Software-Defined Vehicles and the Case for Extended Protection

There was a time when cars were built purely using mechanics, but those days are now in the rearview mirror. Now, digital features are shaping the perception and popularity of automotive brands. We live in the age of software-defined vehicles; modern cars where core functions are controlled or improved by the implementation of networked computing platforms to heighten the driving experience.

The advancement of software-defined vehicles (SDVs) provides many benefits for car owners to enjoy but also comes with added layers of complexity. Extended protection products are needed to reflect how software informs overall vehicle performance and offer support in the face of any technical issues. Vehicle Service Contracts can help customers OEM’s adjust to this new reality.

The Expanding Role of Software in Vehicle Performance

Where classic cars succeeded or faltered on the strength of their mechanical components, SDVs rely on software architecture to power a variety of features, including:

Infotainment systems
Adaptive cruise control
Lane-keeping assists
Maintenance alerts
Driver interfaces
Driving modes

It’s also common now for OEM’s to remotely send over-the-air (OTA) updates to their vehicles. These updates allow them to deliver performance and ease-of-life improvements at any time, without a visit to your local dealership. SDVs also give car owners more freedom to personalize their vehicles by allowing them to pick and choose which features they want to spend their money on.

However, SDVs also come with a unique risk profile in today’s modern age. Software malfunctions, bugs, and cybersecurity threats could all affect the usability of your vehicle. Plus, this is on top of the normal wear and tear that is inherent with any car. SDVs confer features that have never been possible before. On the flip side, those expanded capabilities also come with wider potential for disruptions to occur.

The Growing Case for Extended Protection

Vehicle service contracts are a smart solution to cover the extent of repairs that may be needed for an SDV. VSCs ensure that customers have safeguards in place to mitigate costs for a wide range of issues that can hamper a vehicle’s ability to operate.

A well-written VSC fortifies the car ownership experience by:

Providing coverage for electronic and software-integrated components
Imparting confidence that drivers will be covered as vehicles age and technology evolves
Improving the reputation of the OEM as a reliable partner going forward

Timing and Relevance in Post-Sale Marketing

Like most things in life, timing plays a substantial role in the VSC adoption process. As customers get closer to the end of their warranty period, they tend to become more open to post-sale marketing campaigns.

A particularly potent time in the lifecycle is about 36 months after delivery. This is a long enough stretch that drivers should be fully accustomed to the vehicle’s technological capabilities, experience a few updates, and may have dealt with minor issues that were covered by the factory warranty. Owners will have enough awareness of their car’s risk profile to understand the benefits of a post-sale vehicle service contract.

Launching targeted outreach during this window allows manufacturers to explain how VSCs can extend the ownership experience by using real-world situations, including the cost of replacing faulty sensors, repairing systems, or fixing connectivity errors.

Leveraging Data to Drive Engagement

One of the advantages of SDVs is that they provide tangible data points, such as:

Usage patterns
Service history
Diagnostic data
Feature adoption rates
Software update frequency

OEMs can use this information to sharpen their strategies to be more precise and personalized for different demographics. Using SDV data can lead to higher conversion rates and build deeper relationships with customers who feel their concerns are heard and adequately addressed.

A Strategic Opportunity for OEMs

Vehicles are only becoming more dependent on software platforms, making vehicle service contract coverage more of a necessity. VSCs align the desire to enhance post-sale strategies with the needs of modern car owners. OEMs that are ready to revamp their approach have the chance to transform how VSCs are formed, presented to customers, and when the time is right to do a deal.

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