Carmakers need mandates to help accelerate telematics in Brazil

Brazilians are addicted to smartphones and social media. People from all social backgrounds have access to the latest mobile technology, which creates a challenge to the automotive industry: phones are more desirable than cars. Automakers are now working to make telematics more appealing to meet this craving for technology.

"Brazilians are social media addicted. People have difficult to let go of the smartphone even inside the car, which creates a safety problem and a challenge for the auto industry," said Henrique Sampaio, Volkswagen manager of product marketing.

The new trend in Brazil is to manufacture popular cars with advanced connectivity features. In 2016, Volkswagen launched the B-segment Gol hatchback, its second-cheapest model, with a complete infotainment system. The German automaker almost has all car models with infotainment. Only the Up, the most popular one, still does not have a connectivity system.

"Close to 80% of Brazilian cars will eventually have connectivity with smartphones, high precision maps, safety systems integrated and information on road conditions," said Flavio Sakai, sales and marketing director at Harman. However, the time it will take for this type of technology to become widely adopted will depend on the companies' capacity to make the necessary investments, according to Sakai.

Severe recession

But Brazil struggles with a severe recession and the industry's financial capacity is constrained. The automakers association in Brazil, the Associação Nacional dos Fabricantes de Veículos Automotores (ANFAVEA), estimates sales will shrink 19% this year, after a decrease of 26% in 2015. 

Telematics mass market adoption can also be a strategy to overcome the economic crisis, Sakai added. "Brazilians don't buy cars without connectivity anymore. Demand is high for customized systems. The new business model for telematics is to reduce costs and increase the number of people using it," Sakai said.

Volvo, Chevrolet, Renault and Nissan are also working to manufacture more cars with 100% embedded connectivity systems. The technology is more adapted to the Brazilian market and becoming more popular, according to Marcio Luz, solutions manager for Volvo. Cheaper solutions will meet the demand for younger drivers, the ‘Y’ generation.

Connected cars go beyond infotainment. They include the entire mobility ecosystem, said Yeswant Abhimanyu, Frost & Sullivan programme manager for Latin America. He mentions business models of shared cars such as Uber, and technology for buses and trucks.

In the car industry, General Motors OnStar programme stands out as a more complete solution with a range of services other than just a smartphone mirror system, Abhimanyu added. Several Chevrolet models are already manufactured with OnStar in Brazil. 

Automakers will continue to meet demand for luxury, with high-tech systems, Luz said. "There will always be different approaches. We can see a mix of premium and popular solutions for younger drivers," Luz added.

For the Volvo executive, companies will probably focus on multimedia infotainment systems only when it comes to more popular cars. Premium models will have extras, such as remote start engine and air conditioning control from a distance, tracking and safety systems, such as the automatic crash notification that Volvo launched in 2011.

In Brazil, new technologies arrive almost at the same time as in Europe or North America, with local adjustments, said Volkswagen executive. Sampaio mentions that VW cars in Brazil are connected either with MirrorLink, a simpler and more popular system, or with App-Connect for premium models.

Both mirror smartphone functionalities and have voice commands to avoid diverting drivers' attention, and even text messages can be sent using a voice command. For navigation, VW uses the European Sygic. Although Waze is the most popular navigation app used in Brazil, it is not considered robust enough because of its social media features, according to Sampaio.

Regulatory framework

There is a lack of regulatory framework to foster new business models and technology development in Brazil. In 2007, the so-called Regulation 245 said that all Brazilian cars would have to be manufactured with a tracker system. The goal was to increase safety and reduce car theft statistics but the regulation was never enforced, despite pressure from insurance companies.

From 2007 through to 2015, automakers were preparing to meet the requirement, said Luz. Because of that, the industry delayed other technologies advances in Brazil. But since last year, automakers are resuming its global programmes to transfer new technologies from Europe and North America to Brazil, he added.

Abhimanyu believes Brazil still needs to further discuss opportunities and regulation for new business models. However, the political climate in Brazil is very unstable, with President Dilma Rousseff's impeachment process and a far-reaching corruption investigation spreading over most political parties. The industry will have to wait for a more stable political situation to resume negotiations over a new regulatory framework, Sakai added.

While there's no headway when it comes to regulation and governmental incentives, automakers will keep sending the latest technology innovations from their headquarters in Europe and North America to meet the demand from Brazilians consumers, the Volkswagen executive added.

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