Auto Physical Damage

Connected Car Data: Your Vehicle's True Emissions

January 14, 2019

Ryan Mandell

Director of Claims Performance, Auto Physical Damage

We live in a world where the process of simply getting from point A to point B has been completely transformed. A study conducted by IBM shows that 73 percent of OEM executives rated mobility services as a significant area of value creation for them and their consumers.1 The concept of the connected car is a critical aspect of this new mobility ecosystem. The connected car has radically changed the way drivers interact with their vehicles. For many years now, cars have been undergoing a process of transformation, from a simple mode of transportation to mobile entertainment systems. The concept of the connected car has created a second transformation of vehicles into mobile marketplaces and payment centers. In many vehicles, drivers now have the ability to perform various shopping activities through the infotainment system, automatically schedule regular virtual service updates, and even set up automated fuel refills and charging appointments. With this new wave of vehicle connectivity comes unprecedented challenges as well as opportunities for automakers, especially as it relates to the data being generated by today’s modern vehicles. A recent Wall Street Journal article detailed the opportunity for OEMs to monetize the data produced by drivers and cites a McKinsey and Co. study that estimates the value of data monetization to exceed $750 billion by the year 2030.2 The article went on to detail how such data would be used, from optimizing vehicle efficiency and performance to targeting marketing campaigns, using location data to offer in-car delivery of Amazon packages, and providing insights into driver habits (with permission) to auto insurance carriers. The bottom line is that the data produced by today’s drivers are, on their own, a valuable commodity for auto manufacturers. One of the areas where these data come into play is in the identification and reporting of an accident. The first notice of loss has traditionally been the responsibility of the parties involved in the loss itself. However, connected vehicles are now able to determine when a loss has occurred and immediately contact the owner to help determine an appropriate repair facility based on the vehicle’s configuration, in addition to reporting the loss to the insurance carrier. But it’s not just the OEMs that find value in data. Diagnostic scans have become an integral part of the collision repair process and are absolutely essential to bringing a modern vehicle back to pre-loss condition. The data produced by diagnostic scans not only can help collision repair facilities ensure the necessary steps are taken to guarantee a proper and safe repair, but can also provide auto insurers insight into the depth of complexity of the vehicles they are insuring and assist underwriting departments pricing of insurance products appropriately. Kenneth Cukier, co-author of the book, Big Data: A Revolution that Will Transform How We Work, Live and Think, refers to data as “the new raw material of business”.3 As vehicle complexity continues to increase, the raw material of data produced by sensors, computers, and other embedded, connected devices will begin to rival the traditional raw materials of steel and aluminum in terms of its significance to the auto industry’s forward looking strategy. Ryan Mandell is director of performance consulting at Mitchell International.