Automotive telematics has been around for more than 10 years. While it has made a dent in the market, its overall outlook has not been so promising as it was perceived to be a costly and complex affair. But, recent advances in wireless communications and navigation technologies, coupled with the pressure to enhance vehicle safety, is prompting a comeback. By 2010, more than 30 million telematics-enabled vehicles will be on the road in the United States alone, according to Telematics Research Group (TRG), a market research firm based in Minnetonka, MN.
Thanks to General Motors, BMW and Mercedes, nearly one in four vehicles sold in 2007 will have monitored telematics for safety, vehicle diagnostics or navigation devices. “The pendulum is starting to shift, stated Egil Juliussen, TRG's co-founder and principal analyst. “Telematics will eventually be on all cars as OEMs realize the benefits of having a connected car.” In Europe, telematics will become mandatory in the next five years as a means of saving lives, according to TRG. Similar patterns are emerging in Asia and other parts of the world.
For instance, after a prolonged period of slow activity, Chinese commercial telematics is experiencing a resurgence. The Chinese market for fleet management systems (FMS) is expected to be worth in excess of $300 million by the end of 2007, according to a new study by ABI Research. By 2012, the value of this market is expected to be nearly $786 million, projected the ABI report. Subscriber numbers will reach 2.6 million by the end of 2012, with a compound average annual growth rate of 46%. The summer Olympic Games in 2008 in Beijing and the World Expo in 2010 in Shanghai are expected to trigger an explosion in the commercial telematics market, the ABI analyst predicted. Most of the taxis and public buses in these two cities have GPS-enabled fleet management systems installed.
“The taxi and bus monitoring and tracking market has a penetration rate of 80% in this region,” stated Wang Tao, ABI Research analyst. “We forecast rapid growth for the Chinese commercial telematics market, particularly because of the intense competition among short-range specialty logistics companies and couriers, who are implementing FMS to increase their delivery efficiency and competitiveness.”
According to GM, its OnStar will be standard equipment on all its vehicles next year. Similarly, Merecedes will offer COMAND and BMWs will carry Assist. While Ford's Sync will be unveiled in 2008, and Chrysler's Hughes Telematics system is expected in 2010. Others in this race include Toyota and Nissan, according to TRG.
Globally, automotive telematics and navigation hardware and services will experience strong growth and generate $38.3 billion in total revenues in 2011, according to “Automotive Telematics: Global Consumer Telematics Markets and Technologies,” a study released last year by ABI Research. “Telematics and navigation systems are converging,” said transportation research associate Steve Bae. “While telematics systems can bring peace of mind to customers by providing security, safety, and other convenience features such as news, weather, and concierge services, current navigation systems can offer more than simple directions from point A to B by applying layers of traffic and weather information to routing schemes. Combining two technologies brings existing and new industry players greater flexibilities to offer new products and address niche markets.”
Although, initially the telematics functions like global-positioning system (GPS), hands-free telephone, navigational assistants have been separate, the trend is to integrate them on a common platform. Thus, driving the cost to make it attractive as a common standard equipment. More details can be obtained in this issue's cover feature, “Telematics Catches A Wave” by John H. Day, p. 8. This report indicates that the telematics services available today may only be the tip of the iceberg. The next frontier in telematics includes vehicle-to-infrastructure and vehicle-to-vehicle communication.