Remote vehicle diagnosis and floating car data services will continue to witness strong demand, finds Frost & Sullivan
The Japanese automotive connected services market is in the late growth phase and has become highly saturated and competitive. Hence, several telematics system original equipment manufacturers (OEMs) are looking to offer unique, differentiating features in order to establish a distinct brand identity.
New analysis from Frost & Sullivan, Strategic Analysis of the Connected Vehicles Market in Japan (frost.com/p83c), expects the number of telematics service subscribers to go up from 8.49 million in 2014 to 13.20 million in 2020. The study covers OEM and independent aftermarket telematics solutions.
For complimentary access to more information on this research, please visit: corpcom.frost.com/forms/APAC_PR_ATsuji_P83C-18_04May15.
For the last seven to eight years, the Japanese automotive telematics market has struggled to increase its subscriber base at a more rapid pace compared to Western markets. However, with smartphone penetration having significantly risen in the last two to three years due to the availability of high-speed network infrastructure, the market is set to make quicker progress. In fact, by 2020, the market is likely to see cloud-based data services with wide-ranging apps combined with new-generation telematics services offered by several key OEMs.
“Consumers are aware of the merits and advantages of utilising smartphones and tablets with cloud-based services through consumer electronic devices,” said Frost & Sullivan Automotive & Transportation Senior Consultant Takashi Morimoto. “Nevertheless, OEMs and the Japanese Government should offer telematics systems with clearer benefits to consumers and introduce legislations that mandate the installation of on-board data communication modules.”
In Japan, emergency calls and remote vehicle diagnosis are ranked second in importance to floating car data services across all segments except luxury models and brands. This trend is expected to continue once on-board communication modules are installed as a standard in several vehicle models, as the available floating car data will increase exponentially, enabling OEMs and telematics service providers to build a solid business case for their solutions in the short- and medium-term.
Currently, telematics services in Japan are focused on navigation features and intelligent transport system services. However, since not all vehicle drivers drive in congested areas such as big cities, and the penetration of navigation systems is pegged at a near-saturation rate of 63 percent, singular attention to these telematics services is undesirable.
Neither is it ideal to offer telematics services exclusively under the initial payment business model – $1,500 to $2,000 for an embedded navigation headunit that enables connected services. While this is the approach taken by most Japanese OEMs, it is unlikely to succeed especially among price-sensitive users who will instead look to fulfill their demand for in-vehicle infotainment through their mobile phones as an alternative to navigation headunit.
“An open architecture strategy, along with high-quality app offerings will be key to building a large telematics subscriber base,” pointed out Morimoto. “Close association of all stakeholders, including telematics system OEMs, software developers and operating system providers will be required to achieve this.”
Strategic Analysis of the Connected Vehicles Market in Japan is part of the Automotive & Transportation (ww2.frost.com/research/industry/automotive-transportation) Growth Partnership Service program. Frost & Sullivan’s related studies include: 2015 Thailand Automotive Market Outlook, Japanese Powertrain Market, Commercial Vehicle Telematics Market in China, and Commercial Vehicle Telematics Market in Australia. All studies included in subscriptions provide detailed market opportunities and industry trends evaluated following extensive interviews with market participants.
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