The Global Automotive OEM Telematics Market - 2nd Edition

Nov 09, 2015, 15:00 ET from Reportlinker

NEW YORK, Nov. 9, 2015 /PRNewswire/ -- Executive summary
Telematics is a broad term that may be applied to a wide range of automotive connectivity solutions. Berg Insight's definition of a car telematics system in this report is an automatic system designed for passenger cars that incorporates some form of cellular communication. Mobile networks have enabled online connectivity with two-way communication at the same time as GPS technology has been commoditised to the extent that satellite positioning can be integrated into virtually any device. Automotive manufacturers can choose between several connectivity options when creating connected car services, which are not mutually exclusive. The main options are embedded telematics devices, tethered devices and integrated smartphones. With embedded systems the connectivity and intelligence is built into the car. In the case of tethered devices, the connectivity is provided by an external modem or handset while the intelligence is built into the car. Solutions relying on integrated smartphones leverage the connectivity and intelligence built into the smartphone. Carmakers often use a combination of these options to address different customer requirements and keep pace with the rapid development of mobile technology.

Several categories of car telematics applications are now offered on a commercial basis by most leading carmakers. Examples include eCall and roadside assistance, stolen vehicle tracking (SVT), vehicle diagnostics, connected navigation and infotainment, as well as convenience applications. Convenience applications mainly rely on embedded telematics devices to enable remote control of vehicle functions such as door lock/unlock, vehicle preconditioning (heating or cooling of the passenger compartment before a trip) and finding the last parking position. Several other applications also exist, for instance usage-based insurance, leasing and rental fleet management, as well as electronic toll collection and road charging. However, these applications are usually offered by aftermarket service providers. The connected car is a major trend in the automotive industry and virtually all of the world's leading carmakers have launched mass-market services in key regions. The drivers behind adoption of OEM telematics are both commercial and regulatory. Regulatory initiatives related to safety and security will have a decisive effect on the adoption of OEM telematics in Europe and Latin America. The EU's eCall initiative and Russia's ERA-GLONASS set the sight on
making an automatic emergency call device a mandatory safety feature in all new cars sold.

Brazil's government for its part is pushing car manufacturers to install security tracking devices on all vehicles sold in the country through the so called CONTRAN 245 mandate. In North America, commercial services have driven the adoption of OEM telematics services that have evolved from being a differentiator to a mainstream feature now offered by nearly all the leading car brands on a majority of their models. Berg Insight estimates that nearly 15 percent of all new cars sold worldwide in 2014 were equipped with an OEM embedded telematics system, up from 12 percent in 2013. North America is the most advanced market with an attach rate of 34 percent. Other developed markets such as Europe, Japan and South Korea currently have attach rates of 14–15 percent. China has emerged as an important market for telematics services with an attach rate of about 8 percent in 2014. In other regions, the attach rate is only 1–5 percent. GM and BMW are the leading adopters of embedded telematics, widely offering the technology as a standard feature across models and geographies. GM has offered telematics services for more than a decade, offering the technology as an integral part of its value proposition in North America and China. Since August 2015, GM is also launching the OnStar service throughout Europe. BMW introduced its ConnectedDrive service in North America and Western Europe in 1997. ConnectedDrive has since become a standard feature on a growing number of models, now available in nearly 40 countries on all continents. Other major car brands offering embedded telematics on a broad scale include PSA, Hyundai, FCA Group, Toyota, Renault and Volvo.

Berg Insight estimates that total shipments of embedded OEM telematics systems reached 11 million units worldwide in 2014. Growing at a compound annual growth rate of 31.1 percent, the shipments are expected to reach 56 million units in 2020. The number of telematics subscribers using embedded systems is forecasted to grow at a compound annual growth rate of 39.9 percent from 20.5 million subscribers in 2014 to 153.4 million in 2020. However, by 2020 many users will only have access to safety services such as eCall. Berg Insight forecasts that the number of active subscribers using at least one additional premium telematics service will grow to about 110 million worldwide at the end of 2020.
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