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Thursday, August 22, 2013

Telematics Market Drivers: Customer Return Visits to Dealerships

As reported by Connected World Magazine: The connected car is gaining ground as safety and convenience technologies are added to vehicles. For manufacturers, in-vehicle telematics systems may be the wave of the future. But there are also challenges to face when integrating connected technologies into the automobile.

One recent report states the increasing complexity of design is one hurdle the industry needs to overcome. TechNavio, says telematics use is definitely growing for vehicles, but that growth brings with it more complexity of design in the applications to manage all the telematics.

TechNavio says the infotainment trend is one of the driving factors in the growth of the in-vehicle telematics market. As more vehicles are sold worldwide, and more consumers look for telematics capabilities in their cars, the overall demand for telematics is increasing. Right now, the largest markets are the Americas and Western Europe, according to the report.

Telematics also presents opportunities for dealers and OEMs (original-equipment manufacturers). A report from Frost & Sullivan, says auto manufacturers are seeing the value of including some telematics services in the cost of the vehicle.

“Vehicle manufacturers are waking up to the advantages of signing up users for a connected service for three or more years than having them pay a monthly subscription of $15 or $20 for a year,” says Frost & Sullivan Telematics and Infotainment Research Manager Praveen Chandrasekar.

Frost says successful telematics systems need to bring dealers into the value chain by providing them with vehicle data and performance information. With this data available, dealers can reach out to car owners to provide additional services throughout the life of the vehicle. Access to vehicle data can allow both manufacturers and dealers to provide value-adds to the customer.

Telematics is a $1 billion service market in North America, according to Frost. But the research firm says even more significant revenue can come from customers returning to dealerships during their ownership of the vehicle.

For customers, safety and convenience are driving the selection of telematics in vehicles. But for manufacturers and dealers, additional service opportunities may be the most important force for embedding telematics.