The number of telematics service subscribers using embedded systems will grow at a compound annual growth rate (CAGR) of 39.9 per cent from 20.5 million subscribers at the end of 2014 to 153.4 million subscribers at the end of 2020, a report said.

Meanwhile, shipments of embedded car OEM telematics systems worldwide will grow from almost 11.1 million units in 2014 at a CAGR of 31.1 per cent to reach 56.0 million units in 2020, added a new research report by Berg Insight, a dedicated M2M/IoT market research firm based in Sweden.

The drivers behind the adoption of telematics systems among car manufacturers are both commercial and regulatory. Safety regulations that aim to make automatic emergency calls mandatory in all new cars are for instance being adopted in the EU and Russia with the eCall and ERA-GLONASS initiatives respectively.

In other markets such as North America and Japan, commercial services have driven adoption of telematics services that have evolved from being a differentiator to a mainstream feature offered by most car brands. Examples of services offered by carmakers include emergency call and roadside assistance, stolen vehicle tracking, vehicle diagnostics, navigation and infotainment, as well as remote control of vehicle functions.

“Carmakers are still experimenting with the business models for connected car services as renewal rates for telematics subscriptions after the initial free period remain relatively low”, said André Malm, senior analyst, Berg Insight.

He added that most car OEMs let users of new cars equipped with telematics systems try services for free for a given period of time.

In the US, the free period now ranges from 6 months in the case of GM, Nissan and Volkswagen, to 12 months for FCA, Subaru, Hyundai and Toyota. Mercedes-Benz has recently extended the free service subscription period to 5 year and GM now also offers the OnStar Basic plan free of charge for five years.

In Europe, BMW, Mercedes-Benz and PSA Peugeot Citroën offer basic telematics including eCall and remote diagnostics free of charge for lifetime and Audi for 10 years. Other brands including Opel/Vauxhall and Volvo offer free services for 6-months to two years.

“Market competition and local regulations will likely lead to that a growing number of brands will offer free basic services such as safety and diagnostics for the lifetime of the vehicle,” said Malm.

As part of new business model trials, some carmakers are also launching their own app stores. These enable customers to download additional apps that have been developed to integrate with the car’s infotainment system. It is however unlikely that car OEMs will be able to attract enough developers to offer compelling alternatives to the leading smartphone-based app stores and generate meaningful revenues.

“Carmakers should instead focus on making infotainment systems with smartphone integration available across the model range and rely on existing app stores for distribution of car-optimised apps”, concluded Malm. - TradeArabia News Service