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Analysts project 380 million connected cars to be on the road by 2021, and this technology will pave the way to significant improvements in productivity. The rise of connected cars, or internet-enabled vehicles, will affect manufacturers, consumers, and, in arguably the biggest way, businesses.

Underlying the adoption of connected car technology is a general industry trend toward acceptance of Apple CarPlay and Android Auto as must-have components for a vehicle infotainment system. With a massive base of users and a huge ecosystem of available apps, the impact of this trend is dramatic and fuels a game-changing convergence of technology — what was once just a smartphone app can now become an integrated part of the vehicle.

The impact to drivers and businesses will be substantial, but mostly positive. Drivers will be offered a highly integrated experience, where the car acts as an extension of their smartphone. Their apps become accessible via the standard controls in the car, and they will have fewer distractions that take their eyes off the road. Organizations, particularly those with road warriors or at least occasional drivers, will find information acquisition to be much more timely and efficient. Tasks such as capturing accurate mileage and trip information, understanding the age of their fleet, or ensuring that vehicles are properly maintained will be simplified.

Here are three business implications to watch for as connected car ownership becomes more mainstream.

1. Automated receipts for miles traveled

Mileage is the only business expense without a receipt. A typical company loses as much as five percent of revenue to overreported mileage, according to the Association of Fraud Examiners. From error-prone manual reporting processes to the blatant overstatement of mileage, inaccurate mileage reporting can balloon into an expensive problem.

Tax-free reimbursement is contingent on employee reporting, and the IRS requires a thorough mileage log, complete with trip purpose, miles driven, start and end location, and more. Forty-eight percent of companies rely on their employees to capture mileage manually, putting companies at risk for over- or under-reimbursing employees for businesses mileage.

Through apps that support connected cars, businesses will have the ability to track mileage information based on the vehicles’ odometer readings. All the driver will have to do is classify the trip as business or personal after they drive. This will take the pressure off employees to determine and log their own miles and eliminates many opportunities for overstating business trip miles.

Whether it’s through embedded vehicle systems or integrations with mileage capture and expense management apps, connected cars will automate and streamline the entire reporting process.

2. Greater driver safety and convenience

While drivers are split on whether connected cars will make driving safer or more dangerous, connected cars’ potential to enhance driver safety is vast. Features like safety sensors, engine maintenance signals, and mobile integration will put safety at the forefront. The connected car offers the power of mobile apps on a smartphone in a hands-free and driver-safe way.

Connected cars also should improve drivers’ productivity by providing critical, timely data that enhances their decision-making. Through telematics technology, drivers can monitor the health and fuel efficiency of their vehicle, receive feedback on their driving habits, and get real-time access to weather, traffic, and optimized navigation applications.

Video and other onboard sensors will be the next frontier for improving driver safety. In-car video will generate insights that can be used to identify and remedy risky behaviors and other critical driving patterns. This type of information can also be used to defend drivers in the event of an accident. However, while telematics and connected cars can increase safety, it raises concerns around driver privacy that companies (and manufacturers) will have to combat. More than a fifth (21 percent) of U.S. job-seekers believe connected cars represent a threat to driver privacy.

3. Dynamic insurance premiums

If connected cars fulfill the promise of advancing driver safety, we can expect this to affect insurance prices. Depending on the scope and quality of connected vehicle software development, insurance firms may offer discounts to customers who invest in more sophisticated driver technology.

Insurance companies will also likely give discounts to customers who share their driving data. Details recorded through connected car technology — like where and when people drive — could even determine rates for usage-based car insurance (UBI), where drivers receive competitive quotes if the technology deems their behavior “safe.” This is a more advanced version of Snapshot technology, a system aggressively marketed by Progressive and replicated by other insurance companies over the past several years. Unprecedented access to vehicle data and driving patterns may also give way to models like pay as you drive (PAYD), where a driver’s insurance ties directly to their mileage, and pay how you drive (PHYD), in which rates are based on driving behavior.

These innovations in safety and insurance, through the connected car, will also shift business liability. Historic approaches to determining rates, like driver demographics and business reputation, will transition to focuses on software and vehicle reliability.

As connected car adoption accelerates, people need to brace for change. While many of the technology’s effects are still unclear, the brunt of the impact facing enterprises will almost certainly implicate mileage reporting, liability, and insurance.

The connected car is only the first look at the disruption set to materialize with groundbreaking innovations in the vehicle space, which has seen major hype around autonomous cars. But with the connected car’s influence on employee and business costs, companies need to be proactive in adjusting their current programs to ensure a smooth transition.

Mason Meadows is the vice president of business vehicle solutions at Runzheimer, a mobile workforce software company. 

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