The coming year will bring not only advances in the connected vehicle ecosystem — changes that will directly involve payments and commerce — but further developments in how consumers share and buy cars. And as that happens, the worlds of auto finance and insurance will likely undergo shifts as the rest of the industry changes.
Payments in 2019 will drive much of the innovation the automotive world. That was the main message in recent PYMNTS interview with Bisi Boyle, VP of IoT global connected car at Visa. The opportunity is clear. The Digital Drive Report, a collaboration earlier this year between PYMNTS and Visa, found that 135 million U.S. commuters already make or influence $212 billion annually on commerce in their cars as they drive to and from their workplaces and homes. Much of that is, of course, ordering ahead — food, coffee, even parking and gas — via mobile devices that they bring with them in their car. Two-thirds of those commuters who do that today would do so more often if in-vehicle commerce was available in their cars.
Car sharing, too, will likely take on a more prominent role in 2019. One reason to believe that? In November, the European Union’s competition authority approved a plan by luxury carmakers Daimler and BMW to combine their car-sharing businesses. This new deal includes car-sharing units car2go and DriveNow, as well as other ride-hailing, parking and charging services, and allows for Daimler and BMW to each hold 50 percent stakes in the venture.
The ride-hailing business is due from some significant advances in the coming years as well. That’s because both Uber and Lyft are expected to launch initial public offerings in 2019. Not only that, but those players, along with other operators, are trying to make scooter-sharing more mainstream even as some politicians and lawmakers push back on that mode of transportation.
Not only that, but Fair, the car-leasing startup that earlier in 2018 acquired the leasing portfolio of Uber, has raised $385 million in venture funding. Claiming to hold the keys to the future of car ownership, Fair has a mobile app and website that makes it easy to search for and purchase a car while staying within a predetermined budget. Through the app, users search for a car and sign the lease without the need to go to a car dealer.
For consumers who want buy their own cars and trucks, the purchase experience is changing. In the second half of 2019, USAA launched an augmented reality (AR) mobile application that aims to make car buying easier for its members. The app utilizes Blippar‘s car recognition and AR technology so members can simply point their mobile device at any vehicle (year 2000 or newer) and instantly see the car’s information, including purchase price, cost of insurance and any similar vehicles for sale in the area.
“Trends show that consumers are increasingly using digital channels to complete the entire car-buying process,” said Heather Pollard, vice president of USAA Auto Experience. “By testing this new augmented reality capability, we hope to transform and enhance our members’ experience by making it as easy as possible for them to access the information they want, when they want it.”
In fact, nearly half of consumers begin their car-buying process online, according to a report. Seven out of 10 consumers are more likely to choose a dealership that offers online car buying, according to car-buying platform Roadster. To help attract these customers, Roadster allows car dealers to bring the car-buying process — or at least some elements of it — online.
As described in a PYMNTS interview with Roadster Chief Marketing Officer Michelle Denogean, new technology enables car buyers to search a dealership’s inventory on multiple devices and receive upfront pricing information. Software also allows consumers to build a deal, value their trade-in and add service and protection plans to their purchases. In addition, shoppers can add accessories like cargo nets and cross bars.
Car buying is not all that’s changing. Insurance companies are still figuring out to use and employ data that could help craft policies in the emerging age of connected cars. The payments for the insurance generally belong to the insurance company. But what happens when the sensors and other data-collecting and data-transmitting technology installed by the OEM play a part in insurance costs? For instance, a driver whose sensors show he or she to be safe and cautious might end up paying a lower premium than someone whose foot is glued to the gas pedal as he speeds through a school zone.
Financing and Insurance
Auto finance will undergo shifts as well.
Get ready for one recent analysis called a “new layer of complexity,” at least when it comes to leasing, thanks to connected vehicle technology.
That’s because “conventional leasing models, whereby contract prices are determined by fixed parameters — i.e. mileage requirements, car choice, duration, residual value — will no longer be enough,” according to Daniel Layne, founder and CTO of Quotevine, which sells automated finance technology. “With over the air data or software updates, connected cars have the potential to become smarter, and therefore actually increase in value throughout the duration of the contract as new functionalities are added to the car,” he said.
The new year will bring more advances and changes in the automotive world — and with them, more options for payments and commerce.