Auto-Based Internet Access Depends on Price

Consumer interest in Internet access from vehicles is extremely price sensitive, according to a study by CNW Marketing Research.

At $5 per month, 48 percent of the 5,126 respondents said they would be interested in having Internet access in their vehicle. At $25 per month, the rate collapses to less than 15 percent. And if the service costs more than $25, interest dwindles to 8 percent, the survey found.

“While the auto industry is intent on including some form of Internet access in their vehicles, it is clear consumers are less than enthusiastic at certain price points, regardless of how good the service or content,” said Art Spinella, VP of CNW.

According to CNW, more than 3.5 million new vehicles annually will be fitted with Internet access hardware within 5 years. More than half of those, however, will be in business-fleet and company vehicles, not general consumer cars and trucks.

“Operating in a mature market, car manufacturers are looking for new ways to generate revenue,” said Thilo Koslowski, senior analyst in the e-Business Services group at Gartner Group. “Subscription-based services like GM’s OnStar is a very promising idea to create revenue. Although other car manufacturers are planning to offer similar services to consumers, GM currently is the leader in this area.”

GM’s Virtual Advisor will allow drivers to perform voice-activated personal calling and give them access to Web-based information like stocks, sports, and traffic news. The Infotainment system will be able to read emails to a driver, display text on a screen and offer download capabilities to a handheld computer.

Interest in Internet Access in Vehicle
Over $25 $25 $20 $15 $10 $5
Favor 8.3% 14.7% 23.1% 32.1% 37.5% 48.3%
Oppose 68.2% 47.9% 26.9% 19.7% 16.1% 9.4%
Don’t Know 23.5% 37.4% 50.0% 48.2% 46.4% 42.3%
Source: CNW Marketing Research

A survey of 40,000 household interviews showed that 70 percent of the households who bought a new car in the last six months have a cell phone and 65 percent have active Internet users. By comparison, in the average household, cell phone penetration is 50 percent, and active Internet users is 48 percent.

“Our research shows that most car buyers are comfortable and experienced in using new interactive communication technologies in their daily life,” Koslowski said. “Since most people spend a significant amount of time commuting in stop and go traffic every day, in-vehicle voice operated Internet access might be a useful alternative to the passive radio. The ability to listen to a business-related email while commuting might help to reduce a person’s workload in the office. While driving home a person can check the latest online weather report and call their family to discuss weekend plans — all voice activated and hands free.”

Gartner’s research also showed that among all new car buyers, those consumers who spent between $50,000 and $55,000 on their last car purchase show the highest Internet and cell phone penetration with 94.2 percent and 93.7 percent, respectively, which validates GM’s plans to initially introduce the new systems primarily in its premium brands.

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