Shipments from original equipment manufacturer (OEM) embedded telematics systems worldwide  have been forecast to grow from 8.4 million units last year at a rate of 30.6 per cent to reach 54.5 million units in 2020, according to a new report.

The Berg Insight research report pointed out that the number of cars sold worldwide equipped with head-nits featuring handset-based telematics capabilities will grow from seven million last year to 68.5 million in 2020.

Telematics is a broad term that may be applied to a wide range of connected services in the automotive industry, it said.

Berg Insight’s definition of a car telematics system is an automatic system designed for passenger cars that incorporates some form of cellular communication. Automotive manufacturers can choose between several connectivity options when creating connected car services, which are not mutually exclusive.

The main options today are embedded telematics devices, tethered handsets and integrated smartphones. Car manufacturers often use a combination of these options to support different customer needs and keep pace with the rapid development of mobile technology.
 
Connected car services are gaining momentum globally after many years of development and gradual rollout. The drivers behind adoption of telematics systems among car manufacturers are both commercial and regulatory, said the report.

Safety regulations that aim to make automatic emergency calls with vehicle location 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 OEM telematics services that have evolved from being a differentiator to a mainstream feature offered by most car brands.
 
Several categories of connected car services are now offered by leading car manufacturers, including emergency call and roadside assistance, stolen vehicle tracking (SVT), vehicle diagnostics, connected navigation and infotainment, as well as convenience applications.

Convenience applications include remote control of vehicle functions such as door lock/unlock and air conditioning, vehicle status and finding the last parking position. Several other applications also exist, such as usage-based insurance, leasing and rental fleet management, as well as electronic toll collection and road charging.

Most telematics services can be supported by any connectivity type, although embedded connectivity is the most suitable option for applications including emergency call, SVT and convenience applications, it said.

There are many business rationales for car telematics, ranging from monetary savings for the car owner in the case of SVT and usage-based insurance, to product differentiation, improved customer relationship management, potentially lower costs of product recalls and soft value creation for the car OEM.
 
The number of telematics service subscribers using embedded systems will grow at a compound annual growth rate of 38.1 per cent from 16.6 million subscribers last year to 158.9 million subscribers in 2020, the report forecast.

Andre Malm, senior analyst, Berg Insight, said: “A key factor that influences the growth in active subscribers is the length of the free trial period included in the price of new cars.”

The free period now typically ranges from six to 12 months in the case of Chrysler, GM, Mercedes-Benz, Toyota and Volkswagen to three years for Hyundai and 10 years for BMW, he said.

“Renewal rates for telematics subscriptions after the free period expires are presently relatively low.”

However, car brands are now launching cloud-based telematics services that facilitate customisation of service packages to better meet the needs of individual customers. Several car manufacturers have app stores that enable car owners to download apps directly to the infotainment system of the car.

“New split-billing solutions being introduced by telecom operators also increase flexibility in business models for car manufacturers offering connected car services to their customers”, said Malm.

Split-billing can enable car manufacturers to bundle services such as eCall, roadside assistance and diagnostics for the lifetime of the car, while high bandwidth applications like infotainment and car hotspot features are billed separately, he added. - TradeArabia News Service