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Home / Press Releases / Consumer Electronics / Auto Industry Will Make Loyalty from Apps, Not Money
Press Releases
Auto Industry Will Make Loyalty from Apps, Not Money
Date: 18 September 2012
A new consumer survey by IMS Research (recently acquired by IHS Inc. (NYSE: IHS)) of 2,250 people from the U.S., U.K. and Germany showed that only 28 percent of respondents would be willing to pay for apps in the car, if they were available. This is not a good sign for the automotive industry as it searches for ways to monetise the in-car experience.
In fact, results from the survey also showed that a ‘willingness to pay’ for apps doesn’t always equate to extra revenue. The survey showed that 55 percent of smartphone and tablet owners would be willing to pay for apps, but in actuality nearly 70 percent have never paid for an app.
The automotive industry has struggled for several years to recreate and exploit the consumer electronic (CE) experience within the car. The stark results from this new IMS Research study show that consumer app purchases are unlikely to represent a significant revenue stream. Furthermore, more traditional routes to generating revenue through apps – such as advertising – are likely to be restricted. “This comes at a time when more and more vehicle manufacturers are offering connected head units which feature apps. However, unless they are able to come up with a viable business model, the revenue generation from apps is likely to be limited,” said Nimisha Patel, analyst at IMS Research.
The bad news continues for the automotive industry as the survey also showed that nearly 60 percent of respondents would prefer to get a car specific app through their smartphone app store rather than from a portal from the vehicle manufacturer. This indicates another problem for the automotive industry: Not only will it struggle to generate revenue through the sale of apps, most consumers would prefer to interact with their CE device rather than a vehicle specific portal.
Despite this negativity, there is some solace for the automotive industry. The survey showed that if apps were available in the car, driving specific apps (such as navigation) would be most popular and something consumers would be willing to pay for. Furthermore, this is a nascent market and consumer perception may change as familiarity increases. Finally, monetising the in-vehicle experience isn’t the only reason to offer in-car apps. By engaging with drivers through apps on a daily basis, auto makers may find they increase brand loyalty, which is perhaps a more valuable commodity in the longer term.
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