Digital services are increasingly important in the automotive sector, as Tesla recognized early on. Other automakers must catch up, as shown in a new BearingPoint study that assesses the potential for digital services in the automotive sector and analyzes customers’ wishes and willingness to pay for those services in China, Germany, and the US.

Amsterdam, July 14, 2022 – A new study by management and technology consultancy BearingPoint asked passenger car owners in the major automotive markets of China, Germany, and the US about their preferences in the area of software-over-the-air functions and digital services. According to the study, 93% of car owners in the world’s largest automobile markets are interested in using and acquiring digital services through new software updates for their cars.

Dr. Stefan Penthin, Global Leader Automotive at BearingPoint

However, the digital service portfolios of many automotive manufacturers do not yet match the customers’ preferences in terms of feature bundling, individual offers, willingness to pay, commercialization, and timeframe. This offers plenty of potential for improvement. Customer is king and digital service portfolios should be revised to suit customer preferences. Therefore, manufacturers need to assess their market position to identify and close potential performance gaps to the competition.

Dr. Stefan Penthin, Global Leader Automotive at BearingPoint

Automotive manufacturers must become software manufacturers

The transformation pressure on the automotive industry is growing rapidly, and new business models that include software development, are increasingly important. In all three markets surveyed for the study – China, Germany, and the US – safety & security services are the top priority for 91% of end customers. These are closely followed by navigation & infotainment services at 84%, and comfort & convenience, and entertainment are important for 71% and 66%.

Customers’ top 3 digital services in China, Germany, and the US

Within the surveyed markets, three specific digital services are at the top of customers’ lists: real-time traffic information (navigation & infotainment), theft protection (safety & security), and warning and locking system (safety & security) functions. While theft protection is number one in China and the US, real-time traffic information is the most important service for German customers, with theft protection second.

Security services are the OEM's future cash cows for digital services

In all three countries, customers rated safety & security as the most important category at over 90%, and they are willing to pay up to €134 per year for these digital services. Customers are also willing to pay up to €131 for services in comfort & convenience, although respondents consider this category less critical at 71%. Whereas the willingness to pay is the lowest for navigation & infotainment, and entertainment, at €100 and €96.

German customers are the thriftiest

Compared to other markets, German customers have the tightest wallets regarding digital services: on average, they would be willing to spend €214 a year. German customers expect navigation & infotainment functions to be available at a low price or without additional costs. The willingness to pay is significantly higher in the US at €300. The highest willingness to pay is shown by Chinese customers, who would spend an average of €353 per year.

Preference of purchase period of digital services - configuration phase versus after delivery

The study also queried customers about their preferences for purchasing digital features. It showed that customers in all three markets expect to be able to buy digital services in the configuration phase and after delivery via “software-over-the-air.” Depending on the manufacturer, customers are offered digital services in a bundle or individually for purchase. In all three markets, 55% would like to buy a digital package, but there is no significant trend here, meaning that interest in purchasing individual functions remains also important. In addition, 90% of customers expect to be offered a free trial phase when using digital services.

Christoph Landgrebe, Partner at BearingPoint in the Automotive segment

Many traditional manufacturers still have a lot of catching up to do. Chinese electric vehicle manufacturer NIO has already launched more than 180 ‘over-the-air’ features and firmware over-the-air (FOTA) updates. Tesla CEO Elon Musk has announced that a dedicated Tesla app store for vehicles will launch soon. While Mercedes, for example, with ‘Mercedes me connect Services’ and Audi with ‘Functions on demand’ have successfully integrated digital services into their new cars, they are currently unable to compete with the rich digital product range of Tesla and NIO.

Christoph Landgrebe, Partner at BearingPoint in the Automotive segment

About the study

The study surveyed over 600 respondents in China, Germany, and the US about their expectations and preferences for digital services and willingness to pay for each service category. The respondents were 35 years old on average and owned a car (less than ten years old and in the mid-to-high-end price range).

About BearingPoint

BearingPoint is an independent management and technology consultancy with European roots and a global reach. The company operates in three business units: Consulting, Products, and Capital. Consulting covers the advisory business with a clear focus on selected business areas. Products provides IP-driven digital assets and managed services for business-critical processes. Capital delivers M&A and transaction services.

BearingPoint’s clients include many of the world’s leading companies and organizations. The firm has a global consulting network with more than 13,000 people and supports clients in over 70 countries, engaging with them to achieve measurable and sustainable success.

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Contact BearingPoint

Alexander Bock
Global Senior Manager Communications
Telephone: +49 89 540338029