The collective urge to drive a sharing economy is unlikely to fade away anytime soon. In such circumstances, transportation companies and service providers need to revisit their strategies to survive in a world where shared assets are the new norm.
The new economy brings with it a set of challenges in the form of digital platforms and mobile technologies that are fast eroding all the conventional barriers to market entry (i.e. asset ownership) and democratizing the core transportation industry. On the other end, however, the same technologies are also fostering newer possibilities for progressive incumbents to leverage collaborative platforms and enhance margins.
This sweeping trend – aka servitization of products is already setting high standards for performance. And, automotive OEMs who deliver on these expectations are more likely to stay ahead of the curve. One sector that riding at the top of this trend is the connected vehicle market which is expected to be worth US$ 112 billion by 2022, according to Netscribes research. No wonder, the underlying technology that’s intrinsic to building connected vehicles – telematics, is also expected to touch down US$ 233.24 billion in valuation by the end of 2022 from US$ 68.09 billion in 2017.
The automotive telematics market – at a glance
A recent Netscribes’ research reveals that almost 80-85% of telematics solutions and devices cater to the automotive industry (Solutions, Aftermarket Solutions (UBI) and others). One of the major factors driving automotive players towards embracing such new age information technology is the urge to reduce fuel consumption and carbon footprints.
Advanced telematics-based monitoring solutions can help fleet managers determine fuel usage and vehicle condition from remote locations and that too, on a real-time basis. Enhanced focus on safety and quality of transportation services is also a major reason for which key automotive players are implementing sensor-based electrical engineering and wireless communication solutions in commercial, as well as individual vehicles.
The overall market for telematics is at a comparatively mature stage in countries like US and Canada, with forecasts of stable growth until 2022. Going forward, however, the proliferation of innovative solutions and devices, increasing security for customers’ data and optimum product pricing would likely result in aggressive telematics penetration in untapped pockets of the North American market.
Identifying the growth drivers
One of the major growth drivers of automotive telematics in mature markets like the US is the demand for big data and analytics, which is opening up newer revenue channels for both service and retail-based organizations within the sector. In most of the cases, data analytics companies, automotive OEMs, and telematics solution providers are forging meaningful synergies to collaboratively create newer solutions.
In addition, the advent of driverless vehicles has also created massive demand for vehicle telematics. For instance, Uber which sees its future in driverless cars recently introduced advanced telematics solution for drivers. It is expected to help drivers predict and prevent accidents while tracking vehicle performance on a real-time basis.
Vehicle telematics is undeniably the way forward for automotive industry players looking to leave a mark in the age of self-driving vehicles. However, in order to simplify the journey towards that direction, companies need to tread the path systematically – eradicating each challenge that comes along the way.
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