The study’s analysis found that warranty cost avoidance provides the car maker with a value of $500 per year for a total of $7,500 over the lifetime of the car. The consumer realizes an annual value of $400 for a total of $6,000 through lease, loan, and insurance savings. The dealer achieves benefits of $300 on a higher selling price and residual value for a total of $5,000.
Researchers also estimated the overall annual benefits for the three groups. Automakers could realize $40 billion in warranty cost avoidance. Consumers could save $32 billion in lease/loan savings and dealers could enhance point of sale revenue by $24 billion. Reductions in collisions and emissions will benefit society generally and save billions of dollars, the firm said.
“5G connectivity will allow automakers to preserve or enhance the value of vehicles post-sale in a manner that will alter the calculation of residual vehicle values,” Roger Lanctot, Director of Connected Mobility at Strategy Analytics, said in a press release. “This, in turn, will influence the economics of leasing and the market value of both new and used cars.”
Strategy Analytics notes that almost all cars made in Europe, the United States, and China are equipped with connectivity. The study suggests that 5G provides the most valuable connectivity.
5G will be integral to driver-assist systems that will avoid collisions and self-driving systems. Cars with 5G, the firm says, “will capture an increasing share of unit volume with an even faster capture of sales revenue.”
There are also content-based financial benefits with 5G technology. For example, content creators and telecom providers will generate revenue in bringing informational and entertainment services to passengers, and retailers will be able to use 5G to market products and services available to travelers.
Avanci licenses wireless technology to automobile makers.