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As part of the empirical study “Customer Insights: Connected Car Services in Germany”, which Prof. Dr. Hans Christian Riekhof and Marc Scholz conducted for the Private University of Göttingen, the following interview with Dr. Kersten Markus Lange, Head of Vehicle Logistics at Volkswagen, was conducted.

Professor Riekhof: What importance do connectivity services have for you compared to other new topics in the automotive industry such as electrification, mobility services, autonomous driving?

Dr. Kersten Markus Lange: Connectivity services have a high importance. They are a prerequisite for many future fields of mobility: Suitable connectivity or services based on it are crucial for the acceptance of electrification, for example. Customers can more easily accept a range limitation compared to combustion engines if a charging station search and booking as well as the management of the charging process are easily available via online services in the vehicle. Mobility-as-a-Service (MaaS) and Transportation-as-a-Service (TaaS) solutions and, last but not least, autonomous driving will also be difficult to implement without real-time connectivity. Finally, connectivity can also become a business model for car manufacturers, for example when it comes to selling functions or data to vehicle owners and users.

Professor Riekhof: Which technological trends will further promote the topic of connectivity in the future?

Dr. Kersten Markus Lange: Of course, the further development of mobile communications standards towards 5G will open up new application possibilities, especially in the area of Car2Car and Car2X communication. But we also notice in discussions with our commercial customers that topics such as “Voice Assistants” and the associated “Handsfree” operation are becoming relevant. This simply saves commercial customers time and they see potential to optimize their workflows.

Professor Riekhof: What measures do you think could be taken to further promote the spread of connectivity services?

Dr. Kersten Markus Lange: Connectivity is already standard in the premium segment, in other segments it is beginning to establish itself. With commercial customers, with light commercial vehicles, we are still at the beginning of development. A stronger focus of the service offers on added value at the vehicle and on a good and continuous customer experience will also drive the spread. In addition, competitive pressure within individual sectors and the associated search for optimization and savings potentials will promote acceptance.

Professor Riekhof: Connectivity greatly increases the flow of data in the vehicle or from the vehicle to the manufacturer. What conclusions about customer behavior have you already been able to draw from this?

Dr. Kersten Markus Lange: First of all, it is important to emphasize that there is no general data outflow from the vehicle. Data is always collected with the explicit consent of the customer for specific service offers. Data protection is our top priority! We observe that services with a high proximity to the vehicle are increasingly being used. Simply displaying information such as weather or news is often less attractive on a journey than route planning based on the current traffic situation or fuel price information in the infotainment system.

Professor Riekhof: How important do you think future collaborations with third-party providers, such as streaming providers or payment service providers, will be in the context of vehicle connectivity?

Dr. Kersten Markus Lange: Customers expect the same functionality from online services in a vehicle as on their smartphone. Therefore, the integration and cooperation with third-party providers is of great importance. On the one hand, to achieve the necessary development speed – pure in-house developments tie up more resources and time. On the other hand, to be able to offer customers the content they are used to from their smartphone, such as that of a streaming provider.

Professor Riekhof: Our study shows that almost a third of respondents are not willing to pay for Connected Car Services. Are you considering models of flexible pricing or On Demand Pricing to increase acceptance for Connected Car Services?

Dr. Kersten Markus Lange: Yes, this is indeed a big topic. We generally observe price erosions over time for digital offers. Those that initially cost the customer something are soon offered free of charge. We also currently observe many services as novelties in the connected car market that are already offered on the smartphone – and often free of charge, so I am not surprised by the result. In my view, the key will be to offer a suitable combination of free offers and priced value-added services.

Professor Riekhof: Our study also shows that respondents attach rather low importance to Driver’s Health Services. Does this surprise you, and wouldn’t it be necessary for reasons of traffic safety to monitor driving ability more closely?

Dr. Kersten Markus Lange: Health data is of course always a sensitive issue for users, just think of the discussion when health apps were introduced a few years ago. In my estimation, demand ultimately also depends on the specific design of the services. The demand for driver assistance systems is high, and not only from this do we know that accident-free driving is an important goal. It will therefore be interesting to see how Driver’s Health functions are used.

Professor Riekhof: Do you see different needs in terms of connectivity services for fleet customers and private customers?

Dr. Kersten Markus Lange: Commercial customers usually use their vehicle to do their work. The vehicle is a significant cost factor, but also a basis for revenue. Therefore, the expectation is much greater towards services that increase the availability of the vehicles. Entertainment functions, on the other hand, are more interesting in the private customer sector. Specifically, a parcel service provider will be more interested in topics that optimize his costs around the vehicle or his processes. An example is predictive maintenance, i.e. the vehicle actively reports when a problem seems to occur and e.g. the battery is getting weaker. These are functions that will be indispensable in commercially used vehicles in the future.

Professor Riekhof: According to our study, trust in the premium manufacturers in the use of data from the Connectivity Services is high, Apple is in 4th place ahead of other European manufacturers. Facebook and Google are far behind. How do you assess this result?

Dr. Kersten Markus Lange: We observe this in the same way in conversations with our customers. The use of data is a very sensitive issue, customers apparently perceive that the OEMs approach this topic carefully. The car will certainly not become a “data octopus”, the use of data is always only with the customer’s consent. Our goal is that driving with the products of Volkswagen Commercial Vehicles will be even better, safer and more comfortable in the future thanks to the new possibilities offered by connectivity.

Further links:

Study on Connected Car Services in Germany (Riekhof/Scholz):
More about the study “Customer Insights: Connected Car Services in Germany” (Riekhof/Scholz, published 2020)

Volkswagen Homepage:
https://www.volkswagen.de/de/konnektivitaet-und-mobilitaetsdienste/konnektivitaet.html

Photos: UNICConsult, Volkswagen AG