High Demand for Improved Connectivity and Intelligence in Vehicles to Fuel Market Growth

The automotive sector is no stranger to innovations, and with the advent of novel technologies such as the Internet of Things (IoT), automotive manufacturers are in the pursuit of integrating IoT into vehicles during the manufacturing stage. Owing to noteworthy advancements in technology, a broad range of telematics services and devices has entered the automotive telematics market. Furthermore, telematics, which was once regarded as a niche feature, has gradually entered the automotive sector in recent times– a trend that is expected to continue in the near future. Despite a slow-paced adoption in the current scenario, automotive telematics is on course to gain significant momentum during the forecast period (2019-2027). Significant developments in connected car capabilities are paving the way for automotive telematics offered by third parties.

Some of the leading factors that are likely to accelerate the adoption of advanced telematics in the automotive industry include the willingness of government bodies across the world to mandate telematics services and rising consumer demand for improved connectivity in vehicles. Furthermore, automotive telematics offer improvements in road safety and driving behavior, and is likely to streamline insurance premiums in tune with usage-based insurance. Trends in the automotive telematics market also indicate that use of telematics in the automotive sector can open up new avenues for corporate businesses and individuals beyond matters of road safety and insurance. Due to these factors, the automotive telematics market is expected to reach a value of ~US$ 36 Bn by 2024 from ~US$ 7 Bn in 2019.

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Industry 4.0 Drives Adoption of Telematics Services in Automotive Industry

Industrial verticals across the world continue to evolve as the automation trend gains momentum. The global industrial sector is witnessing the dawn of the fourth industrial revolution, wherein factory automation and automation solutions, including telematics are set to gain notable traction. The onset of Industry 4.0 is expected to accelerate the adoption of telematics in the automotive sector. The adoption of telematics in the automotive sector is anticipated to increase at a rapid pace, owing to growing applications such as vehicle tracking, satellite navigation, fleet management, vehicle safety communication, etc.

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Advancements in the automotive telematics market are heavily linked with the progress of the 5G technology. Swift and real-time data transmission across devices require advanced network with efficient data transmission. The advent of 5G technology is estimated to fuel the demand for autonomous technologies in the near future. Moreover, improvements in 5G will enhance coverage, speed, and reliability of automotive telematics– a factor that is expected to boost the growth of the automotive telematics market in the coming years.

Within the automotive telematics market, fleet management and vehicle tracking are expected to be key application areas. Both these segments are projected to account for ~65% share of the automotive telematics market in 2020.

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Benefits Offered by Telematics Technology in Fleet Safety to Propel Demand

Fleet management has attracted significant attention in recent years. The need to improve safety for cargo, personnel, and vehicles has driven the adoption of automotive telematics for fleet management. Automotive telematics has emerged as one of the most reliable and efficient services for fleet management such as emergency warning systems, GPS navigation, autonomous driving assistance, sensors, radars, etc. While some of the services focus on safety of the driver, these services, however, play a key role in improving fleet management. Stakeholders in the automotive telematics market are also engaged in the development of new automotive telematics solutions to gain an edge in the current market landscape. For instance, in January 2024, Geotab launched an integrated General Motors telematics solution. The newly launched solution is primarily developed to enable fleet managers to gain access to vehicular data and improve fleet management.

Automotive Telematics Market: Overview

• The automotive telematics market is anticipated to expand at a CAGR of ~17% between 2019 and 2027
• In terms of technology, the integrated segment holds a prominent share of the automotive telematics market, and it is likely to remain the prominent share of the market, owing to rising integration of telematics systems among all classes of vehicles
• Based on application, the vehicle tracking and fleet management segment held a prominent share of the automotive telematics market
• In terms of Vehicle, passenger vehicle has been the dominating segment due to higher production of passenger vehicles, along with rising integration of telematics system in the same. Moreover, rising concerns about safety and security, and high focus on adoption of digital technologies are driving the passenger vehicle segment of the automotive telematics market.

Drivers of Automotive Telematics Market

• Telematics services offer several features that ultimately turn out to be highly convenient for vehicle owners, such as remote control of vehicles, vehicle health diagnostic, over the air updates, connected navigation, and infotainment
• Presence of large population and high traffic congestion in several countries, such as the U.S., and the U.K., make recovery of a stolen vehicle highly difficult; however, the stolen vehicle tracking feature of the telematics system is expected to make the task of recovering the vehicle notably easier for governing authorities
• According to the World Health Organization, traffic injuries are the leading cause of death for children and young adults between the ages of 5 and 29. If medical assistance is provided right after the accident, chances of losing a life reduces notably. Furthermore, the eCall feature helps summon primary medical assistance at the accident location and hence, it is mandatory for all vehicles sold in Europe after April 2018.
• Cases of vehicle theft are significantly high in developed countries, among which leading countries with high rate of vehicle theft are Uruguay, Italy, France, Sweden, Greece, and the U.S.; however, the rate of vehicle theft has been decreasing continuously since 2005 in these countries. Furthermore, the telematics industry is likely to play a significant role in reducing the rate of vehicle theft in these countries.
• Electronic toll collection and congestion charge are key features offered by telematics service providers in some parts of Europe that face parking issues and traffic jams, owing to high rate of motorization, such as in the city of London. The electronic toll collection system automatically scans the number plate or QR code mounted on the vehicle and deducts the amount from the account of the vehicle owner, which leads to easier flow of traffic.

Challenges for Automotive Telematics Market

• Low awareness among consumers of developing nations, such as India, is a major restraint to the automotive telematics market, as lack of awareness about telematics technologies is likely to lead to low demand for the technology and services. Moreover, telematics services are popular among business owners and fleet owners. Thus, the fleet service segment holds a significant share of the automotive telematics market.
• Developing nations offer significant opportunities to the automotive telematics market, as most nations are adopting digital technologies in order to enhance the efficiency of vehicle fleets. Furthermore, most countries in Asia Pacific such as China and India are into the transitional stage of emission norms and have announced the adoption of Euro 6 equivalent emission norm soon, thus optimizing the driving habits, and regular diagnosis report of vehicle may contribute to reduction in carbon emission.
• The telematics service providers charge for providing regular service to vehicle owners and hence, people opting for entry level vehicles mostly do not use charged telematics services

Automotive Industry

TMR’s market research reports on the automotive and transport industry provides a forward-thinking analysis of innovations that are expected to set new trends in this industry. The integration of next-gen technologies that is powering a transformation in the automotive and transport industry is well covered in the vast array of reports curated for this industry. Autonomous vehicles, electric vehicles that are reckoned to be revolutionary for passenger travel in the future, and their repercussions on the existing fabric of demand in the automotive sector are studied in detail to present a well-gauged analysis of the automotive and transport industry for the coming years.

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