BRICs: Wide open to telematics, part I

Consumers in Brazil, Russia, India and China are more willing to embrace all kinds of technology associated with cars, according to a recent survey by Cisco – from telematics to virtual auto buying. And they are prepared to offer all manner of personal information – and even DNA samples – in return for connected car services.

On the face of it, the survey, which covered 1,500 consumers and 405 automotive professionals in 10 countries and was released in May, seems to show tremendous opportunity for telematics in the so-called BRIC countries.

"There truly is a higher propensity in these countries to embrace technology," says Andreas Mai, director, product management – connected industries, Cisco. "These countries have had a more direct, open and recent experience with technology that makes them more open to embracing it."

Too bad then that so few BRIC consumers have actually experienced telematics services and may not get to any time soon.

SBD, a consultancy specializing in automotive technology, puts 2013 penetration of OEM-installed embedded telematics systems in the United States at 29.6%, 18.2% in Canada and 9.4% in Western Europe. Looking at BRIC, SBD expects Brazil to lead with 10.1% penetration in 2013, with China seeing 3.5%. It pegs this year's penetration in Russia at 0%, and India is not even in forecast territory.

No long-hanging fruit

There are other reasons for the connected car industry not to get overly excited, through the pent-up demand is real enough.

In BRIC, OEMs and vendors will struggle with the same business model and supply chain issues that they're currently grappling with in North America and Europe.

For example, while Cisco found that consumers all over were willing to share personal information in return for useful services, such as tracking the costs of car maintenance, it did not mean that they were actually willing to pay for these services.

This dovetails with an earlier consumer survey by SBD, which found high interest in telematics among Chinese consumers – but not high interest in paying for it.

While 44% of Chinese drivers said connectivity in cars would be a major purchase influencer, they were only willing to pay $30 per year. In fact, among all countries surveyed by SBD, Chinese consumers had, by far, the greatest interest but also the lowest willingness to pay.

What’s more, companies that want to expand into the large and growing economies of BRIC will have to create local business partnerships, untangle divergent government regulations and have pockets deep enough and patience large enough to build things from scratch.

Still, there are big business opportunities, and the greatest opportunity appears to be where consumers' need for safety and security makes them willing both to pay for telematics and to allow data gathering that can feed into more robust – and more valuable – services.

(For more on doing business with BRICs, see Telematics: Doing business with the BRICs, Telematics in India: Ready to grow and Telematics opportunities in Southeast Asia.)

Virtual car shopping

According to the Cisco survey, consumers everywhere overwhelmingly preferred to research cars online, rather than going to a showroom; 83% on average preferred the Internet – 96% in Brazil, 90% in Russia.

Consumers in Brazil and Russia, as well as in India and China, also tended to trust the information found on both OEM and third-party websites a bit more than average. And they scored above average in their comfort level in using virtual technologies like video conferencing, even being at least somewhat willing to go through the entire purchase without ever shaking hands with an actual dealer.

Cisco’s Mai points out a couple of reasons for why this may be so.

First, while developed nations have a 100-year history of buying and selling cars, and the dealer infrastructure to do it, BRIC countries don't have sales networks that reach beyond major cities. Second, Russia, India and China are geographically huge.

"So technology is one way to overcome this vastness of these countries so they can, for instance, access information in kiosks rather than having brick and mortar dealerships," he says.

Let's go for UBI

While usage-based insurance (UBI) has yet to take off in BRIC, or much of anywhere else, Cisco found that, in general, 74% of drivers would opt for savings on insurance via a monitoring device, while 65% would go as far as to share their height and weight, driving habits and entertainment preferences for a "more custom driving experience."

Here again, BRIC consumers out-indexed the average, with 100% of Brazilians being at least somewhat willing to have their driving habits monitored in return for savings on insurance and maintenance.

The survey also asked consumers whether they would provide biometrics such as fingerprints and DNA samples to enhance personal vehicle security – and 60% of them said yes. In this case, Brazilians led, with more than 95% of them being at least somewhat comfortable offering a cheek swab or a fingerprint.

Since Brazil is notorious for high rates of auto theft, this is not so surprising. But India and China also said yes at higher than the average rates. Only Russians were below average, with approximately 58% agreeing.

(For more on Russia, see Telematics in Russia, part I: Waiting for ERA-GLONASS, Telematics in Russia, part II: The impact of ERA-GLONASS and Telematics in Russia, part III: Growing the market.)

While the Internet provides anonymity for people who want to do harm, "In a world where each driver is identified by way of biometric information, you would make sure that whatever malicious intent originates to a particular vehicle can be tied to the individual driving it," Mai says.

Victims of hit-and-runs, road rage attacks and fender-benders would have recourse in such a system. It would also let consumers create preference profiles stored in cloud databases to be downloaded to whatever vehicle an individual was driving, according to Mai.

While there's plenty of privacy debate across the globe, Cisco's results clearly show, Mai says: "People would be willing to share even very private info in return for the benefit in the form of a better experience, monetary benefit, saving time during the day while they're driving. If you take this into BRIC, where customers are more willing to share this information, this gives reason to believe that the idea of creating a business around the idea of big data would be much better located in those countries."

(Return next Thursday for part II of the series.)

Susan Kuchinskas is a regular contributor to TU.

For all the latest telematics trends, check out Insurance Telematics USA 2013 on Sept. 4-5 in Chicago, Telematics Brazil & LATAM 2013 on Sept. 11-12 in Sao Paulo, Brazil, Telematics Japan/China 2013 on Oct. 8-10 in Tokyo, Telematics Munich 2013 on Nov. 11-12 in Munich, Germany, Telematics for Fleet Management USA 2013 on Nov. 20-21 in Atlanta, Georgia, and Content and Apps for Automotive USA 2013 on Dec. 11-12 in San Francisco.

For exclusive telematics business analysis and insight, check out TU’s reports: Telematics Connectivity Strategies Report 2013, The Automotive HMI Report 2013, Insurance Telematics Report 2013 and Fleet & Asset Management Report 2012.

Infotainment