Imagine this scenario: You realize that you have to refuel your vehicle. At the push of a button, participating fuel stations in your area compete for your business.
You choose the station that discounts its price-per-gallon the most and head to it, aided by turn-by-turn instructions. Payment is just as convenient; the amount of the transaction is automatically debited or billed to your account at the end of the month.
The scenario may seem far-fetched, but it's just one of the possibilities that in-vehicle telematics may soon provide.
Bruce Radloff, chief information officer at OnStar, says telematics is 'the integration of wireless communication, vehicle monitoring systems and location devices into the vehicle.'
Irv Miller, vice president at Toyota Motor Sales U.S.A. Inc.'s Office of the Web, meanwhile, says telematics is simply 'the communication with customers in their cars, and one of our top corporate initiatives.'
Just the beginning
OnStar, a GM subsidiary, uses global positioning satellite technology and a dedicated cellular phone to connect a customer to an OnStar operator.
OnStar was introduced in GM vehicles in the 1997 model year. Today it claims half a million paying subscribers and 1 million OnStar-equipped vehicles. The service offers free one-year trial subscriptions. OnStar's basic features include emergency help, travel directions and dinner or other entertainment reservations from an operator. But Radloff says OnStar's current offerings are just the first phase of an extensive business model program that will evolve to greater customer convenience and personalization.
Customers will want more than safety and security features, he says.
Toyota also recognizes the move to offer entertainment services through telematics, but Jim Pisz, team leader for Toyota's NetCar Team, does not believe consumers will pay the price for such elaborate telematics offerings.
'Safety and security are the elements that consumers demand and will pay for from a telematics unit,' he says.
That brings about the interesting flip side of this coin: how to make telematics a downstream revenue generator and customer relationship and retention tool, when customers want the entertainment offerings for free.
Toyota's Miller believes the model will be a customer pay-per-use deal. Instead of paying a flat $199 annual basic fee - the current price for OnStar - Miller believes customers would be willing to pay per use.
Don Bogue, CEO of Command Audio in Redwood City, Calif., sees it differently. 'I think that 75 to 80 percent of revenue (generated from telematics) will be derived from advertising.'
Bogue's company provides interactive, on-demand audio services. He believes the advertising will be highly targeted and - in essence - will be requested by the customer.
Ads for the enthusiast
The customer would provide his or her preferences and interests to the dealer or manufacturer, who would set up elements of the telematics system specifically for the customer. Once inside the vehicle, it would be possible for a golf enthusiast, for example, to receive ads that the local pro shop has a sale on putters and golf apparel.
How soon will this be available? It's hard to tell. A number of impediments - including bandwidth, standards and issues of privacy - must be overcome before the full potential of telematics is available to consumers. With so much at stake, it's a sure bet that the automotive industry will continue developing and improving telematics.
Says Toyota's Miller: 'We believe telematics can become the litmus test for customer satisfaction. Margins on cars are shrinking and lifetime customers generate revenues. Telematics provides a more creative way to get closer to the consumer and keep him or her in the Toyota family.'