Drivers, start your gadgets

Thu Apr 4, 2013 10:54am EDT

The keyfob emulator screen for the Delphi Connected Car app is seen at the opening press event of the Consumer Electronics Show (CES) in Las Vegas January 6, 2013. REUTERS/Rick Wilking

The keyfob emulator screen for the Delphi Connected Car app is seen at the opening press event of the Consumer Electronics Show (CES) in Las Vegas January 6, 2013.

Credit: Reuters/Rick Wilking

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(Reuters) - Can a little device plugged into a port under your car's dashboard help you drive better, save money and diagnose your car's troubles? That's the premise behind some new smartphone-linked gadgets, including one launched last week by Verizon Wireless and Delphi Automotive LLP.

Think of them as high-tech translators that let you and your car understand each other. The maker of one, Automatic Labs Inc., in San Francisco claims its device can help cut your gasoline spending by as much as a third.

The Delphi-made, Verizon-sold device, called Vehicle Diagnostics, sends alerts to a user's smartphone when the car suffers problems ranging from malfunctioning sensors to serious transmission problems. It also allows a user to remotely start the engine with a smartphone. At $249.99, though, with a $5-a-month service fee, it isn't cheap, and it works only with Verizon cell phones.

Some of this technology may already be standard fare on certain high-end vehicles, but these gadgets work for just about anyone with a car and a smartphone. Are they worth it? That's another question. Drivers need to determine whether they drive enough to justify the money spent, and they should consider the privacy and security issues that some of these devices may raise.

DRIVE WELL AND SAVE

The Automatic is a device-app combo designed to help drivers save on gas, brake linings and more by monitoring driving habits. The device is back-ordered, and the company is taking orders, at $69.95 a pop, for July delivery.

"Changes in driving style can have a very big impact on fuel efficiency - up to 30 to 35 percent," says Ljuba Miljkovic, the company's chief product officer.

The device emits an audible signal when a driver is going too fast, accelerating too rapidly or braking too hard - three things that can affect gas mileage. Someone who regularly spends $250 a month on gas (a typical average) and is willing to dial back aggressive driving habits could save the cost of the app in less than a month.

Automatic's Global Positioning System (GPS) feature will collect maps of all the trips users make and analyze the fuel costs. That could help you decide whether it's worth driving five towns over to save $20 on a flat-screen television, for example.

Both the Delphi device and Automatic also can potentially save consumers the cost of bringing their vehicles to a repair shop for something benign. A check-engine light only alerts to a problem without specificity, but both devices will communicate in plain English everything from minor problems, such as a loose gas cap, to major trouble, such as transmission failure, the companies say.

INSURANCE SAVINGS

The idea of using technology to monitor driving isn't new; insurers got there first. Progressive Corp first started testing such devices in the late 1990s. They were large metal boxes that had to be professionally installed and read.

As the technology has improved, other insurers have jumped in. Allstate Insurance Co customers get a 10 percent discount for signing up for its DriveWise device, which remains in the user's car. Data gleaned from transmissions can lead to a discount after six months and is re-evaluated every 12 months after that.

While fewer than 1 percent of those driving today have used such a device, usage should expand exponentially in the coming years, says Tom Kavanaugh, insurance practice director for the consultancy PwC.

Some insurers leave their devices permanently installed in customers' vehicles, but Progressive watches its customers for six months with its Snapshot device and then has them ship it back. Meshelle Smith, 53, a customer service worker in Gainesville, Florida, says she tried Progressive's Snapshot because using it came with no risk. She could qualify for a discount if her driving over the six-month trial was considered safe, but she did not risk an increase.

The result, Smith says, was the maximum 30 percent discount - a $195 savings on her six-month premium. The discount remains in place, though Smith's device was removed a couple of months ago. About two-thirds of Snapshot users will get a discount of 10 percent to 15 percent, on average.

Those risk-free offers may disappear, though, says Kavanaugh. "As mass adoption begins to occur, for everybody who gets a 30 percent discount, someone's going to get a 30 percent increase," he says. "By sharing your actual driving data, the carrier might determine you have an increased risk profile."

We're still at least three years away from the devices becoming commonplace enough for that to be a concern, he says. Although Progressive's device is in 44 states, other insurers have made fewer inroads and are growing slowly.

WHO IS WATCHING YOU DRIVE?

Both personal and insurance company-owned driving monitors raise privacy concerns for some consumers.

"People liked the idea of getting the savings because they are good drivers, but they don't like the idea of the insurance company knowing where they are all the time," Pratt says. So Progressive and some other insurers do not use a GPS function.

Delphi and Automatic do but say they will not use the data they collect for any purpose other than to work with the individual users.

Many consumers would be willing to submit to a fair amount of monitoring if it meant a discount. Almost two-thirds of respondents to a recent survey by website CarInsurance.com said they would allow an insurer to install a breathalyzer in their cars, while 39 percent said they would accept a third party monitoring their driving data and 20 percent said they would allow an insurer to install an observation camera.

(The author is a Reuters contributor. The opinions expressed are his own.)

(Follow us @ReutersMoney or here Editing by Linda Stern, Chelsea Emery and Douglas Royalty)

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