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Adoption of telematics devices on the rise

Embedded car OEM telematics subscribers are forecast to reach 153 million by 2020

According to a new research report published by Berg Insight, a dedicated M2M/IoT market research firm based in Sweden, the number of telematics service subscribers using embedded systems will continue to increase at 39.9% per year, surging from 20.5 million subscribers in 2014 to over 153 million subscribers by the end of 2020. Moreover, Berg Insight forecasts that worldwide shipments of embedded OEM telematics systems will follow suit, increasing by ca. 31% from 11 million units in 2014 to 56 million units by 2020.

The increase in the adoption of telematics systems is being driven by a wide range of factors, especially commercial and regulatory ones. On the regulatory front, for example, all new cars sold in the European Union as of October 1, 2017 will have to be equipped with an e-Call emergency alert system.

Another great driver of telematics is the attractiveness of products and services that can be custom-tailored to consumer needs, driven by usage-based insurance opportunities, and the growing number of market segments addressed by telematics products and services.

This includes smartphone-based solutions and the steady journey towards a world of connected cars; indeed towards the greater Internet of Things. Less than a year ago, McKinsey & Company reported that 13% of buyers was no longer even interested in purchasing a new vehicle without Internet access and over 25% already prioritized connectivity over features such as engine power and fuel efficiency.

In fact, a senior analyst at Berg Insight points out that “market competition and local regulations will likely lead to a growing number of brands offering free basic services such as safety and diagnostics for the lifetime of the vehicle.”

As part of this new business model, some vehicle manufacturers are launching proprietary app stores with apps that have been specifically developed for their telematics systems. Analysts, however, believe that the fierce competition from existing app stores will be hard to beat and the best solution is to focus on making their systems compatible with leading smartphone manufacturers.

In North America and Japan, the adoption of telematics services has mainly been driven by commercial services aiming to differentiate their offers. Today, most car manufacturers in these two markets routinely equip their vehicles with a range of telematics services, including emergency alerts, roadside assistance and stolen vehicle geo-tracking, as well as vehicle diagnostics, navigation and infotainment.

And last, but certainly not least, worldwide, a new generation of technologically savvy digital natives are now taking to the roads, eager to enjoy the benefits provided by new technology.

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