A recent FT article presented to its reading audience the number of miles driven by cars in the US since the interstate act that made long routes enjoyable, and clearly stimulated the development of recreational vehicles.
It also, as time went by, gave manufacturers access to data they have been using to adjust the inner workings of the car’s chassis and suspension, as well as learning the habits formed by those behind the wheel so that it could track and act on feedback.
The information deemed solely for corporate use has never been shared or used to openly benefit the user – that is until recently, when the geek community started chatting about the advent of self-driving cars and the way algorithms are best created by the internet-born companies such as Tesla and Google. It seems like the classic automotive world is backtracking, but when we look again at the data they have, and what can now be aggregated and analysed in a new way, the dinosaur industry may stage a comeback on several fronts:
- Access to car accident data – automotives can track not just industrial-scale mishaps that impact airbags or gearboxes, but grasp the larger sentiment around how their cars are driven.
- They could better calibrate the rates of hire-purchase and leasing based on the intimate detail on how cars are driven.
- The OEM itself can operate the pay-per-usage plan for insuring, additionally protecting and financing the vehicle only when it’s used.
The end idea is that the data component has always been with the manufacturers. The missing link has been about not having as scrupulous a look as the data-driven giants.
Several possible scenarios
OEM partnering with financing companies and insurance companies to broker the annual coverage through a user app, as the black box controls for all variables of the car; signed with a private key and pushed from a smartphone app.
Pushing the data on anonymised car behaviour to the developer world, to improve the algorithms of insurance coverage models. As the cars are becoming increasingly self-driven, the whole deal of insuring them on a case by case basis disappears and is switched by a wholesale deal. Where originally each individual contract was calculated, managing fleets of autonomous vehicles changes the game where the fleet as a whole is under the insurance contract. This is already the case with banks insuring their fraud risks or cyber risks, and is coming to car insurance as well.
Turning the car sales business into a transportation service platform is no mean feat in itself, but the initial slump of new car sales may portend an envisioned future with people not owning cars, but increasingly using them because the cost of having one in the moment diminishes to a negligible state. Hence, having the payment and insurance coverage in the moment is an important part for the manufacturers.
These are interesting times indeed.
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– This article is reproduced with kind permission. Some minor changes have been made to reflect BankNXT style considerations. Read more here. Main photo: Denis Zastanceanu, Shutterstock.com
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