How Automobile Leases Use Linked Automobile Knowledge – Grape Up

By 2025, over 400 million related vehicles will probably be on the street. Automobile leases and fleet managers can use related automobile knowledge to handle their automobiles extra successfully and enhance income. An enormous a part of that strategy is said to dynamic pricing – a data-driven method enabling you to set the most effective costs to your service. Let’s take a look at how your corporation can profit from dynamic pricing and related automobile knowledge.

Automobiles generate tons of useful data. Most of it comes from their engine management items (ECUs) that accumulate knowledge from many various sensors inside the engine and controller space networks that allow microcontrollers and gadgets to speak.

Because of knowledge coming from these and different sources, the automobile rental firm can have rapid entry to telemetry knowledge, together with:

  • The particular automobile’s location
  • Its present engine standing and pace
  • The automobile’s standing (e.g., if the automobile is locked) and so on.

As a by-product of the telemetry knowledge, you may as well perceive the driving fashion of a given driver.

Apparently, the related automobile penetration has already surpassed that of non-connected vehicles (over 50% market share in Q2 2022)[1].

connected car market share

As a result of related automobile knowledge supplies automotive companies with helpful enter (particularly when mixed with net and market knowledge), automobile leases and fleet managers can use it to regulate their affords and, thus, develop income. Right here, dynamic pricing is probably the most outstanding resolution.

What’s dynamic pricing?

In a nutshell, it’s a data-driven technique that exploits clever algorithms (often primarily based on machine studying and automation) to set and preserve the most effective costs inside particular market situations.

Dynamic pricing algorithms regularly analyze the accessible knowledge (coming from the web site, the market, and the automobiles themselves) and use it to routinely modify costs and different service situations accessible in your web site or in your app.

Because of this, costs for renting a automobile could be optimized a number of instances every week (or perhaps a day) relying on:

  • Present demand and automobile availability
  • Time of day
  • Visitors situations
  • Gas costs
  • Earlier driving historical past of a given consumer
  • And even the probability {that a} given particular person will probably be pleased to pay extra for the service (e.g., as a result of they’re operating out of battery of their cellphone and they should organize transportation rapidly)

Dynamic pricing is prevalent in each giant automobile leases, rideshare corporations, and mobility-as-a-service suppliers, akin to Uber. And talking of Uber, a while in the past, Forbes revealed an article explaining how Uber’s pricing works. They use a sophisticated dynamic pricing algorithm primarily based on AI and a number of worth factors to find out the optimum worth every consumer sees of their app.

dynamic pricing vs static pricing

Because of this, Uber can cost the optimum fee for each journey, which helps them make more cash. An identical resolution could be launched in any automobile rental firm.

However the worth of the service is only one puzzle piece. Relating to automobile leases, there are different situations and costs renters have to pay attention to earlier than signing on the dotted line. Right here, related automobile knowledge can be of assist! Let’s dig a bit deeper.

Dynamic pricing, related automobile knowledge, and the query of the insurance coverage

Renting a automobile entails extra charges, primarily insurance coverage, which is sort of all the time obligatory. It stands to motive that this charge must also be depending on a given driver and their expertise and driving habits.

Insurance coverage corporations have been accumulating knowledge about drivers’ behaviors for years. And sure, they’ve been utilizing it to calculate insurance coverage premiums and provide reductions (so-called usage-based insurance coverage – UBI). Immediately, it’s potential because of cellular functions that should be all the time on when driving a automobile. Such an app can monitor every driver’s habits on the street. Quickly, although, related automobile knowledge will substitute these apps altogether.

Though this concept continues to be in its infancy, we will count on that it will likely be shortly doable on a big scale, particularly given the truth that the variety of related automobiles is regularly going up (the worldwide related automobile market dimension is projected to achieve nearly USD 192 billion by 2028 – CAGR of 18.1%[2]).

The primary functions enabling the implementation of dynamic pricing in automobile insurance coverage are already right here. Because of hundreds of thousands of related vehicles providing trillions of knowledge factors, automobile rental corporations can perceive their prospects and their driving behaviors.

This information can be utilized to provide cheaper insurance coverage and different rental charges to renters with a confirmed historical past of protected driving. One other concept value contemplating is utilizing knowledge from related automobiles to enhance reward and loyalty applications (a protected driver may get reductions to lease a automobile or get extra loyalty factors).

Nonetheless, there are nonetheless some challenges that should be addressed.

The challenges of benefiting from related automobile knowledge…

As McKinsey explains of their recent report, “many OEMs have struggled with connectivity or associated software program developments, leading to poor buyer critiques and delayed begin of manufacturing”. Automobile producers and different OEMs battle with convincing prospects that car-connectivity companies ship extra worth. Add poor execution of companies and communication points to the combo, and it turns into apparent that buyers are nonetheless a bit reluctant in direction of such companies. It’s the identical story with usage-based insurance coverage.

In 2021, there was a survey carried out in Canada regarding UBI. 77% of Canadians are involved about potential fee hikes. And 51% are hesitant in case it negatively impacts their present insurance coverage charges[3].

After which, there may be the information administration problem. McKinsey estimates it’s essential to entry 1 to 2 terabytes of uncooked knowledge per automobile every day to totally profit from related automobile knowledge. Meaning big knowledge facilities able to processing all that data day by day.

…and the inevitable future

The way forward for the automotive business is software-centric, and automobile leases and fleet administration corporations are not any exception. Because the variety of related automobiles goes up, we can profit from extra superior data-driven options.

At GrapeUp, we tirelessly work on them every single day! We develop customized options for each OEMs and automobile rental corporations that allow accumulating knowledge, seamless processing, and even distributing it additional. All to permit you to earn more money.

When you run a automobile rental firm, we can assist you implement the options mentioned on this article. To search out out extra, see our provide for the automotive sector.