How Tier 1 Suppliers Can Benefit From Connected Cars

February 29, 2016  |  By John Jasper  |       

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The connected car phenomenon is going to give Tier 1 automotive suppliers the opportunity to make their products more valuable to consumers and OEMs. With connected car systems, Tier 1 vendors now have the means to access components directly to validate functionality, perform diagnostics, or upgrade firmware (with OEM approval) with bug fixes and new features. Having direct access to automotive components has the potential to change the game for Tier 1 vendors.

While many OEMs are selling integrated connectivity in their new models, there are many models that are still not connectivity enabled and the cost for the bandwidth is prohibitive. By using a consumer's mobile device, OEMs and Tier 1 suppliers can deliver a range of features and services that were not otherwise feasible.

The advantage for carmakers is that by using smartphones as a bridging technology, OEMs can provide connected car support for infotainment and peripheral services without having to pay for data access or detracting from bandwidth needed for telematics and safety monitoring. Using the smartphone to provide automotive connectivity also gives consumers access to the services they want without forcing them into an additional paid monthly service plan. They simply download smartphone apps as they do now from the iTunes or Google stores, only the interface is the IVI system rather than handheld device.

The advantage for Tier 1 suppliers is now they get more flexibility in the manner in which they support their components. They can continue to work with OEMs to issue wireless software update, or they can offer new features and functions direct to consumers and gather their own telematics data through their own smartphone apps.

New Opportunity for Tier 1 Suppliers

Tier 1 suppliers have traditionally had a fixed role in the value chain; they provide components to OEMs who install, sell, and maintain them in specific car models. If a problem arose with a faulty part or a recall, then the Tier 1 supplier would support the carmaker that would be responsible for managing the recall or upgrade. Any updates in electronic firmware or components were handled through the OEM and their dealers. The OEM also owned any telematics data about component performance, and they sent specific findings back to the suppliers as needed to help with troubleshooting and manufacturing improvements.

By using smartphones to power connected cars, Tier 1 providers now could have direct access. They could create their own smartphone apps to manage connected car components, or work with third-party app developers to integrate intelligence into their apps. Pioneer, for example, has been able to provide integrated infotainment support to its head units via a smartphone link developed using WebLink®. Pioneer has direct access to the IVI through any smartphone, making it easy to offer custom, upgradeable applications for music, mapping, news, information, and more direct to the consumer. And Pioneer can use the same link for system diagnostics and firmware updates.

Of course, a high-profile component such as the in-dash infotainment systems lends itself to having its own smartphone app. Consumers would welcome a chance to use an app that gave them direct control over their connected car information and entertainment. For other components, such as transmission, brakes, ignition, and so forth, there may be less incentive for consumers to download diagnostics apps, but dealers, repair shops, auto parts suppliers, and others can benefit from the same technology. Being able to get immediate and detailed diagnostic data makes the Tier 1 suppliers’ part more valuable for repair and aftermarket installations.

Tier 1 Partners Have New Value for OEMs

Smartphone car access also makes Tier 1 suppliers more valuable to OEMs. Consider how valuable connected components have been to the airline industry. Many engines on our airplanes have direct communication channels directly back to the manufacturer, providing them with tremendous value to improve upon their systems. Automakers can also do the same to provide value to both themselves and their consumers.

For example, IVI systems can be offered as a customized platform and consumers can download their own smartphone apps to build their own in-car entertainment system. This creates value for the OEM because they can provide a customizable entertainment platform that attracts more customers, but they don’t have to worry about installing and managing the software since Tier 1 partners can now provide their own IVI software directly through the smartphone

OEMs also can equip dealers and repair shops with diagnostics and firmware updates without having to write or distribute the code themselves. The parts suppliers simply provide their own software for telematics and firmware updates.

Having new platforms such as Abalta’s WebLink® and SmartLink®, can put Tier 1 vendors in a better position to support connected cars in new ways, and to become more valuable partners to connected car manufacturers. It’s all a matter of finding the best way to take advantage of the new possibilities created by using smartphones as the connected car interface.

What are some other ways tier 1 suppliers can benefit from the ramp-up of connected cars?

Topics: Connected Car - Other

John Jasper

John is the President and COO of Abalta Technologies. Abalta Technologies, Inc. is an emerging leader in the connected car landscape. Abalta has developed an innovative platform to enable car companies, automotive electronic firms and tier 1 suppliers to bridge the gap between the smartphone and the car’s infotainment system.

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