Connectivity now has an intrinsic place in the automobile industry, and while there is growing consumer willingness to pay for in-car digital subscriptions to take advantage of services such as predictive maintenance, safety features and autonomous driving, there are also increased consumer concerns regarding industry practices around data.
These sentiments were among the standout findings of research commissioned by software-defined vehicle (SDV) services firm Cubic3. The survey, Consumer and OEM attitudes to the software-defined vehicle, took the opinion of 8,000 participants in the US, UK, Germany and Japan, and 60 global original equipment manufacturer (OEM) executives. Two surveys were conducted concurrently to understand and compare automotive executive and consumer attitudes towards SDVs. OEM studies were conducted by Sapio Research between October and December of 2024 and customer studies in September and October of 2024.
The survey grouped digital services into three categories to reveal consumer willingness to pay for each group, and the data is said to have shown a nuanced yet optimistic future for OEMs navigating a rapidly changing automotive landscape.
The study found a fundamental challenge for manufacturers was how to persuade and prove to drivers the benefits of paying for digital services, which constitute an integral part of SDVs, thereby turning this forecast into reality. The willingness to pay for digital services was seen to be increasing, particularly given the new generation of drivers that are digital natives and accustomed to connectivity.
Overall, the study forecasts the SDV market will create over $650bn value potential by 2030. Automakers estimate drivers are willing to pay £8 a month for digital services, while drivers say it’s £5.82 – a 27% difference. However, in countries where car usage is higher, such as the US, the willingness to pay increases. UK respondents report they are willing to pay the least, at £4.89 a month.
Nearly half (global: 51%; UK: 48%) of consumers are willing to pay for “vehicle-based services”, such as autonomous driving. Globally, 40% (UK: 42%) of consumers are willing to pay for “connected services”, such as video and music streaming; and 39% (UK 40%) are willing to pay for data services such as predictive maintenance. Over a quarter of global consumers and a fifth in the UK have paid for digital services for their vehicles, almost doubling (44%) for those in the global 18-24 age range. Only one in five consumers globally said they wouldn’t be willing to pay anything in monthly subscriptions.
OEMs were found to be closely monitoring potential targets by hackers, such as interfaces and application programming interfaces, digital sims, infotainment systems and telematics. All consumers showed concerns about industry practices around data, with half (global: 48%; UK: 46%) reporting they worry their car could be hacked.
Fortunately, OEMs hold automotive cyber security in high regard. Some 86% highlighted that cyber security of their digital services as important, and the same amount said connectivity was important for protecting vehicles throughout the vehicle’s whole lifecycle.
Going forward, the report suggested that automotive OEMs need to both monetise digital services and turn them into recurring revenue streams. Automakers saw predictive maintenance, enhanced safety features and autonomous driving as most likely to contribute the most to recurring revenue, and an industry opportunity is appearing for over-the-air updates to revolutionise consumer satisfaction, safety and convenience.
“Until recently, most consumers viewed buying a car as a ‘one-and-done’ affair,” said Cubic3 chief corporate officer David Kelly. “Although the concept of paying for in-car digital services is relatively new, we are already seeing significant adoption from consumers. It will take time for OEMs to persuade the public of the value of digital services, but it is encouraging to see younger drivers – so-called digital natives – happy to pay for these services.”
