Brief:

• Toyota agreed to add Google's Android Auto infotainment software to its vehicles, making them directly compatible with more smartphones, Bloomberg reported, citing an unnamed source. The agreement may be made public as early as next month and follows a similar deal with Apple’s CarPlay in January.
• Toyota had resisted the Google software for years because of safety and security concerns. A bombshell report three years ago in Motor Trend said Android Auto collected on-board diagnostic (OBD) data such as vehicle speed, throttle position, engine RPM and coolant and oil temperatures that carmaker Porsche considered proprietary. Google denied some of the report.
• CarPlay and Android Auto previously connected to Toyota vehicles using SmartDeviceLink, a technology developed by Ford that limits access to car data. Toyota and Google declined to confirm the report about Android Auto compatibility. Toyota's U.S. vehicle sales this year rose 1% to 1.621 million through August from a year earlier, per Ward's. 

Insight:

Toyota's addition of Android Auto to its vehicles may give customers another reason to choose the brand over rivals, especially as on-board infotainment systems become a key selling point for car buyers. Apple CarPlay, Android Auto and Baidu CarLife are a "must-have" for prospective car buyers and are more popular than the on-board systems installed at the factory, according to a study from researcher Strategy Analytics. With about 80% of the world's smartphones running Android, Toyota likely doesn't want to alienate a significant group of customers, even as more than half (56%) of drivers who accessed connected-car services at the time of car purchase either don't plan to, or are unsure whether they will renew them in the future, per a survey by researcher Kantar TNS.

Google's agreement with Toyota would put Android Auto into more vehicles, but is less significant than a partnership announced last week with an alliance of car makers — Renault, Nissan and Mitsubishi — which together sold 10.6 million cars worldwide last year. The companies will embed Android in their next-generation infotainment system and dashboard displays for a rollout in 2021. The onboard systems will provide Google Map navigation and access to Google Play apps.

Google seeks to get its technology into cars amid competition from rivals like Amazon, which is the market leader for voice-enabled smart speaker devices. The e-commerce giant last week introduced a new device called Echo Auto that lets drivers speak to the Alexa digital assistant as they would at home. The device can help to navigate roads, make hands-free calls and use location-based triggers to run Alexa Routines, such as turning on a home's smart lights and unlocking doors when a driver arrives home. Amazon also has a software development kit for brands that want to create apps to work with Alexa Auto.