Would You Like a Car With Your Smartphone?

Smartphone car systems for music, Internet search may lead to advertising in vehicles.

A MyLink menu displayed inside a Chevrolet Spark electric car during a press event at the Mandalay Bay Convention Center for the 2013 International CES on January 6, 2013 in Las Vegas.

Smartphone car systems such as Chevrolet's MyLink, shown above in a Chevrolet Spark, allow users to check texts, make phone calls and listen to music just by using their voice.

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American car companies are ahead of their international rivals designing vehicles that link with smartphones, meeting a demand from younger customers who want to take the Internet with them on the road.

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Ford and GM have led the way as early supporters of connected car technology and designed the two top systems on the market, says Karl Brauer, senior analyst at Kelley Blue Book automotive valuation company. GM’s Chevrolet designs MyLink, and Ford offers the Sync and MyFord Touch systems, which allow users to check texts, make phone calls, navigate directions and listen to music just by using your voice.

“American companies are doing as well or better than the Europeans or the Japanese in terms of connected car systems,” Brauer says. “Connected cars are the next frontier.”

Hands-free smartphone car systems satisfy distracted driving laws, and will give drivers more mobile and Internet options as voice search technology improves on digital assistants including Apple’s Siri available on Chevrolet cars.

America’s tech companies are poised to win big on connected cars. Microsoft partners with Ford on the Sync system and Google is partnering with numerous car companies to install its Android mobile platform, which may eventually make applications and content designed by those companies available behind the wheel.  

Ford and GM planned ahead for this opportunity by opening their software to allow developers to design applications for their vehicles, says Mark Boyadjis, a senior analyst at IHS Automotive market research firm.

“Connected cars is an area where the U.S. automakers have led the world,” Boyadjis says.

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International companies including Fiat SpA and Honda Motor Company have followed GM and Ford’s example in recent years, vying for the goal of seamlessly and simply connecting a smartphone to a car. Customers in  years to come will likely make purchases based on whether companies install those smart car features, Boyadjis says, citing IHS Automotive surveys conducted in October.

“According to our surveys in the U.S., U.K. and Germany, there were 30-40 percent of respondents who said they would seriously reconsider buying a car, or would not buy a car if it did not have a connected car application system,” Boyadjis says.

Connected cars seem even more popular in China.

“According to our survey in China, 80 percent of respondents said they would seriously reconsider buying a car, or would not buy a car if it did not have a connected car application system,” Boyadjis says.

The trick is making it simple for phones to connect to those systems, which requires standards to work across the different vehicle brands. Partnerships between car companies including the Open Automotive Alliance and the Car Connectivity Consortium are working on using the same systems for a phone to share applications on a vehicle computer. The members of the OAA aiming to

install the Android mobile platform on cars, which are Honda, Hyundai, GM and Audi, are also members of the larger CCC partnership, which was founded in 2011. The CCC companies designed the MirrorLink system for connected cars.

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Partnerships like these will eventually compromise to share a standard system, or multiple systems provided by different companies to make it easy for drivers to plug and play their phones on cars, Brauer says.

“People won’t want to change their phones just to match it with a car,” Brauer says. “At the end of the day what we need is a programming standard. They all know that has to happen.”

Car companies in the U.S. are stronger than they have been in years as GM began 2014 free of government ownership following its bailout during the recession, but to sustain their comeback American firms have to adapt to a decreased desire for car-buying. The number of families without cars has grown since 2007, especially in cities, and is approaching 10 percent of families nationwide, according to a September report from the American Association of State Highway and Transportation Officials.  

The growth of car sharing services in cities including Uber and Zipcar is one of the reasons leading people to avoid buying their own vehicles, according to a study published by AlixPartners consulting firm on Feb. 5. A company offering one car-sharing vehicle displaces approximately 32 vehicles that would have otherwise been purchased, which could prevent approximately 1.2 million purchases between now and 2020, the study found.

Connected cars may give companies an edge against sharing firms like Zipcar for the near future because it will be easier to link and personalize a smartphone to a car you own, Brauer says.

“Years from now, perhaps the technology will improve and it could be easier to have a Zipcar quickly with your phone,” Brauer says. “This technology will spur car purchases since younger people are more into phones than cars right now. They need to access Internet and phone talking in the car, and they need the transition to be smooth.”

As smartphone-connected cars become more popular and more advanced it could give auto companies a new revenue stream to offer premium features or to tailor advertisements for drivers based on information the vehicles collect. That could also lead to regulation for privacy and safety concerns, says Daniel Castro, a senior analyst with the Information Technology and Innovation Foundation think tank.

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Distracted driving laws are already leading to scrutiny of Google Glass, as a California woman was given a traffic ticket in January for wearing Glass while driving, on the accusation that it counted as driving while viewing a mobile device.

“Once you have more screens in cars what can you display on them?” Castro says as an example. “What kind of freedom of expression rights do Americans have on public roadways?”

The Federal Trade Commission is also pushing for privacy regulation of the evolving ecosystem of devices connected to WiFi, known as the Internet of Things, but the commission might not deal with connected cars in the near future, Castro says.

“The FTC may proceed carefully to avoid a turf battle on connected cars with the Department of Transportation for the next few years,” Castro says.

Congress appears more willing to seek privacy regulation for cars as they become more connected to mobile devices with geolocation features. Supporters of such legislation include Sen. Al Franken, D-Minn., who introduced the Location Privacy Protection Act in 2011, which was never voted on by the full Senate.

"It's just common sense that all companies should get their customers' clear permission before they collect or share their location information," Franken said in a statement in January.