January 28, 2023


Technology Room

How Automotive Leases Use Linked Automotive Information – Grape Up

5 min read

By 2025, over 400 million linked vehicles might be on the highway. Automotive leases and fleet managers can use linked automotive information to handle their automobiles extra successfully and improve income. An enormous a part of that strategy is expounded to dynamic pricing – a data-driven method enabling you to set the very best costs to your service. Let’s take a look at how your corporation can profit from dynamic pricing and linked automotive information.

Automobiles generate tons of invaluable info. Most of it comes from their engine management items (ECUs) that acquire information from many various sensors inside the engine and controller space networks that allow microcontrollers and units to speak.

Because of information coming from these and different sources, the automotive rental firm can have instant entry to telemetry information, together with:

  • The precise car’s location
  • Its present engine standing and pace
  • The car’s standing (e.g., if the automotive is locked) and so forth.

As a spinoff of the telemetry information, you can even perceive the driving type of a given driver.

Curiously, the linked automotive penetration has already surpassed that of non-connected vehicles (over 50% market share in Q2 2022)[1].

connected car market share

As a result of linked automotive information gives automotive companies with helpful enter (particularly when mixed with net and market information), automotive leases and fleet managers can use it to regulate their affords and, thus, develop income. Right here, dynamic pricing is probably the most outstanding answer.

What’s dynamic pricing?

In a nutshell, it’s a data-driven technique that exploits clever algorithms (ceaselessly based mostly on machine studying and automation) to set and keep the very best costs inside particular market circumstances.

Dynamic pricing algorithms frequently analyze the out there information (coming from the web site, the market, and the automobiles themselves) and use it to routinely regulate costs and different service circumstances out there in your web site or in your app.

In consequence, costs for renting a automotive may be optimized a number of occasions every week (or perhaps a day) relying on:

  • Present demand and automotive availability
  • Time of day
  • Site visitors circumstances
  • Gas costs
  • Earlier driving historical past of a given person
  • And even the probability {that a} given individual might be completely happy to pay extra for the service (e.g., as a result of they’re working out of battery of their cellphone and they should prepare transportation shortly)

Dynamic pricing is prevalent in each massive automotive leases, rideshare firms, and mobility-as-a-service suppliers, similar to Uber. And talking of Uber, a while in the past, Forbes printed an article explaining how Uber’s pricing works. They use a sophisticated dynamic pricing algorithm based mostly on AI and a number of worth factors to find out the optimum worth every person sees of their app.

dynamic pricing vs static pricing

In consequence, Uber can cost the optimum price for each experience, which helps them make more cash. An analogous answer may be launched in any automotive rental firm.

However the worth of the service is only one puzzle piece. In the case of automotive leases, there are different circumstances and costs renters have to concentrate on earlier than signing on the dotted line. Right here, linked automotive information will also be of assist! Let’s dig a bit deeper.

Dynamic pricing, linked automotive information, and the query of the insurance coverage

Renting a automotive includes extra charges, primarily insurance coverage, which is nearly at all times obligatory. It stands to cause that this charge must also be depending on a given driver and their expertise and driving habits.

Insurance coverage firms have been amassing information about drivers’ behaviors for years. And sure, they’ve been utilizing it to calculate insurance coverage premiums and supply reductions (so-called usage-based insurance coverage – UBI). Right now, it’s potential due to cell purposes that need to be at all times on when driving a automotive. Such an app can monitor every driver’s habits on the highway. Quickly, although, linked automotive information will change these apps altogether.

Though this concept continues to be in its infancy, we are able to anticipate that will probably be shortly doable on a big scale, particularly given the truth that the variety of linked automobiles is frequently going up (the worldwide linked automotive market measurement is projected to succeed in nearly USD 192 billion by 2028 – CAGR of 18.1%[2]).

The primary purposes enabling the implementation of dynamic pricing in automotive insurance coverage are already right here. Because of hundreds of thousands of linked vehicles providing trillions of information factors, automotive rental firms can perceive their prospects and their driving behaviors.

This information can be utilized to supply cheaper insurance coverage and different rental charges to renters with a confirmed historical past of protected driving. One other concept price contemplating is utilizing information from linked automobiles to enhance reward and loyalty applications (a protected driver may get reductions to lease a automotive or get extra loyalty factors).

Nevertheless, there are nonetheless some challenges that have to be addressed.

The challenges of benefiting from linked automotive information…

As McKinsey explains of their recent report, “many OEMs have struggled with connectivity or associated software program developments, leading to poor buyer critiques and delayed begin of manufacturing”. Automotive producers and different OEMs wrestle with convincing prospects that car-connectivity providers ship extra worth. Add poor execution of providers and communication points to the combination, and it turns into apparent that buyers are nonetheless a bit reluctant in the direction of such providers. It’s the identical story with usage-based insurance coverage.

In 2021, there was a survey carried out in Canada regarding UBI. 77% of Canadians are involved about potential price hikes. And 51% are hesitant in case it negatively impacts their present insurance coverage charges[3].

After which, there’s the information administration challenge. McKinsey estimates it’s essential entry 1 to 2 terabytes of uncooked information per automotive every day to completely profit from linked automotive information. Which means big information facilities able to processing all that info day by day.

…and the inevitable future

The way forward for the automotive business is software-centric, and automotive leases and fleet administration firms are not any exception. Because the variety of linked automobiles goes up, we can profit from extra superior data-driven options.

At GrapeUp, we tirelessly work on them daily! We develop customized options for each OEMs and automotive rental firms that allow amassing information, seamless processing, and even distributing it additional. All to permit you to earn more money.

In case you run a automotive rental firm, we will help you implement the options mentioned on this article. To search out out extra, see our supply for the automotive sector.

[1] https://www.counterpointresearch.com/global-connected-car-market-q2-2022/

[2] https://www.globenewswire.com/en/news-release/2022/08/17/2499966/0/en/International-Linked-Automotive-Market-Measurement-to-Hit-USD-191-83-Billion-at-a-CAGR-of-18-1-for-2021-2028-Fortune-Enterprise-Insights.html

[3] https://www.ratehub.ca/weblog/ubi-saves-money-but-87-per-cent-not-trying-survey-data/

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