Analysis on the future development trend of vehicle-mounted telematics market

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Analysis on the future development trend of vehicle-mounted telematics market [Copy link]

Telematics refers to the in-vehicle communication system. In the vast field of automotive electronics, automotive telematics is an important part of it. In the past, telematics services were mostly centered on customer service centers (Customers Service Center or Call Center). If the car owner has service needs, he or she can describe the required service through automatic or manual voice calls or text messages, and then the customer service center will provide navigation, ticket booking, emergency rescue and other services through human voice or automatic voice.

This type of Telematics provides carefully arranged services, so the service content is fixed, tends to be one-way, and has low interactivity. In addition, it is difficult to customize this service to meet the different needs of individuals.

These shortcomings once caused the development of Telematics to stagnate. However, with the advancement of information technology and the automotive industry's understanding of the Telematics market, Telematics services have begun to develop rapidly, and in recent years there has been a trend towards integration with other electronic systems. Let us introduce the situation in this regard and the latest market trends of Telematics.

1. Integration of automotive electronics and telematics
Automotive electronics can be roughly divided into four subsystems: Telematics (vehicle communication system), Navigation System (navigation system), Digital Entertainment System (digital entertainment system) and Driver Assist System (driving assistance system), which correspond to the four needs of communication, guidance, entertainment and safety. Other automotive electronic systems that only have one-way communication capabilities or no communication capabilities have actually begun to integrate with each other in the car, and the boundaries have gradually blurred.

The Telematics system has two-way communication capabilities and GPS reception capabilities; the Navigation System includes a GPS receiver, electronic map database, display, and path calculation host; the Digital Entertainment System includes audio and video output devices, such as speakers, displays, and media storage devices; the Driver Assist System has a wider range, such as cruise control, lane departure warning, reversing warning, collision warning, or other driving assistance equipment using radar, laser, ultrasonic, and camera technologies. The main components are sensors, computing devices, and display devices.

The global market sales of these four subsystems are shown in Figure 2. In 2004, the sales of Navigation System was still the largest, followed by Telematics. It is estimated that around 2007, the sales of Telematics will surpass Navigation System. It should be noted that since each subsystem has overlapping parts, for example, in 2003, about 10% of Telematics systems included navigation functions; by 2010, this number will grow to 43%, indicating that each subsystem has a trend of gradual integration.

Although these four subsystems have different application purposes, they share some automotive components and technologies, such as displays, communication systems, storage devices, etc. The shared components are listed below:

l Microprocessors: 64 bit, 32 bit, 16 bit
l Displays: LCD flat panel displays, various flat panel displays.
l Communications: Cellular, Wi-Fi, Bluetooth
l Memory: DRAM, Flash, small memory cards
l Disks: hard disk, DVD/CD
l Sensors: image sensors, motion sensors
l Others: voice recognition, satellite broadcasting, GPS

Under the constraints of cost saving and space in the car, it is inevitable that each subsystem will share parts, which will make the boundaries between subsystems increasingly blurred. The suppliers of these parts will gradually gain profit growth under this integration trend. Therefore, for manufacturers who intend to enter the automotive electronics market, now is the best time to enter the automotive parts market. Among these parts, the most widely used are microprocessors, displays, memory, large storage devices, communication equipment and sensors. In addition, GPS receivers and voice recognition technology are also basic parts and equipment that are growing rapidly.

In recent years, automotive electronic products have gradually developed with the attention paid to Telematics, and various new technology electronic products on smart cars in ITS are also being developed and tested. These electronic products cannot get rid of the von Neumann architecture, that is, processors, memory and input and output devices. Therefore, the parts produced by these parts suppliers can not only be supplied to Telematics system car manufacturers, but also to the other three subsystem manufacturers. Even if the four subsystems are gradually integrated into a single system in the future, a powerful processor, memory, large-capacity storage device and human-machine input and output interface will still be needed in the end. Of course, the car computer system may also develop into a thin client architecture, reducing the cost of the car computer through remote computing, but analysts believe that this is unlikely when the communication system is not mature. With the trend of sharing automotive electronic components, driven by the growth of the Telematics market, it is believed that the shared components market will gradually take off.

II. Global Market Analysis
According to the latest market report released by Telematics Research Group, a professional market research company for Telematics, at the end of 2003, the total value of the global Telematics market will grow from US$4.1 billion in 2001 to US$35 billion in 2010 at a compound annual growth rate (CAGR) of 27%. Such a high market growth rate shows that the Telematics industry has become one of the star industries in the next decade.

As can be seen from the global Telematics market trend chart in Figure 3, the market volume grew slowly from 2001 to 2005 because the life cycle of the Telematics industry was still in its infancy. After 2005, as the relevant technology, operating model and consumer acceptance gradually matured, the market began to grow rapidly and the industry life cycle officially entered the growth and growth period. During this period, there will be a large number of suppliers and potential competitors in the market, all scrambling to get a piece of the Telematics pie. After 2010, the market growth began to slow down, and it is estimated that the market will not be saturated until 2025.

2.1 Regional Market Analysis
The global Telematics market is mainly distributed in North America, Europe and Asia Pacific. North America includes Canada and the United States; Europe mainly includes the United Kingdom, France, Germany and Italy; Asia Pacific mainly includes Japan and Australia. North America is the leading region in the global Telematics market, and its total market value was even greater than the sum of other regions in the world before 2005. As shown in Figure 4, in 2001, the total market value of North America was close to 4 billion US dollars, while Europe was only 160 million US dollars and Asia Pacific was only 80 million US dollars, indicating that the North American market started very early and was far ahead of other regions. However, the growth of Europe and Asia Pacific should not be ignored. Compared with the 19% CAGR of North America, Europe and Asia Pacific have been growing at a high CAGR of about 50% since 2001, and can still maintain an annual growth rate of 30% by 2010. The data shows that the North American market is huge and has basic market maturity, while Europe and Asia Pacific have high growth potential.

III. Conclusion
According to market forecasts, the global market growth rate of Telematics in 2004 is about 28.6%, and in 2005 it will reach a peak of 32.6% in the past decade. Therefore, the next year will be an era of rapid growth for the global Telematics market. Manufacturers from various industries have successively invested in the automotive Telematics market, whether in vehicle manufacturing, service integration, content provision, communication networks, etc. Drivers have also found another space to enjoy information services in addition to computers and mobile phones.

In the global regional market, the North American market will still dominate the global market in the next decade, while Europe and the Asia-Pacific region will catch up quickly. North America sells about 17 million vehicles per year, Europe sells 16 million vehicles, and the Asia-Pacific region sells 15 million vehicles. In terms of market potential, the three regional markets are not far apart, and the difference lies in consumer income, preferences, and market maturity time. Therefore, if we can cultivate the European and Asia-Pacific markets for many years, I believe that we can still reach a scale comparable to the North American market in the future.