Report author and SBD specialist on Telematics and ITS development in Emerging Markets, Stephen Longden, talks about OE telematics development in China.
Q: Telematics services will be officially launched in China in 2009. What experiences of telematics developments in other markets should be considered by OEMs and mobile operators in China?
Stephen Longden: It is important that vehicle manufacturers have a clear understanding of why they are planning to offer telematics services to their customers.
Companies planning telematics services in China should learn from the successful implementations such as GM OnStar, BMW Assist and Volvo OnCall. While these vehicle manufacturers attempt to cover their costs, their main use of telematics is to provide a close customer relationship and a unique selling point giving them a competitive advantage. BMW in particular uses its Connected Drive programme to reinforce its brand image as a technology leader that supports its drivers.
Q: Local service providers will be greatly impacted as OEMs start to promote telematics services such as navigation, safety, remote diagnostics and infotainment. What suggestions can you give to these companies?
SL: While full-blown OE telematics services from vehicle manufacturers will provide strong competition to local security service providers in the Guangdong region, there will still be room in the market for both. OE telematics services will be more expensive than security services from suppliers such as Shenzhen SEG who will be able to compete on price for specific stolen vehicle tracking applications.
There is also potential for local Chinese telematics service providers to gain from their experience and expertise by teaming up with OE telematics service providers to provide their security services and call centre infrastructure to vehicle manufacturers.
Q: As real-time traffic information service is becoming an industry focus in China, what advice can you give about the development of future traffic information services in China?
SL: SBD's current research for its Telematics, Navigation and Traffic Information in China subscription is focused on the future traffic information services in China as the situation is very complex and fluid. Both RDS TMC and VICS RTIC services are emerging and vehicle manufacturers are attempting to ensure they pick the right technology.
In Europe, DAB digital radio is emerging as the next generation broadcast technology for TPEG traveller information services. The UK and Germany are furthest ahead with deployment but no commercial services are available yet. Some vehicle manufacturers are planning DAB TPEG services, but pan-European services is the key deployment issue. For China, DAB services are available in Shanghai but nationa lcoverage is a long way from being achieved.
Q: Can you describe the current status and prospect of the "Pay as You Drive" (PAYD) service in Europe? What will it mean to the Chinese Telematics market?
SL: Usaged-based PAYD insurance services using telematics technologies have been tested and launched in many countries across the globe. However, it has remained a niche market as a stand-alone application. For all markets, including China and Europe, the future success of PAYD insurance lies in sharing in-car hardware and service providers used for OE telematics services. We go into further detail about this in our recently published report, "Connecting Usage-based Insurance with OE Telematics".
Q: GPS enabled mobile phones are gradually replacing special GPS navigation devices and some big portable navigation system providers in the world are concerned by the declining profits. Therefore, it is likely that Connected Navigation will become a future trend of the navigation industry. What's your opinion on this?
SL: As consumers in China become used to "static" navigation systems, they will start to demand more advanced dynamic route guidance using traffic information to avoid congestion. Connected Navigation systems, either PNDs or embedded OE systems, capable of receiving either broadcast or cellular traffic data will begin to dominate the market in China in the next few years.
