Factory-installed telematics devices currently dominate the Chinese automative technology market, generating 1.5 million sales in 2013. However, change is coming and, according to projections from IHS Automative, black box systems that operate through consumer electronic devices like smartphones will take the lead by 2020.
Currently consumer electronic (CE) based systems hold only a paltry share of the market. They generated sales of just 119,000 last year and hybrid systems, which tether wireless devices to embedded telematic control units (TCUs) sold just 104,000 units. While there are more than one billion mobile phone subscribers in China, mobile phone penetration there has lagged behind world averages. Currently global cell phone penetration stands at 90%, while, in China, it’s merely 84%. Furthermore, the penetration of smartphones equipped with 3G–which would be equipped to run telematics systems–remains at just 22%. This figure is projected to rise as China’s urban middle class continues to boom. Last year 9 out of 10 handsets sold in China were smartphones.
Pollution produced by China’s burgeoning population of cars–240 million at last count–is suffocating China’s cities under dense layers of smog. Projected increases of 13-17% in vehicle supply, to more than 500 million by 2030, will spell serious trouble for the world’s largest carbon dioxide producer–and the global environment. But the combination growth of smartphone and vehicle sales will mean huge growth in China’s CE-based telematics systems.
Sales of consumer electronic and hybrid based telematics systems will surpass those embedded in the vehicle by original equipment manufacturers (OEMs) by the end of 2020. That year, OEM embedded telematics solutions will sell 4.3 million units while CE and hybrid devices will generate 4.6 million sales.
Currently, Chinese consumers overwhelmingly favor embedded telematics solutions, which are seen as luxurious additions to their status symbol cars. “Motorists in China treasure the capability of embedded systems to access call-center operators for services, such as concierge and destination download. They associate these operator services with high social status, almost like having their own personal secretary,” Celina Li, senior automotive analyst at IHS, said. China’s vast supply of cheap labour means these call-centre services are cheaper to provide locally than in other regions.
However, growth in the OEM-embedded devices market has recently stalled since its high in 2010 and 2011, a slowing attributed to the recent introduction of new CE-device telematics devices. Chevrolet’s Epica model, released in 2011, started the trend and now nine additional brands offer CE-device telematics solutions.
IHS is now projecting that CE-device and hybrid telematics solutions will undergo healthy growth in the next three years, notching triple digit annual expansions. At those growth rates, CE-device systems will surpass embedded, factory-installed telematics in seven years. Sales of OEM telematics solutions will also continue growing, just not as quickly.
“China already is the world’s largest car market, and with consumers now buying more high-end vehicles and using more wireless devices, the deployment of OEM telematics in the country will increase at a rapid pace,” Li said.