships include:

 

• Demonstrating smartphone and tablet computer integration alternatives in cars – along with distracted driving mitigation messages. (Tablet computers are ideally suited to aftermarket rearseat video solutions.)
• Demonstrating and selling aftermarket safety systems.
• Demonstrating and selling mobile broadband devices.
• Safe driving clinics for teens
• "Pimp My Ride" rallies in the parking lot?

Best Buy’s large box stores are veritable palaces to destination shopping actually dependent on the automobile. It makes sense for the company to take advantage of the in-store space and product assortment and trained sales force to promote enhanced driving experiences.

 

Implications:

 

The strangest thing about this emerging opportunity is Best Buy’s failure to recognize it. Auto makers have historically been hostile to automotive aftermarket retailers – and with good reason. A substantial proportion of a typical OEM’s profitability and of the profitability of its dealer base comes from aftermarket sales. (Maybe Best Buy could coordinate its efforts with local car dealers. Better yet, maybe Best Buy could negotiate pricing on new cars - it works for Costco.)

 

The mere fact that OnStar and Ford are reaching out to Best Buy and other retailers marks a tipping point in the industry. Auto makers are suddenly recognizing that they have entered into the consumer electronics market. On this new turf they clearly understand that they will need all the help they can get in explaining and demonstrating their own consumer electronics solutions. (Coincidentally, Ford and GM have drastically cut the size of their dealer organizations - adding a further rationale to the retail outreach.)

 

While Ford has reached out to its dealers to offer more training and more incentives to usher them into this new consumer electronics-laden era, retailers like Best Buy are being asked to fill a yawning gap between the available technology and the available means of explaining it. The marriage of Best Buy and the automotive industry is a marriage of convenience, but Best Buy should take advantage of this opportunity to build stronger customer relationships, higher connectivity market share and increased profit from the resulting service and installation business.

 

Additional insight:

 

http://bit.ly/ePD2Df - GM Shrinks Development Cycle in Game of Connectivity Catch-up - Roger C. Lanctot - Automotive Multimedia & Communications Service

http://bit.ly/dJXnU2 - Aftermarket Telematics: Let's Get It OnStar - Roger C Lanctot - Automotive Multimedia & Communications Service

GM’s Chevy Volt is the best thing to happen to electric vehicles since the Prius hybrid. In fact, it would be even bigger than the Prius if more than 10,000 were being made next year. The car represents revolutionary technology. It makes electric vehicles palatable to the mass consumer – at least conceptually if not based on the $41,000 price tag. The electric vehicle business was in desperate need of a car like the Volt that could take the worry out of driving electric. By adding the internal combustion engine (ICE) to drive the electric motors when the vehicle’s on-board battery is exhausted the Volt offers an acceptable range for any kind of driving requirement.

The car also features cutting edge componentry with a low-weight, low-energy stereo system from Bose, an OnStar telematics system (with five years of free service) with an iPhone app, and a multiple-screen vehicle diagnostic experience. The car looks and feels and drives like the future. But the simplicity of the Volt concept belies the complexity of the electric vehicle business and therein lies some long-term concern for the viability of any alternative fuel vehicles. A big contributor to the complexity of the EV picture has been the Regulatory Authorities.

My kingdom for a PZEV

The regulatory authorities are well-meaning bureaucrats who are trying to stimulate demand with financial incentives for specific types of cars while providing guidance to the auto maker community regarding which kinds of vehicles will be acceptable to meet fleet emission standards. These efforts have produced an alphabet soup of vehicle categories and a maze of definitions that have been further confounded by the automotive press. From the regulatory authorities we were originally given (see Strategy Analytics reports referenced below for detailed definitions and history):

·        TLEV – Transitional Low Emission Vehicle

·        LEV – Low Emission Vehicle

·        ULEV – Ultra-Low Emission Vehicle

·        SULEV – Super-Ultra Low Emission Vehicle

·        ZEV – Zero Emission Vehicle

These categories would be humorous in and of themselves but they have already been superseded by:

