Free Safety = Good Vehicle, and IIHS Agrees!

50% Jump in the Number of IIHS Top Safety Pick MY2015 Vehicles – And US consumers value overall perception of safety over any other advanced technology feature

I shouldn’t be saying this as a connected car enthusiast and analyst for a long time, but the verdict according to a consumer survey done by Frost & Sullivan recently from a huge pool of US vehicle owners is that safety and a specific set of safety features are more important to them than any other feature area in the vehicle. This is what will drive vehicle purchases in the next 2-3 years and this is what has driven vehicle purchases predominantly in the last 5 years (according to almost a dozen other surveys done by us).

Now let me open the surprise as you would be wondering where are all the smartphone related and connected car related stuff, the deal is that consumers don’t think of these as must to have features in the vehicle but at a few challenging price points they are willing to pay for select features. The gold standard in safety testing IIHS has evolved over the years to put a lot of stress on front crash prevention especially the use of automatic braking systems. That’s the common theme to models like Mazda 3, Lexus CT200h, Subaru Imprezza & XV Crosstrek, etc.

Let me cut to the chase and share the key findings that matter from a consumer vehicle purchase process in the US

• Safety and this is not just active safety/ADAS or passive safety/crashworthiness but the overall perception of vehicle safety is rated by more than 75% of the US consumers as the critical vehicle purchase driver. This perception doesn’t change by different segments as from Subcompact to CUV to Minivan owners all report safety as most critical. The interesting part is connected car/telematics and infotainment features are clearly not purchase drivers for any segment owners in the US and it has been the same way for the last 5 years.
• Excess of 2/3rd US consumers rate a mix of 5 ADAS features such as blind spot alerts, driver alert systems, around view cameras, FCW plus AEB and a futuristic level 3 automation feature as important standard vehicle features and the trend is similar across vehicle segments. The key aspect is comparing this with the ADAS market in US which is growing in excess of 25% CAGR and where the C and D segments are showing the maximum growth. And even the OEMs are also moving their ADAS portfolio to more collision avoidance features than the old generation ADAS alerts.
• Not very surprisingly and aligned with the US market and the direction telematics is taking, there is in excess of 25% take rate opportunity on certain TCO related features like maintenance/recall alerts, critical fault notifications, using driving data for insurance discounts, and in-vehicle service scheduling. This is where OEMs like GM are changing course on its OnStar platform with features like Prognotics. Once explained, consumers also show a decent appetite for OTA’s which creates a mobile like environment in the vehicle from a software and firmware level.
• And a little surprisingly, consumer show much higher take rate potential for using Smartphone as a vehicle access and personalization tool rather than just the Carplays and Android Auto’s. This is also extremely aligned with the market direction where a number of OEMs including premium OEMs like Audi have introduced smartphone NFC based mobile keys.
• From a HMI level, there is immense interest in natural speech recognition solutions like SIRI, Tesla like center display screens which even OEMs like Volvo have emulated and complete digital clusters like the Audi virtual cockpit. HMI is clearly the area where consumers feel bigger the better.
• Here is the interesting part – from a willingness to pay perspective the only ADAS features that consumers are willing to pay and not expect as standard is the around view camera and this is much lower than the cash they are willing to pay for connected services like real-time parking reservation and booking. Even wireless device charging pad in the car is a feature that consumers are willing to part some of their optional budget.
• Finally the interesting takeaway around health, wellness features is that consumers are not really driven by alerts/warning type of features but are more willing to look at this in a premium comfort way – e.g. active lumbar support, etc. And the biggest find is that certain health wellness features if combined with level 3 automation are very interesting for customers, e.g. emergency steer assist.

This survey was in many ways a refresher and an eye opener that increasingly to customers the connected car might actually be the safe car rather than the IoT connected car where they fear privacy and other negative stuff. In terms of future outlook, two really key aspects

• Volume OEMs need to fit mainstream models with important ADAS features as consumers associate importance to this but are not willing to shell huge money
• OEMs need to focus less on features like air gestures, facial recognition and other gimmicky features where consumers associate least importance. Features like full digital cluster is of high importance

This was interesting one and if you want to chat more, we can always catch up personally.