Connectivity is now a key part of the auto industry. Consumers are showing a real willingness to pay for in-car digital subscriptions. They see the benefits of services like predictive maintenance, safety features, and autonomous driving. But there’s also growing concern over how data is handled within the industry.
This insight comes from research by Cubic3, a firm focused on software-defined vehicle (SDV) services. They surveyed 8,000 people in the US, UK, Germany, and Japan, along with 60 global OEM executives. The study, done over a few months in late 2024, aimed to compare how consumers and automotive leaders view SDVs.
The research categorized digital services into three groups and revealed consumer interest in paying for each. It pointed out a key challenge for manufacturers: they need to convince drivers of the value that comes with these digital services. Drivers today are increasingly open to digital offerings, especially younger generations who have grown up with technology.
The report forecasts that the SDV market could create over $650 billion in value by 2030. Automakers think drivers will pay around £8 a month for digital services, while consumers estimate it closer to £5.82, showing a notable gap. In regions with higher car usage, like the US, willingness to pay goes up. However, UK respondents are the least inclined to spend, averaging £4.89 a month.
About half of global consumers, and 48% in the UK, would consider paying for vehicle-based services like autonomous driving. Around 40% globally are open to paying for connected services such as streaming entertainment, and 39% are interested in data services like predictive maintenance. Interestingly, more than a quarter of global consumers and one-fifth in the UK have already spent on digital services for their vehicles. This jumps to 44% among younger adults aged 18-24. Only one in five globally said they wouldn’t spend on subscriptions at all.
Concerns about security are significant. Many OEMs are aware of hacking risks, especially regarding interfaces and telematics. Nearly half of consumers worry that their cars could be vulnerable to hacks.
On a positive note, 86% of OEMs prioritize cybersecurity for their digital services. They recognize that maintaining connectivity is crucial for protecting vehicles over their lifespans.
Moving forward, the report suggests that car manufacturers need to find ways to monetize these digital services. They see potential in predictive maintenance, safety enhancements, and autonomous driving for creating steady revenue. There’s an emerging opportunity for over-the-air updates to enhance consumer satisfaction and safety.
David Kelly, chief corporate officer at Cubic3, noted that buying a car used to feel like a one-time deal. But as more consumers embrace in-car digital services, it’s clear there’s a shift underway. It may take time for manufacturers to communicate the value of these offerings, but younger drivers are already adapting and willing to invest in them.