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The new chapter in global vehicle telematics market: SE Asia

Published: November 25, 2015

Automotive telematics is a relatively new term for the South East Asian market. people are not very familiar with the term and technology in this part of the world, unlike the west where situation is quite different. The market of vehicular telematics or automotive telematics is quite developed in the western nations like The USA and European countries. South-east Asia is a developing market for automotive telematics. It this part of the world it is just a newly born and slowly but steadily developing sect. It wasn’t introduced into this part because of  infrastructural restriction, and also due to low income of people in these countries. But the market is expanding.

With a strong position in South East Asia, Japanese OEMs have been the first to jump at the opportunity to offer telematics in this market. Toyota became the first to launch a smartphone integration solution in Thailand in early 2012 and domestic OEMs are also following.

Consumers are very passionate about environmental issues and concerned about fuel prices making eco-drive services rank highly in all 3 markets . Stolen Vehicle Tracking is particularly popular among Malaysian car buyers which is a reflection of the high theft rates in the country. Ownership of smartphones amongst recent car buyers is typically 20-30% higher than the overall penetration rate. Smartphone navigation is becoming the primary form of navigation among car owners along with the popularity of smartphones.

Proton_YES_Connected_Car_4G_MalaysiaIn Asia, Japan is by far the largest telematics market but South Korea and Taiwan’s telematics market are also growing rapidly. The telematics market includes the navigation, the in-car infotainment and features for security and remote diagnostics. Advanced telematics systems are in place in countries like Japan and Korea. The telematics market globally has not yet reached its potential and is expected to increase with the rising automobile sales. In Asia, traditionally most of the telematics market is driven by navigation and its associated services as well as infotainment. Honda was the first to introduce a navigation system based on electronic sensors in 1981; future developments that introduced CD-based maps encouraged the integration of infotainment with navigation. The year 1996 saw the development of Vehicle and Information Communication System (VICS) which further integrated telecommunication technologies to retrieve real-time traffic information.

Though the market is expanding, but there are many challenges that the development of telematics has to face in Asia.  For example : most countries in Asia still do not have the adequate infrastructure to support features like real-time traffic for navigation systems, both in terms of traffic data collection and telecommunication infrastructure. The availability of the traffic data is one of the biggest barriers to greater adoption of telematics system.

Like any other market in a development stage, the telematics market in Malaysia is characterised by low customer awareness and its benefits. With availability of only partial telematics services in Malaysia, even the vehicle owners who have acquired certain telematics functions are not completely aware of the convenience and advantages of using complete telematics systems. Hence, telematics is not perceived as a “must have”. This restricts consumer adoption and hampers market development. To read more on telematics in SE Asia, please read our interaction with DRVR.

Similar is the situation in India. People here don’t consider any telematics feature to be essential. It becomes the duty of the manufacturer here to convince the people of the usage of the feature they are providing in the vehicle. For example: ABS is not considered as an essential feature by the Indian buyers. The main reasons behind this are the lack of awareness about ABS and its cost. Most of the Indian (read Asian) buyers are middle class people who always consider the price before buying a vehicle and sometimes the price matters more than the features. With most of the buyers this is the case. They don’t believe that they need any of the “technical” features. It depends upon the manufacturer how well can he convince the buyers. The lack of awareness about the “connected” features results in the lesser usage of these features. Automakers can take a lead by providing telematics services free of cost until customers are adequately educated about the benefits, convenience, and necessity of using telematics systems.

Customer education is expected to remain a high impact challenge over the next few years as the market evolves from infancy. Innovative and technologically upgraded products are likely to require customer education to become a continuous process.

In China, limited service network coverage across the provinces is the major restraint for telematics to take off. The service network for telematics is not interconnected; and this impedes the reception of information when user travels across different cities. Original Equipment (OE) participants’ reluctance to introduce telematics is largely due to the lack of unified standard for service operators. There are many demonstration projects being carried out by Asian countries such as DYNASTY in Beijing using Traffic Management Channel (TMC) standard from Europe and also Vehicle Information and Communication Systems (VICS) from Japan. However, telematics will take a back seat in the original equipment market until 2008 until a sound service platform is established.

Even in a developed market like Japan, consumers are not fully convinced that telematics is necessary. While consumers understand the importance of map and traffic update, they are less convinced about the safety and security function, especially benchmarked against other safety devices such as multi-stage airbags.

There is a big growth opportunity for the telematics market in Asia given the growth of 3G subscribers in the telecommunications sector in these countries. The Chinese telematics and infotainment markets are likely to see considerable growth and development over the next five years. Contributing to this upsurge will be continued growth in both demand and production of passenger cars, increasing disposable incomes, growing acknowledgment of the benefits of telematics and infotainment, the 2008 Olympic Games and the 2010 World Trade Exhibition.

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Therefore, with all the restrictions and limitations, the telematics market of South-East Asia is developing as a steady pace and is sure to have a telematics boom in the upcoming year. Soon this part of the world will also be at par with its western counterparts in terms of development of telematics.

Get the inside scoop of SE Asian telematics and connected car market in our upcoming conference & exhibition,  SMART AUTOMOTIVE 2016 APAC on 27-28 April, Kuala Lumpur. Find more information here.

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