Car technology race: Japan is behind America and Europe

For a variety of reasons, Japanese automakers are slowly falling behind big players from the US and Europe in the race for car technology.
In the race for car connectivity services – for example, ordering a cup of coffee right on a car’s touch screen – Toyota and Nissan run the risk of slowing down due to their home market.
Unlike the US and European countries, car-connected technology is not popular with Japanese consumers. According to SBD Automotive statistics, only 10% of vehicles on Japanese roads integrate this feature. This is an impressive figure compared to 49% in the US, 31% in Europe and 20% in China.
The Japanese are not really excited about the direct integration service on cars.

The Japanese are at a loss

In the context of increasing demand for car connections, the big players from Japan are facing significant disadvantages, even in the domestic market, where they have a large market share.
Competitors are increasingly pushing this feature, even General Motors sees it as a source of their own revenue. Because in China, the US and European countries, consumers are very interested in shopping, paying quickly on their cars.
Talking about this, Masanori Matsubara – senior analyst at IHS Markit said: “The Japanese car industry is facing great risks. They have to compete globally with rivals from the US and Germany, brands that are pioneering the car service platform. ”

Japanese customers prefer connecting services through smartphones

Instead of choosing the services built into the dashboard, the Japanese prefer to connect the smartphone to the car’s system, such as listening to music online.
This mechanism requires data to be passed through smartphone service providers, typically Apple or Google. That will lose a great opportunity for independent car companies to develop in this area. Because according to McKinsey & Co’s estimates, direct car services could create a market worth up to $ 750 billion by 2030.

The future is precarious

The SBD Automotive smart car research center predicts that two-thirds of cars in the US and Europe will use direct connectivity by 2020. Meanwhile, this ratio in the Japanese market is less than 1/3, according to analyst estimates.
“There is a need for consumer influence,” said Lee Colman, an analyst at SBD Automotive’s connected vehicle research division. “Carmakers will not recommend these services to buyers unless they know that their customers really want them,” he added.

There has been no agreement between Japanese automakers and consumers

In connected services, GM pioneered the OnStar system on the Cadillac in 1996. Originally used for emergencies and vehicle safety, OnStar now gives users table reservations, discount interest rates offered at nearby gas stations, all via an integrated car dashboard.
GM did not disclose financial results from the provision of OnStar. However, this feature has brought a large revenue to the American car group for a long time.
In China, Lynk & Co. is one of the domestic brands that will officially introduce their latest connectivity technology at the Beijing International Auto Show here. Li Shufu, billionaire owner of the famous Volvo car company, revealed that with the direct connection feature, the car company has reached a large number of young customers in the past year.

Struggling to find a solution

Under the new EU law, Europe is required to equip eCall technology in cars, starting this April. In the event of a serious accident, eCall immediately notify the ambulance center, in case the driver cannot afford to make a call.
In Japan, there does not seem to be a government’s urge to equip similar emergency systems. Domestic automakers have failed to entice customers, according to Matsubara expert IHS Markit.
Adding that, Colman of SBD Automotive said: “A system that helps users avoid congested routes, or services to help the elderly may become popular.”
“Which Japanese car connection technology attracts consumer demand is a billion-dollar question. The answer depends on what problems you are trying to solve. ”

Japanese automakers have not found a reasonable solution

Toyota has started the race with the T-Connect service, providing drivers with the current traffic situation, and helping them to book a restaurant table quickly on their cars. However, the service has not satisfied most customers, said Akio Yamamoto, general manager of Toyota’s internal company, in charge of creating intelligent connections.
“We are having a headache searching for innovative solutions for T-Connect. But we also consider a different approach in case T-Connect is not suitable for the current market, ”Mr. Yamamoto added.

The timely return

In 2016, Toyota “shook hands” with Microsoft in a project to develop car connectivity services, with the goal of 70% of its cars equipped with this technology by 2020.
Toyota’s “compatriot”, Nissan plans to provide intelligent connectivity for Nissan, Infinity and Datsun models for sale in key markets by 2022.

The Japanese are gradually regaining their positions in the future.

As for Honda, the car company has not announced specific targets, but there have been certain moves when cooperating with SoftBank Group to develop new connection technology.
To confirm the ambition of Japanese car brands on this technology race, Mr. Takao Asami, Nissan’s vice president of research, is confident that the turning point will be around 2020-2025. This is a time when the Japanese will no longer be in the position of chasing the Western “giants” in the car technology race.

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