RAC is out of the telematics game folks. It’s quit. Gone. Quindell is now the happy new owner of all of RAC’s shares in the Connected Car Solutions (CCS) business it created with black box car insurance firm, Ingenie. While the deal won’t take place officially for a short while, Quindell will eventually own 100 per cent of the joint venture.
This is a big deal, considering RAC only announced the partnership in April this year, with an investment of some £20 million. There was also talk of a further £70 million if the business did well, so here’s hoping that nobody poured that liquid gold into CCS, as if they did, RAC, is likely kicking itself right now.
Quindell is said to be dropping around $3.5 million on the restructure, though it’s not clear if that’s all it’s paying for the shares.
Both Quindell (the parent company of Ingenie) and RAC have said that they plan to continue working together in the long term, but for the time being at least, RAC just doesn’t want to be in the telematics and insurance business. RAC will however continue to be supplied by Quindell, fitting its repair vehicles with telematics hardware to make sure that they get to the scene of an accident or breakdown as fast as possible, whilst reducing fuel consumption and vehicle wear.
Rob Terry, Quindell chairman, said (via Post): “The relationship between RAC and Quindell remains strong and we will continue to work closely together in key areas, including in relation to the servicing of claims arising from RAC’s connected car offering and potentially through the ingenie brand. These revised terms are in the best interests of both companies.”
“Quindell has a number of exciting new contracts in the telematics and connected car space and is confident of achieving its targets in this area. The board continues to have confidence in its previous guidance in respect of cash and profitability for 2014 and beyond,” he said.
RAC for its part was also pretty positive about the whole thing, suggesting that it would benefit from the ongoing relationship with Quindell. It also praised the company, suggesting that in the future it would release many new and innovative products, even without RAC’s involvement.
As Sky News points out, the contract between the two companies for the outsourced telematics hardware is set to last for another five years, so it will be some time yet before RAC and Quindell officially part ways, but it’s clear that the roadside repair firm really wanted out of the telematics games and it’s probably quite clear why. Quindell’s business model as of late has come into question repeatedly, especially after its shares dropped some 12 per cent last month in a single day.
Quindell is expected to continue the upbeat tone however, suggesting that it may go on to reinforce expectations of reaching as many as 12 million paying customers by 2020. Whether that actually turns out is anyone’s guess, as it has plenty of time to come through on that bet.
image Source: Graham Richardson