A number of critical developments which will directly affect the rollout of telematics in cars and trucks are at play – and many are outside the control of the industry.
Passenger car producers and their suppliers are asking whether the Telematics car business case is profitable enough, and whether road safety legislation restricting the number of potential distractions facing drivers as well as integrity issues, make it impossible to deliver the infotainment services the market seems to be demanding. And, on the commercial front, factory fitted telematics technology in trucks has the potential of disrupting the commercial balance within the Fleet Management System Market.
These two subjects will be debated at Telematics Valley International Conference in Gothenburg on October 9 and 10, 2012. Telematics Valley is a non-profit organisation supporting its members to do more business within the Telematics area as well as also related ITS and M2M areas.
Automotive Industries (AI) asked Jan Unander, Executive Director of Telematics Valley, what the challenges are in the car market.
Unander: I followed the development of Telematics from commercial and technical perspectives since 2000, and from the very beginning what puzzled me has been the unwillingness from car manufacturers to invest in the infrastructure needed to create the critical mass of connected vehicles required for a return on investment. The only exception is GM OnStar in the United States. The rest of the market took many years to follow. There are now a variety of solutions, but the services are more or less similar.
Infotainment in cars has never been a gold mine, and never will. Today I hope and believe that most car manufacturers have adopted a completely different view – that connectivity and infotainment are important to position the brand to sell more cars. I also hope that they have accepted that the Internal Business case alone justifies the investment of technical infrastructure in the car.
The Internal Business case focuses on creating income from the aftermarket that actually generates 60-80% of the profit for a car manufacturer. On top of that, it delivers savings in lower warranty cost, lower cost on leasing/ hire contracts, shorter and better product development, reduced marketing cost and improved efficiency in the branded workshops to mention some of the benefits.
AI: So what’s the problem?
Unander: To quote Ray Lahood – United States secretary of Transportation, “Every single time you take your eyes off the road or talk on the phone while you’re driving – even for just a few seconds – you put yourself and others into danger!”
If this is true how can we justify the infotainment race that is ongoing? Statistics say that in US 3,092 people were killed and 416,000 were injured in crashes involving a distracted driver. We have to ask ourselves whether this is really the full truth. Researchers have found that there are positive ways to alert (not distract) a driver, and voice controlled commands are improving the safety. Is it really true that barring drivers from making any calls at all or consuming any infotainment services while driving will influence that figure significantly?
Another factor that can put a blanket over the infotainment business case is not having respect for personal integrity by revealing/using geographical position and other sensitive information for commercial or regulatory purposes. Should car manufacturers offer integrity proofed services that might reduce functionality and the user experience to position themselves or is it the “Open world” that rules ? Some people do not care less about sharing the information, but others do – it is a segmentation issue, but one that is important to address.
AI: What about trucks?
Unander: Most major truck manufacturers are starting to factory fit Telematics to be able to reach the trucks to collect and make use of diagnostic data. But, that also means that they will have the communication channel for the Fleet Management Systems (FMS). These could be either their own or a third-party solution.
This can be seen as a threat to the established third-party Fleet Management System providers as sometimes an important part of their income is generated from the technical infrastructure they install to enable their customers to use their solutions – and by so doing tying the customers in a proprietary solution. Truck manufacturers have standardized the data/information accessibility via their FMS interface, and the third party FMS providers might find it difficult to argue for proprietary solutions in the future.
AI: How will this change existing business models?
Unander: There are opportunities for partnerships. Many of the big third-party FMS suppliers are internally organized to offer total solutions including the technical infrastructure and have as their competitive edge the understanding of goods logistics throughout the transportation chain. Truck manufacturers have a limited access (and often limited interest) to information from the goods and goods terminals, but deep insight of fuel consumption and other vehicle related data that are used to create selling points for the truck.
Logistics specialists should not have to generate their own vehicle-related data, and should be able to focus on their applications and services around improving efficiency in the transportation flow. If, for example, suppliers of trailers, refrigeration equipment and components for the vehicles also provide their data and information in a commercial win-win way, the source for more and more reliable data can be created.
As the mixed fleet challenge (transporters have to use more than one truck manufacturer’s FMS application) becomes a non-issue – we have to ask what will happen? Will the truck manufacturers rule the FMS market, or are there advantages with collaboration within the transportation eco-system to find new business models?
I strongly believe that if there was a closer dialogue between the truck manufacturers, third party suppliers of FMS solutions and other suppliers of data/ information from the vehicle, trailer and the cargo, higher value for the transporters will be created.
Focus on Telematics
To highlight the Telematics/ connectivity case for cars and the value of a closer collaboration within the transport eco-system, Telematics Valley has organized an International Conference to be held in Gothenburg, Sweden, from October 9 to October 10. It will be led by a panel of international speakers from the key role-players in the industry.
To get more information on the conference please contact Jan Unander, Executive Director of Telematics Valley jan@telematicsvalley.org
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