Is there an aftermarket market for V2V telematics?

Is there an aftermarket market for V2V telematics?

The aftermarket can be scary for telematics hardware makers: Demand can evaporate as services become embedded into cars or go free on mobile phones. Despite the diminishing sales for portable navigation devices, aftermarket is having its moment in the vehicle-to-vehicle (V2V) communications sector. The US Department of Transportation (USDOT) has identified the availability of aftermarket and/or retrofit devices as one of the strategies that will build the market by making sure early adopters have enough other vehicles to communicate with that they can see benefits from these systems.

Egil Juliussen, principal analyst and fellow in the IHS iSuppli Automotive Practice, points out that Metcalfe's Law applies here: The value of a communications network is proportional to square of the number of users.

Juliussen expects a USDOT mandate for V2V systems in 2018and forecasts OEM annual sales for V2V tonear $17 million in 2021, withaftermarket sales that year to be close to $5.75 million. By then, he expects less than 20 percent of vehicles to be equipped with some kind of vehicle-to-vehicle communication system. (For more on V2V and ADAS, see V2X telematics: Taking ADAS to the next level, Telematics and M2M communications: Creating the Internet of things, MEMS: The telematics opportunity and Telematics and enhanced consumer usability.)

The industry is gearing up for the Safety Pilot Model Deployment in Ann Arbor next year, and aftermarket devices will be part of this year-long test, according to Steven Cook, operations and maintenance engineer for the Michigan Department of Transportation. Three hundred vehicles owned by the University of Michigan Transportation Research Institute, which is conducting the pilot, will be equipped with aftermarket devices. The type and manufacturer are still to be determined. These will most likely not be devices already on the market, Cook says, but rather demos that are purpose-built and validated for the pilot.

A real opportunity?

Beyond the Safety Pilot Model Deployment, there may not be a lot of interest in V2V from manufacturers of other automotive aftermarket devices, according to Vann Wilber, principal of Global Technical Policy Associates. "A lot of people are talking about aftermarket engagement in the connected vehicle network as means to increase density very quickly. We understand the interest and desirability, but we haven't seen that the aftermarket folks see this as a real opportunity," Wilber says.

Part of the lack of interest may be because there's lack of clarity about the size of the market, according to Wilber. Crash avoidance, though, is a much more difficult problem—with higher stakes—than providing traffic apps, he thinks. "Folks in consumer electronics or specialty manufacturing groups say they're very comfortable doing infotainment applications, but, because they may have no experience in doing a hard safety system, they are being very cautious," Wilber says.

He also wonders if the timeline is simply too long for the short-attention-span consumer electronics industry. Wilber expects a mandate for V2V systems for crash avoidance by 2013, with cars equipped with it hitting the road five or six years after that. "When you say 'five or six years' to consumer electronics people, they glaze over and say, 'Call me in four years,'" Wilber says. "Historically, consumer electronics can move faster, but when you talk about a safety system, that is unprecedented in their product history."

Installation barriers

Denso is studying the market and sees anything from factory installs to retrofit devices in the company's future, according to Roger Berg, vice president, wireless technologies, Denso. Denso also is under contract to provide USDOT with both an embedded vehicle awareness device and also an aftermarket V2V safety and crash avoidance device for the Safety Pilot Model Deployment.

Distribution and installation top the list of issues to be resolved for aftermarket/retrofits of V2V crash avoidance systems. "It's primarily a marketing and business case and use case consideration," Berg says. "Technically speaking, the whole DSRS V2X technology is based on commercial-type hardware, so it's not an issue for us. From the aftermarket perspective, one key question is the installation process. We have to make sure that once it's installed in retrofit, its performance will match what's necessary."

Berg foresees some kind of guidelines and information that licensed installers would have to adhere to, much like is done in the satellite radio installation industry now. "It's likely that we would have to set up a dealer/installer program with training, support materials, etc.," he says.

A win for suppliers

"A DSRC mandate is a big win for suppliers, not car companies," says Richard Bishop, principal of Bishop Consulting. "Suppliers will generate the hardware and software, particularly the tier 1s. They are already well-positioned to do that."

When it comes to aftermarket, Bishops says, the view of the opportunity is still fuzzy. Aside from Delphi and Alpine, he points out, most standard tier 1s don’t operate in the aftermarket sector.

Bishop also sees new opportunity for PND makers. "The personal navigation device already has the location and heading of the vehicle it's riding in," he points out. "They could add a DSRC radio and antenna. Those guys are at least looking at this."

Susan Kuchinskas is a regular contributor to TU.

For more on the related field of V2X, see V2X telematics: Taking ADAS to the next level and V2X telematics: From testing to tipping point.

For more all the latest telematics trends, visit V2X Safety & Mobility 2012 USA on March 20-21 in Novi, MI, Content & Apps for Automotive 2012 on April 18-19 in Germany, and Telematics Detroit 2012 on June 6-7.

For exclusive telematics business analysis and insight, check out TU’s reports on In-Vehicle Smartphone Integration Report, Human Machine Interface Technologies and Smart Vehicle Technology: The Future of Insurance Telematics.

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