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Wireless car updates to save billions, transform service experience, IHS predicts
September 4, 2015 - 11:55 am ET
Over-the-air software updates are set to save automakers billions of dollars over the next decade and could fundamentally alter the relationship between drivers, automakers and dealerships, an IHS Automotive study reported.
The authors estimate over-the-air software updates, which allow automakers to issue software repairs and upgrades that drivers can then download wirelessly via smartphone, will save manufacturers more than $35 billion a year globally by 2022, up from an estimated $2.7 billion this year.
Most of those savings will come from upgrades to telematics and infotainment systems, according to the study released Thursday.
By 2022, IHS estimates 160 million vehicles globally will have the capability to upgrade their telematics systems over the air, up from 14.5 million in 2015. Over-the-air infotainment system upgrades will be available in 96.4 million vehicles by 2022, up from about 200,000 in 2015, the authors said. Map and app software updates are also set to exponentially increase over the next seven years, the study said.
That will provide the industry a “big boon” over the next decade as warranty costs drop and completion rates for software-related recalls rise, IHS said.
“It is clear that OEM cost savings from OTA software updates will be the most valuable part of this technology -- by far,” Egil Juliussen, one of the report’s co-authors and principal analyst of automotive technology at IHS, said in a statement.
Customer satisfaction could increase dramatically, the report said.
In addition to being able to instantly download new infotainment system and map features, the frequency of trips to the dealership for repairs could be cut down for the average driver. For instance, a driver who would have had to go to the local dealership for a software-related repair might soon be able to have the fix wirelessly installed on the vehicle without ever leaving home.
Dealerships could gradually see their business models upended over the next decade as over-the-air updates become commonplace. Drivers might find themselves coming into their dealerships for repairs less often and could see their vehicles’ lifespans rise, thus cutting into dealers’ revenue streams.
“There’s going to be a lot more direct interaction between OEMs and consumers,” said Colin Bird, one of the study’s authors and senior analyst of software, apps and services at IHS Automotive.
The good news for dealers, Bird said, is that the change should be gradual. That’s in large part because the capability for firmware fixes -- from which dealers gain much of their revenue -- to be done over the air will grow at a much slower rate than software fixes, the authors said, thus buying time for dealers to adjust their business models.
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