In July 2007, the Brazilian government announced that all new vehicles would need to be fitted with an anti-theft system as standard equipment. This legislative program, known as SIMRAV, requires that each system is capable of communicating with a control centre so that tracking and remote immobilisation services can be provided. SBD has been closely monitoring the automobile industry in Brazil and has released a new report, Deployment of mandatory telematics in Brazil - Lessons learnt and market trends 2011, examining activities in Brazil regarding this legislation.

In this exclusive interview, Paul Burnley, Senior ITS & Telematics Specialist, provides insights into how car manufacturers have reacted to the Brazilian legislation, the additional telematics services to be offered and the lessons learnt during the development of this national telematics program.

Q1. The government’s initial deadline for the introduction of these systems is already more than 18 months behind us and there have been a seemingly never-ending number of postponements to the legislation. Will the legislation really be introduced this year as planned?

It’s important to acknowledge that the Brazilian market is not the most predictable, and there have certainly been a few ‘bumps along the road’ for the SIMRAV legislation. With some vehicle manufacturers still vocal opponents of the program and a still-sceptical public, there remains a chance that the mandate will be cancelled, or modified, at the eleventh hour.

However, on balance SBD believe that it is likely to be introduced in 2011, although the introduction timing (a progressive rollout is planned) may have to be further relaxed from May to the second half of the year. The Brazilian government remains committed to the program and vehicle crime remains at very high levels in Brazil. Tackling the high level of vehicle theft is the primary motivation for the SIMRAV program.

Q2. Many industry observers expected the first widespread mandate for telematics to be the EU’s long-awaited eCall program, hence there was some surprise when the Brazilian government made their announcement back in 2007. What are some of the lessons the government has learnt during what is the first national implementation of telematics?

The government has learnt several lessons that will have resonance with industry observers in other markets. Firstly, they appeared to underestimate the level of public concern over the mandate - perhaps thinking they could disregard it, or that the public would be on their side as the motivation was to reduce vehicle crime for the benefit of society. They had to adopt a more conciliatory approach when a federal court judge upheld a legal challenge on privacy infringement grounds, resulting in changes to the system specification.  

Secondly, the government underestimated some of the technical challenges posed by how they defined the systems should operate. Together with a test program which has necessarily involved a huge number of industry stakeholders, this has resulted in the development of a complex and time-consuming validation process.

Thirdly, the government had very unrealistic expectations of the time required to write the initial specifications and for vehicle manufacturers and their suppliers to develop the necessary line-fit systems. When the mandate was first announced, just two years was allowed for this process and the specifications themselves took over a year of that time to develop!

To their credit, the government has appeared resolute in their desire to introduce SIMRAV. What they have learnt along the way is that they could easily have predicted the negative public reaction and modified their approach accordingly. A greater level of expert technical advice and consultation with vehicle manufacturers (rather than aftermarket suppliers) would have resulted in fewer technical hiccups and a far more realistic introduction schedule.

Q3. The legislation calls for equipment capable of delivering vehicle tracking and remote immobilisation telematics services to be fitted to all new vehicles. However it will be at the discretion of the owner if they subscribe to a tracking service. Given that the majority of new cars sold in Brazil are small-engine, budget models, surely only a tiny minority will subscribe to the tracking service?

Due to the high rates of vehicle theft, motor insurance which provides compensation for theft is relatively expensive in Brazil, with some owners paying more than 10% of the vehicle value annually. Theft rates are actually highest on specific compact cars, including top-selling models from Fiat and VW, because of a thriving black market for spare parts. Due to this, there is already a relatively high penetration of aftermarket vehicle tracking systems in Brazil as fitment can reduce the insurance premium and hence lower cost of ownership.

Assuming SIMRAV is introduced as planned, the cost of a vehicle tracking service will be reduced as the necessary hardware is already fitted, leaving the owner with a smaller monthly subscription fee for the monitoring service only. These reduced costs, and the expectation that subscription pricing will fall further due to competition, will mean that a much larger number of car owners will see a financial benefit (by way of reduced insurance premiums) for subscribing to a tracking service. Another potential addressable market is that of owners who currently cannot afford to buy theft insurance, but they may be able to afford the monthly premium for tracking instead.

Motivated by reduced cost of vehicle ownership, the number of owners who subscribe to a tracking service is expected to rise sharply following SIMRAV rollout. The latest SBD report considers the market dynamics to provide a forecast for the growth of vehicle tracking services in Brazil to 2015. The figures may surprise some and are at a different level altogether from those seen in ‘established’ European markets.

Q4. What are some of the unique aspects of the SIMRAV program in terms of the requirements for telematics infrastructure?

Just by virtue of the fact that it is the first implementation of telematics on a national scale, the Brazilian government was always going to be on an aggressive learning curve during the specification, validation and deployment processes. However, by seeking to allow users ‘freedom of choice’ in how the telematics services are delivered, some important constraints were placed on the telematics system architecture.

SIMRAV requires that all in-vehicle telematics units are able to communicate with any ‘approved’ tracking service provider. To enable this interoperability, an ‘open communications protocol’ was adopted called ‘ACP245’ which is based on a Motorola standard. Basically, ACP245 defines a common language for communications between monitoring centres and the vehicle.

However, far more challenging from a technical perspective was the demand that the mobile network operator should be able to be freely changed as required. This has necessitated the deployment of reprogrammable SIM cards – an industry first – and lengthy discussion with network operators, SIM manufacturers and the telecommunications regulator in addition to the service providers and telematics hardware manufacturers.

There are currently hundreds of service providers in Brazil claiming to provide vehicle tracking. One of the government’s aims with SIMRAV has been to improve the quality of the service offered. To that end, they have implemented a ‘quality assurance’ program whereby only the service providers which demonstrate they meet certain criteria are allowed to provide monitoring services to the new line-fit devices.