Is China stealing the Connected Car Market?

China is the youngest major car market in the world and whilst you may be forgiven for thinking that it is still a largely underdeveloped market, the country has the youngest luxury saloon buyers in the world and nothing seems to be able to satisfy their appetite for tech-laden vehicles. But with the communist regime’s desire to restrict what is available on the internet, international automakers are being driven into the arms of mainland Chinese internet giants.

In our ever faster society that demands ever faster internet speed and the ability to connect online from just about anywhere we are (to allow your friends to see what you are eating for lunch and perhaps with whom you are eating it), the wonderful world of auto-making has not been left behind; the world’s car buyers demand connected cars that are their own wireless local area network, allowing sharing both inside and outside of the vehicle, and of course car manufacturers are happy to oblige. The Chinese luxury car segment finds buyers of Mercedes-Benz to be an average age of just 37, which contrasts with the age of 54 for the USA.

However, growth has slowed and thus competition is intensifying. It is now necessary to be at the forefront of technology to satisfy China’s internet savvy consumers. Automakers are well aware that the average European would only be 20% likely to change the brand of car if it didn’t meet with their tech connectivity criteria, whereas in China, the average consumer would be 60% more likely if the vehicle didn’t meet with all of their connectivity requirements.

With some 600 million smartphone users in China and an estimated US$123 billion global market in connected car technology by 2021, according to consultancy firm PWC, you would not blame car makers for wanting to ensure that they get their slice of the pie. In the rest of the world, the market is being dominated by Apple’s Carplay and Google’s Android Auto, but in China they have met with some very stiff regulatory roadblocks put there by the Chinese government; not least of the roadblocks is the blocking of Google maps, which is crucial in any market. 

Thus, manufacturers are effectively being driven into the arms of the likes of Baidu, with its CarLife, or other services offered by Alibaba and Tencent. Audi already has started using the Baidu version and it is widely expected that Volkswagen and GM will follow suit and adopt the Chinese systems. What this means is that very soon, the Chinese systems could become the default in all of our vehicles. In effect, by stopping competition in its markets, China is stealing the future of connected cars and we hate to think what this would mean for our personal web-privacy.

image: asia.nikkei.com