5G connectivity to drive values of cars post-sale: Report
- Once all cars come equipped with 5G technology, OEMs will be able to tap into a $40 billion revenue through annual warranty cost avoidance.
Connectivity is one of the major disruptive trends in the automotive world penetrating at a fast pace. The automotive world is witnessing a wide range of connectivity functions, features and technologies being introduced to modern vehicles. Nearly all the cars sold in the US, Europe and China now come equipped with 5G connectivity.
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This is creating a situation for the automakers to preserve or enhance the value of their vehicles post-sales in a manner that will alter the calculation of residual vehicle values, claims a study by Strategy Analytics.
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The research claims that once all the cars come equipped with 5G technology, automakers will be able to tap into a $40 billion revenue through annual warranty cost avoidance. Also, vehicle consumers will see a $32 billion savings in annual lease or loans. Not only that, the 5G connected cars will bring a huge business opportunity for the automobile dealers as well. They will see a $24 billion annual enhancement in revenue during the sales of vehicles.
These monetary gains will be added over and above the benefits, the society at large will experience due to the introduction of 5G enabled vehicles. These connected vehicles will reduce collisions, traffic congestion and emissions as well. These would help in saving billions of dollars globally, as the research findings claim.
The study also claims that the 5G connectivity in modern cars will directly assist and support the development of Advanced Driver-Assist Systems (ADAS) that are capable of helping vehicles to avoid collisions while facilitating self-driving vehicle operation. The study forecasts that 5G enabled connected cars will grab an increasing share of unit volume with an even faster penetration of sales revenue. This will eventually influence the economics of leasing and the market value of both new and used vehicles.
The connectivity in cars till now comes as an optional value proposition for the consumers. However, wider 5G connectivity penetration in the automotive world will change that perception, claims the study.