·        ILEV – Inherently Low-Emission Vehicle

·        PZEV – Partial Zero Emission Vehicle

·        AT-PZEV – Advanced Technology Partial Zero Emission Vehicle

·        NLEV – National Low Emission Vehicle

Again, it is tempting to chuckle, but these categories have very real and very specific definitions that can mean the difference between a $7,500 vehicle incentive and a combined $12,500 vehicle incentive. The Volt is a case in point. Because the car was introduced with an 8-year/100,000 warranty on the battery instead of a 10-year/150,000-mile warranty it did not qualify as an AT-PZEV according to the California Air Resources Board (CARB) requirements and missed out on the additional $5,000 incentive in California for which the Nissan Leaf does qualify. (This was in spite of the fact that GM reportedly tested and validated the car for the 10-year warranty and expects to boost the warranty for the current Volt or on a new version of the car by 2012.)

EVs not EZ

To make matters worse, the automotive press and industry trade associations have their own roster of EV categories – presumably reflecting their assessment of consumer perceptions. The Electric Drive Trade Association lists the following categories:

·        HEV - Hybrid Electric Vehicles

·        BEV - Battery Electric Vehicles

·        EREV - Extended Range Electric Vehicles

·        Plug-in Hybrid Vehicles

·        Fuel Cell Electric Vehicles

The Volt is sui generis! It is the only EREV, according to the EDTA. This is something that bothers industry types. This would be a minor point if it were the end of the conversation regarding the definition and categorization of the Volt, but it is not. According to some sources the Volt operates as a “plug-in series hybrid” or as a “power-split or series-parallel hybrid” depending on speed or driving mode. By the way, in California, the Volt is considered a ULEV and not a SULEV based on emissions testing.

When is a Volt not a Volt?

Few cars in the history of the automotive industry have been subjected to as much scrutiny as the Chevy Volt – suggesting some strange American instinct toward eating its own young. The Chevy Volt is unquestionably the nastiest, most clever move the automotive industry has pulled in decades. It just seems to frustrate the heck out of regulators and journalists and analysts. GM pulled a fast one out of its hat – one just wishes the company had plans to pull more than 10,000 out of its hat this year. (One might argue that Subaru of America has been a good deal more clever than GM. The company has sold a combined total of hundreds of thousands of PZEV designated Foresters, Legacies and Outbacks that are “sometimes even cleaner than some hybrid or alternative fuel vehicles,” according to the company.)

“I’ll ask my manager.”

Which is where the Chevy dealers come into this story. Having recently attended a Chevy Volt launch event I visited my local Chevrolet dealer. There was a single Volt on the showroom floor, as promised by the Website. (There are four or five Chevy Volt dealers in the area. Not all Chevrolet dealers qualified to sell Volts.) The car in the showroom had a “Do not touch” sign on it with a message that the car was already sold. Of course, that meant that the car was also locked so that the dealer was not able to give test drives, could not demonstrate the clever on-board and OnStar systems, and could not allow a customer the experience of simply sitting in the car. A salesperson indicated that he did not know when they would get any more vehicles and he was not sure what other dealers in the area had any Volts. I returned home and entered my name on the dealer’s waiting list and was called almost immediately. The salesperson on the phone said four cars were due to be shipped in January and one, a white one, was not spoken for. To reserve this incoming Volt, the salesperson said, I would have to put $5,000 down. I asked about the widely reported $350 lease on the car – an attractive option considering the limited life of the battery. The salesperson said there was no lease available and then he suddenly added that to get the Volt that was coming in January I would have to pay $5,000 over MSRP. There is little that will kill enthusiasm for a new car faster than a dealer charging $5,000 over MSRP. It wasn’t bad enough that I could not drive the car, could not sit in it, could not see it do its sexy technology stuff right there in the showroom.

Whether you want a ULEV, an EREV or a serial-parallel hybrid, you will still need to be prepared to do battle with a dealer who will use your enthusiasm against you. Who knew changing the automotive industry would be so difficult. (For the record, GM and Chevrolet representatives say they have specifically asked dealers NOT to charge above MSRP for the cars and there definitely IS a $350 lease offer on the Volt.)

