Advertising The Future of Automotive Profits

There is very little profit in selling new cars; Toyota is one of the most profitable per car manufacturers making an average $2,800 per vehicle sold averaged over their entire range from the $15,000 Yaris to the $54,000 Landcruiser while the world’s number one selling brand Volkwagon make just $600 per vehicle from the Polo to the Touareg.

The bulk of a manufacturers profits come from two places; the first is vehicle financing. Manufacturers love it and dealers love it. Financing isn’t going away anytime soon and as the world shifts from fuel based vehicles to electric finance is going to contribute even more to the manufacturer’s bottom line as more people feel compelled to buy brand new cars to get the latest technology. The other place where profits come from are parts and servicing, big profits and it’s here that the manufacturers are going to feel the pain the most.

Even before the shift from human to autonomous drivers make the need for panel repairs obsolete there aren’t very many parts in electric cars that can break and with fewer moving parts and without the grease and the grime of an engine bay more and more people are going to be comfortable servicing their own vehicles.

This leaves manufacturers with a big hole in their earnings forecast (and explains why they so vehemently avoided making them for so long) and raises the question can they fill that hole with advertising and data?

We are already in a world where after you’ve searched for a business on your home computer and you jump in the car your phone already knows what you’re going to look for when you open the maps app so it’s not too much to assume that your calendar and your car are going to speak and when you are ready to go to an appointment the car will automatically select the best route to get there before you’ve even told it that’s what you want to do.

What about when your electric cars batteries are running low and suddenly the big digital display in the dashboard suddenly flashes up an ad for a service station just a little out of the way with a discount coupon and a button to trigger the in-car navigation to take you there.

How about the day you pull into a supermarket carpark and suddenly a big ad pops up suggesting you travel a little further down the road to a different supermarket or you arrive at a shopping centre and get hit with ads for the homewares store having a sale, the hairdresser who has an available slot and the clothing store that just opened.

Now consider all the other data your car will ‘know’ about you. What day you go shopping. When you last visited the dentist. That you always get take away on Friday nights. All of that information is valuable to someone.

What else could your car learn about you? It will know how frequently you speed and by how much, information that will be very useful for your car insurer or the police. It will know if you smoke in the car or visit fast food restaurants regularly, valuable to your health insurer. It will know if you’ve suddenly stopped going to work which might be valuable to Seek and LinkedIn or your bank or your superannuation fund.

What will it take for you to trade away access to all of this information though? One company at least believes you will happily give them this much control if they bribe you with the data service they will need to deliver the service over. Are they right? Will people trade away their freedom for an internet service in their car? Probably.

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