The Telematics Solutions Market for on & off-highway vehicles is estimated to grow at a CAGR of 14.37% during the forecast period, to reach a market size of USD 40.84 billion by 2022.
The rising demand for raw vehicular data, enhanced comfort and entertainment features, stringent safety regulations, growing smartphone and vehicle integration, and the need for improved operational efficiency and profitability have resulted in the growth of the telematics market for on-highway & off-highway vehicles.
With technological advancements in connectivity solutions for the automotive industry, the fast exchange of data will become a reality in the coming years. Several companies are collaborating to develop the 4G LTE and 5G technology to support the developments in the area of connected vehicle solutions. For instance, in May 2017, Continental AG (Germany) partnered with NTT DoCoMo, Inc. (Japan) to develop advanced 5G networks to enhance the cellular based vehicle-to-everything (V2X) technology. In 2016, LG Electronics (South Korea) partnered with Intel Corporation (U.S.) to develop the 5G telematics technology for vehicle communication. The emergence of advanced telematics solutions would require faster 4G LTE or 5G connectivity to provide reliable vehicle communication, which is expected to fuel the demand for the telematics market in the coming years.
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With increased focus on passenger and vehicle safety, the safety and security regulations are continuously studied and updated by various governments. Some of these updated regulations will also mandate the embedded telematics solutions indirectly. For instance, the European Union (EU) has announced the eCall service mandate for all new passenger cars that will be produced after April 2018 in Europe. The Russian government mandated the emergency call service called ‘ERA-GLONASS’ for passenger cars in 2015. The eCall service requires an embedded telematics control unit, which can connect the car to the nearest emergency service provider automatically in case of a crash. While these regulations are initially proposed for passenger cars, they may also be implemented in light and heavy commercial vehicles in the near future.
The passenger car segment is expected to grow at the fastest rate in the telematics aftermarket for on-highway vehicles from 2017 to 2022. The growth of this market can be attributed to the growing demand for safety among the end-users. The rising integration of smartphones and vehicles has also increased the inclination of passengers toward entertainment features. Along with safety and entertainment, the aftermarket devices help to access other services such as navigation, diagnostics, and vehicle tracking among others. The aftermarket telematics devices are cheaper than the OE market. Further, the increased number of passenger cars on the road at a global level is also becoming an important growth factor. As per the OICA statistics, the global passenger car parc increased from 808 million units in 2010 to 947 million in 2015, at a CAGR of 3.23% in the last five years. So, the foreseen OE safety regulations may also influence the aftermarket sales and may be applicable for existing passenger cars in the upcoming years. Due to all these benefits, the market players can invest and offer a bundle of telematics services, especially in North America and Europe, for passenger cars and commercial vehicles to optimize the profitability of the business.