Further insights: http://bit.ly/gtyxic - EV/HEV Technologies Supply & Fitment Database - Kevin Mak - Automotive Electronics Service http://bit.ly/devMOq - Hybrid Technologies Legislation/Support - Kevin Mak - Automotive Electronics Service http://bit.ly/eC7kFy - Impact of Volt, Leaf Transcends Modest Sales Expectations - Roger C. Lanctot - Insight – Automotive Multimedia & Communications Service

Porsche is changing horses in the stolen vehicle recovery department, opting for Autotxt’s stolen vehicle recovery solution for the 911, Boxter and Cayman, according to industry sources. The change may be coming as a result of Autotxt’s new architecture which enables a single electronic control unit (ECU) to provide a wide range of vehicle diagnostic and remote control capabilities in addition to vehicle tracking. An official announcement is expected later this week. This single ECU solution from Autotxt has the potential to transform the relationship between the driver, the smartphone and the car, providing an enhanced opportunity to sell stolen vehicle recovery systems in the context of a low-cost smartphone-based telematics application. The technology has implications for customer and dealer relationships as well as for broader branding and marketing purposes. It also creates a new path for app distribution to drivers. Finally, the announcement shows Porsche taking one step closer to the inevitable introduction of telematics. Porsche has had a telematics system in place, ready to launch, for many years. The choice of Autotxt move the company that much closer to that decision while providing an in-place solution to satisfy the European eCall mandate. The Autotxt solution for Porsche - which will supplant the existing offering from Cobra Automotive - provides for both reactive and proactive stolen vehicle notification and recovery. In the reactive mode, the vehicle owner must notify the service provider, Autotxt, when the vehicle has been stolen. In the pro-active, or early-warning, application, the service provider is notified of any unauthorized vehicle movement at which point the driver is contacted. The Porsche application – which is a dealer install - may also offer the same functionality provided by Autotxt for Jaguar Land Rover and Aston Martin. Those implementations use the driver’s Bluetooth-enabled phone as the driver identification tag. Alternatively a keyfob can be provided. The system allows for up to seven Bluetooth driver IDs. Porsche is still evaluating this provision. The Autotxt offering is unique in the flexibility of its ECU. Like other modules coming into automobiles for related tracking, tolling and telematics applications, the Autotxt device is deeply embedded in the vehicle with access to the controller area network (CAN) codes. Autotxt expects to make available by Q2 2011 a smartphone application for remote vehicle control and diagnostics. Autotxt executives expect to be able to provide remote control functionality including remote activation of heating and air conditioning, windows, door locks and remote starting along with data logging and vehicle diagnostics. The multifunction ECU, therefore, can become an event data recorder as well as an eCall or bCall platform while also gathering and distributing data on overall vehicle operation available to either the driver or the dealer or both. The device could also handle trip reporting, battery status for electric vehicles and a wide range of location-aware applications. In this way, the car maker retains control of the in-vehicle connectivity experience in contrast to the widely reported terminal mode approach of conveying the smartphone HMI into the car. Autotxt expects to have versions of its system available for Android and other platforms by the middle of next year. The Porsche deal is global in scope as are the implications of the ongoing Autotxt development activities.

