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Consumers want new technology in their cars, but willingness to pay for it varies

Friday, August 11, 2017 - 06:00
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As automakers and aftermarket suppliers continue to invest in new vehicle technology, consumers are still hesitant to pay more for the telematics and other systems that are top of mind in the industry.

According to the 2017 Automotive Connected Services and Apps Consumer Analysis from IHS Markit, consumers around the globe want advanced technology in their cars, but willingness to pay for it varies significantly by market.

The company surveyed 5,000 vehicles owners that intend to purchase a new vehicle within 36 months in five automotive markets (U.S., Canada, China, Germany and the U.K.) It included questions on 31 technologies.

Consumers were most willing to pay for what IHS characterizes as “creature comforts.” Drivers in four regions were most interested in investing in sunroof-moonroof systems; German consumers were willing to spend an additional $642 (U.S.) for such technology, while Chinese respondents were willing to pay $440.

In the U.S., consumers were most likely to pay for rear-seat entertainment systems at a threshold of $640. These entertainment systems ranked second in the U.K. and China (at a price point of $388).

Chinese respondents (who were on the whole much younger than in other regions) showed the most openness to new technology. “China is an emerging market with a fast growing, nascent, middle class,” says Colin Bird, automotive technology analyst for IHS Markit and co-author of the report. “However, cars in China are still mainly used for leisure (shared by family members), and as a status symbol, thus skewing the market heavily toward young families that own their own homes.

Gap in telematics interest

According to the company’s forecast, by 2022 the majority of new vehicles shipped in each market will be equipped with telematics – 87 percent U.S.; 91 percent German; 92 percent U.K.; 89 percent Canadian; and 54 percent of Chinese vehicles. Further, by that time more than half of the global fleet will be connected.

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