McKinsey projects that more than 90 percent of vehicles sold in 2030 will be connected, up from 50 percent today.1 To capture the full value of this growing market, OEMs and other mobility players should consider the following three questions:
- What is the importance of connectivity for different customer segments, including those defined by region, demographic characteristics, and selected vehicle powertrain?
- How can OEMs and other mobility players create a winning connectivity offering (including attractive features, customer willingness to pay, and smart bundling)?
- How can OEMs and other mobility players maximize the commercial opportunity from connectivity through different payment models, such as one-time payments and subscriptions?
The McKinsey Automotive Digital Services Customer Survey: Methodology
The McKinsey Automotive Digital Services Customer Survey was conducted online in October 2023. It garnered responses from 1,649 customers in three key markets: China, Germany, and the United States. The survey was designed to identify the vehicle connectivity bundles that customers most value, as well as the best options for generating revenue from both bundles and individual services.
Some connectivity features in our survey can be digitally unlocked, even after vehicle purchase, as part of a connectivity offering (exhibit). While some connectivity features mainly rely on customized hardware, others are software enabled. They can be grouped into six clusters: safety and security, comfort, autonomous driving, performance, infotainment, and assistant services. Examples of some innovative connectivity features include the following:
- advanced remote control apps that allow customers to control their vehicles remotely and assist drivers with unlocking and locking their cars, climate control, checking maintenance status, and geolocating vehicles
- adaptive-suspension upgrades that adjust vehicle suspension depending on driving behavior
- advanced steering assistant that improves performance
- customizable interior car settings, which can adjust driver and passenger space based on individual preferences (for instance, loading a driver’s music profile, seat, and temperature preferences)
- full autonomous-driving capabilities
- racetrack mode (lap time tracking), which provides tips for driving on racetracks and tracking pace
- intelligent in-car ambience control, which helps create a specific in-car mood suited to a driver’s individual preferences by customizing lighting, temperature, and sound
- human-machine interface and cockpit individualization, which allows drivers to customize the layout and configuration of the controls and displays, such as the position and size of the infotainment screen, to suit their preferences
- preference-based navigation, which considers a driver’s route preferences, electric-vehicle charge, calendar, and other data
- in-car office functions, which allow drivers to create emails with voice command, check emails when the vehicle is stationary, employ auto dial-in for conference calls, and perform other office functions
- in-vehicle concierge services, which provide on-the-go assistance with locating various businesses, such as pharmacies and hotels, and then navigating to them
To support mobility players in the connected-car ecosystem, we recently surveyed more than 1,600 automotive customers in China, Germany, and the United States. The survey focused on 39 different features that could be part of a connectivity offering in six overarching categories: safety and security, comfort, autonomous driving, performance, infotainment, and assistant services. (For more information on the methodology, see sidebar “The McKinsey Automotive Digital Services Customer Survey: Methodology”). The survey findings allowed us to identify nine key implications that can help mobility players understand the current market, including regional differences, and capture the full value from connectivity by identifying features that consumers value, developing strong offerings, and setting the right price.
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Why connectivity is important
Car buyers often prefer vehicles with strong connectivity, and the survey results reflected this enthusiasm.
How to create a winning connectivity offering
OEMs and other mobility players face a complex challenge when developing connectivity offerings because they must understand what customers in select segments want and what those customers are willing to pay. The bar for strong offerings is already high, especially in China, and will only rise higher.
4. Connectivity features and offerings must be highly tailored to specific regions and customer segments
While some connectivity features are in high demand, many advanced offerings, such as in-car gaming, have a niche appeal. Feature preferences also vary widely among regions. For instance, more than 50 percent of the top ten features in China relate to more advanced technologies, such as advanced-driver-assistance features, while German and US customers favor comfort and convenience features. Similarly, the likelihood of considering connectivity features is more than 25 percentage points higher for customers in urban populations compared with suburban or rural customers. Click on the country names in the exhibit for more information on each location.
To maintain control over customer interfaces and data, some OEMs are restricting the offerings of third-party tech players in their vehicles.
A new breed of car financing: Feature bundles and embedded services
How to commercially master the connectivity opportunity
Recapping: Winning the connectivity race
Winning the connectivity game requires several fundamental activities:
- obtaining a sophisticated understanding of customers, including how their needs differ across regions; behavior-based segmentation can help reveal such nuances
- developing features that strictly adhere to customer requirements
- adjusting current processes, including those for R&D, product management, marketing, and sales and services, while simultaneously shifting to recurring revenue models
- creating a strong commercial strategy that combines both sophisticated bundling and pricing in compelling offers and then ensuring that the value proposition is clearly communicated to customers and delivered through all sales channels