Change is coming to the automotive industry via U.S. government entities that suddenly have the cash, the power and the public mandate to significantly influence the direction of vehicle design and surface transportation. With multi-billion dollar investments in two of the one-time Big Three automakers, the Federal government suddenly has unprecedented leverage over the industry along with a clearly defined agenda for enhancing safety and reducing vehicle emissions. Just a few years ago industry participants were inclined to eye roll and shake their heads at the plans of connected vehicle (VII, V2X) and HEV/EV advocates, preferring to stick with the prevailing traditional disconnected ICE (internal combustion engine) vehicle mentality. In the words of an old American advertising slogan: When something works you stick with it. What a difference a few years, an economic downturn and a massive embarrassing recall can make! Consumers are shifting to 4- and 6- cylinder vehicles. And even without incentives, consumers are turning to HEVs most notably Toyota’s Prius. What were once seen as pie in the sky visions of connected electric vehicles have rapidly become remarkably realistic opportunities – even if substantial EV sales volumes are still somewhat out on the horizon (SA EV/HEV forecast - http://bit.ly/9s3lid). Hundreds of billions of dollars have been invested by federal and local governments – as well as overseas governments – to incent EV development and sales. (Strategy Analytics has a spreadsheet of more than 300 EV/HEV legislative initiatives worldwide -  http://bit.ly/aRdhK8.) At the same time, the National Highway Traffic Safety Administration (NHTSA) has stirred to life stimulated by both a distracted driving crisis (from growing fatalities due to talking and texting drivers) and the Toyota unintended acceleration debacle. NHTSA, which was quite recently focused on fusion safety system technology in cars – making use of multiple sensor inputs to assist drivers in maintaining lanes, monitoring blind spots and avoiding crashes – has firmly shifted to an emphasis primarily on avoiding and surviving crashes. The agency is also seeking data recorder mandates among other initiatives. The crash avoidance portion of NHTSA’s campaign has V2X written all over it. While monitoring blind spots and maintaining a lane are important vehicle applications, true crash avoidance technology can only be achieved with vehicle connectivity to other vehicles nearby and not so nearby as well as to infrastructure using DSRC technology. In fact, at the latest ITS meeting the organization made clear that it is compiling a database of 5.9MHz DSRC providers who will be able to meet the antipated demand for line fit and aftermarket modules. DSRC was heavily touted and endorsed at the latest ITS meeting in Houston. The ITS is on the verge of releasing its roadmaps for V2X implementation. It is worth noting that the organization is expending significant energy on providing for the use of mobile devices and aftermarket boxes to enable connectivity. (Coincidentally, the European Union has announced its endorsement of similar connected vehicle objectives and implementation plans – http://bit.ly/bFaIUm.) The time lines may still be conservative and technical issues remain (see ITS conference concluding presentation http://bit.ly/bYio4k), but the mandate and the mission is increasingly clear on both the emissions reduction and the safety fronts: In the future, connectivity will be king. Still, despite the increased interest in safety among legislators, consumers and the Federal government, safety remains a tough sell with consumers. (SA – Consumers Interested in Safety, but not at Current Prices - http://bit.ly/a56WTM) This is why the increased influence of the government is so important. It will require government mandates to change vehicle designs and force consumer acceptance. Now, more than ever, the Feds have the influence and industry participation they require to bring significant change to pass. This type of mandate applies to EVs as well. The U.S. is unique in the world in its governmental inability to force through the kind of fuel taxes that could change behavior. Lacking this lever, Federal and local governments have turned to incentives to encourage consumers – and car makers – to bring electric vehicles to market. (This and the CAFÉ standards regime - http://bit.ly/cBwp2r - U.S. #CAFE Standards Give Impetus to Wide Range of #Green Technologies.) Here, again, the influence of the government along with growing consumer interest in both HEVs and EVs are approaching a transformative critical mass. Industry observers have questioned the wisdom of fostering EV technology when the current state of technology is as limited as it is. But it is only with this kind of government support that the obstacles of charging infrastructure, battery capacity and price can be overcome. Ray Lood, the director of NHTSA, removed any doubt about the government’s passion for change in the automotive industry when he described his own anti-distracted driving efforts at the recent ITS event in Houston as “a rampage” (http://tinyurl.com/24vzrka). A rampage indeed! Change is coming, probably faster than previously conceived possible. It is coming with government impetus and supervision and it is coming whether the industry likes it or not. Additional Insight: http://bit.ly/bbhqGj - Voice HMI: Connected Car Opportunities and UX Best Practices - Chris Schreiner http://bit.ly/ajzQay - Future Promise of V2X Wireless Comms – Chris Webber http://bit.ly/9qf1Mh - EV/HEV Technologies Supply and Fitment Database – Kevin Mak http://bit.ly/9esI9W - Advanced Driver Assistance Systems: Supply and Fitment Database – Kevin Mak