Chinese light vehicle telematics market set for rapid expansion

Although the OEM in-vehicle telematics market is still in an early phase in China, forecasts say it will soon become a billion dollar market.

Source: IMS Research (IHS Inc.)

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Although the OEM in-vehicle telematics market is still in an early phase in China right now, IMS Research (recently acquired by IHS Inc.) forecasts it will soon become a billion dollar market. According to a recently published IMS Research report named “The Chinese Market for In-Vehicle Telematics Systems - 2012,” the total market revenue is projected to reach $2.4 billion in 2019.

There have been OEM in-vehicle telematics systems in the Chinese market for a while, such as GM's OnStar system, Toyota's G-Book system and Nissan's CARWINGS system. However, in addition to these pioneers, more and more vehicle manufacturers, both multinational and domestic, are planning to launch their own telematics systems within the next two years.

Michael Liu, senior market analyst with IMS Research’s Automotive and Transport Group commented: "There are some major reasons for the promising future of this market. First, more and more telematics systems can provide real-time traffic information to drivers, which can greatly improve traffic efficiency and decrease fuel consumption, thus making driving more eco-friendly. Second, most telematics systems provide accident-assist services, which can lower down the damage and casualties caused by traffic accidents. Third, providing telematics products will be valuable to vehicle manufacturers, since it can not only improve their after-sale service quality, such as providing more convenient and frequent software updates to customers, but also help them gain lots of valuable customer information like driving habits which is valuable for their future product design and marketing.”

In addition to these reasons, driving is also forecast to become increasingly automatic in the near future with the uptake of advanced driver assistance systems, thus making it possible for drivers to spend more time safely using in-vehicle communication and entertainment. In addition, more electric vehicles (EVs) will be produced and sold in China in the future, and most EVs are forecast to be equipped with telematics systems. This is because EV drivers will need to pay more attention on how much battery charge is left or where is the closest charging station.

Considering all the above, IMS Research forecasts the fitment rate of OEM in-vehicle telematics systems will increase quickly to 34.5% in 2019, meaning one in every three light vehicles sold in China then will be equipped with these popular systems.