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Connected Cars: The Future of the Automotive Industry is Here and Now

By Don Gottwald, Chief Strategy Officer & President of Digital Data, & Mobility Solutions, KAR Auction Services, Inc.

Connected Cars: The Future of the Automotive Industry is Here and NowDon Gottwald, Chief Strategy Officer & President of Digital Data, & Mobility Solutions, KAR Auction Services, Inc.

Since the development of the first automobile at the turn of the twentieth century, people have had big dreams for this revolutionary method of transportation. Ideas spawned from the elaborate to the unattainable— with a generous dose of inspiration from science fiction. And as revolutionary as that first automobile was more than a century ago—today’s options just might have tested the limits of our grandparents’ and great-grandparents’ imaginations. Vehicles have become more affordable, more attainable, and more reliable—and they are built to be smart and connected.

In the words of futurist Kevin Kelly: “The future happens slowly…and then all at once.” Looking back, this is especially relevant to the automotive industry where, for decades, creatives and engineers alike have offered visions on the future state of the automotive industry and, more broadly, transportation. With the advent of new technologies and innovations, these early visions are now on the cusp of reality.

“Detroit to Atlantic City…on its own [electric] power” – advertisement from The Anderson Carriage Company circa 1910

Consumers and gearheads alike might be startled to know that one of today’s hottest new technologies—the electric car—isn’t so new after all. A hundred years ago, electric engines were serious competitors for combustion engines. In fact, according to the U.S. Department of Energy, electric vehicles made up about a third of all cars driven during the turn of the century. Today, they are better positioned than ever to become mainstream.

That’s not the only new automotive innovation with deep roots finally going mainstream. New technologies have recently emerged that go beyond a traditional history report to show a holistic view of the vehicle’s soundness and quality. For decades, external databases might show a vehicle’s ownership and accident history, title status, date of last oil change, and last known mileage. But how many people, over the years, have wished a car could talk and share more color beyond this simple transactional information?

The good news is that modern vehicles collect, store, and share reams of information. From how the vehicle is driven to the efficiency of its engine, transmission, brakes and more—vehicles today keep tabs on far more. Data collected directly from vehicles shows far more than what a buyer could see by cracking open the hood and looking up a VIN online. Technologies that translate this raw data into actionable intelligence will shed light on the health, inner-workings, and condition of both the overall vehicle as well as its various systems. This deeper-dive into a vehicle’s data has the power to transform the buying and selling process for individual consumers, dealerships, and fleet owners.

But as we look to the future, even how we capture, share, and evaluate the simple transactional information about a car is rapidly changing, thanks to new technology like blockchain applications. Blockchain is more than a trendy buzz word; it’s a potential disruption of how we think about data integrity and accuracy. By leveraging a distributed network to instantly record information, this technology helps to ensure transactions are secure and protects data privacy, ownership, and integrity. According to the World Economic Forum, by 2025, 10% of global GDP will be stored on blockchains.

Blockchain has a variety of potential uses in the automotive industry, including supply chain and logistics, mobility management, vehicle history, and compliance—and potential solutions are quickly gaining traction. Blockchain technology has the potential to provide countless benefits to the automotive industry and consumers alike, who will gain efficiencies, see cost reductions, safety improvements, data security, and the enablement of new processes and capabilities not even thought of yet.

Many OEMs are early pioneers in this technology and are already using blockchain for vehicle and mileage tracking, maintenance ledgers, and to prevent odometer fraud in their leased-vehicle fleets. And more broadly, under the aegis of the Mobility Open Blockchain Initiative (MOBI), a consortium of industry leaders (including my company, KAR) are collaborating on the development of standardized, blockchain-enabled vehicle data and mobility services applications.

“Will the Net Turn Car Dealers Into Dinosaurs?” – CATO Institute briefing paper from 2000

Twenty years ago, pundits and futurists were wondering whether the technology would drive car dealers out of work. That future— if real—has been slow to arrive. Many dealers have adapted to changing technologies to operate their businesses more efficiently and successfully, taking a more data-driven approach for everything from how they market their cars to how they source new inventory.

However, it’s not just technologies that are driving change across the automotive industry. Evolving consumer attitudes and norms are also re-shaping the industry. Foremost among them: shifting ideas about what it means to buy, sell, and own a car. These shifts are challenging both dealers and OEMs to begin thinking and operating in the broader transportation industry rather than solely in the automotive realm.

Which came first—new applications like car-sharing and ride-sharing, or new attitudes about car ownership? This is one chicken-and-egg scenario where it doesn’t matter which came first. What matters is a new reality, and how we navigate a path forward.

As larger fleets of shared vehicles become more prevalent, the power of the new connected car is more imminent. Successful business models will require timely and efficient vehicle maintenance—a programmatic approach to just-in-time oil changes, tire rotations, and other service tune-ups. Sending a mechanic out to track down individual vehicles lends itself to errors and inefficiencies.

Solutions for fleet deployment and maintenance require a constant stream of information about the current health of the vehicle and its systems, so that predictive maintenance algorithms can recommend when a vehicle is due for service, and whether something deeper than a standard tune-up is needed to ensure optimum vehicle up-time and profitability of the vehicle. The rail and agriculture industries are great examples of trailblazers that are already using these new tools to monitor and service their heavy machinery and equipment systematically.

“Future cars will drive themselves” – print ad from 1957

So, is the future now? There’s no doubt that it’s close—it’s just a matter of how close and when. The information revolution is transforming the way people go about their daily lives, and in a significant part, the way they buy, sell and use transportation. At KAR, we have a growing team dedicated to assessing and leveraging new technologies. We’re identifying, researching, and working directly with our customers and other partners to determine how new innovations and emerging technologies will result in solutions with the potential to transform the auto industry. KAR is in the unique position to utilize the strengths from across our business units to hit the ground running to turn those once pondered dreams into a reality.

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