Mexican telematics: Ready for growth, security still hindrance

Track and trace has long dominated the Mexican telematics scene. But seeds planted last summer – the launch of General Motors’ embedded system OnStar and BMW’s plans to introduce its premium service ConnectedDrive in 2014 – show the market is ripe for expansion beyond stolen vehicle recovery (SVR).

Blazing the trail in Mexico has been Road Track with its E-Drive Technology solution, which provides telematics, fleet management and SVR systems to large automotive manufacturers in Latin America, including GM. With a healthy economy and huge automotive market (the region’s largest), other big players could soon follow, industry sources say. 

Clem Driscoll, CEO of the consultancy C. J. Driscoll and Associates, publisher of “2010-11Latin American Vehicle Tracking Systems Market Study,” says that Mexico tends to follow trends in the United States, but the country’s high car theft rate has been holding back the expansion of advanced telematics.

“There is some telematics activity via companies like Road Track, and OnStar has also launched in Mexico,” he says. “The market is growing, but not in leaps and bounds – certainly not as fast as the U.S. market is, and security issues are certainly a major part of that.

"As the market matures, on the consumer side, there will be more telematics solutions where the system will also include roadside assistance and navigation functionality, air-bag deployments – all the things we see in the OnStar and telematics solutions in the US.”

Gone in 60 seconds

Mexico’s insurance association AMIS estimates that, between 2005 and 2012, there has been an 85% rise in the number of stolen vehicles – an $11 billion-plus annual business and the country’s second most profitable criminal enterprise after drug trafficking.

Roughly 60% of vehicles stolen in 2012 were cargo trucks; the rest were cars. About half of all vehicle thefts involved violence or the threat of violence.

No surprise then that sales of GPS tracking devices are rising about 20% annually. According to the Mexican vehicle tracking and protection association ANERPV, some 70 companies are now offering satellite vehicle tracking services in the country, and an estimated 600,000 units were installed in 2012.

That need to focus on safety and security – mainly providing SVR via GPS or a homing device system like LoJack – is a key reason telematics has a place on the Mexican market, and why pockets of the market now appear ripe for introducing high-end functionalities.

“In Mexico, there are mostly pure SVR units installed, without additional functionality, though some might have an emergency button, some telematics,” Driscoll says.

But, interestingly enough, despite high demand, no big player has cornered the market. “The Mexican market has over 200 suppliers of GPS tracking solutions for commercial fleet and consumer markets, and many are very small, with 100 subscribers, if that,” Driscoll says. “It’s a very fragmented market. There’s no one dominant supplier.”

The ANERPV says its 30 member companies sold roughly half of all documented sales of GPS units, mainly in the cargo and commercial transport sector, while the 40 members of the private security intelligence association AMSIRIAsold the other half.

Frustrating fragmentation

Seeing the greatest increase in GPS sales are Mexico City, Estado de México and Nuevo León, where satellites linked to the country’s Directorate of Public Security and Information boost the chances of a vehicle being traced and recovered after a theft.

In greater Mexico City – the largest metropolitan area in the western hemisphere (population of over 20 million people) – district authorities since January 2008 have required dealerships to sell cars equipped with geolocation devices.

David Colon, country manager for BMW’s ConnectedDrive suite of telematics services slated for launch in Mexico in late 2014, says the market obviously has huge potential for connectivity and telematics. But the lack of a national infrastructure and the market fragmentation is an issue.

“OnStar was the first sign that Mexico is fully committed to developing telematics,” Colon says. “The market is developing – I know that many other OEMs are also planning to include telematics. I see major opportunities for developing local services and functions, like real-time traffic information, remote services, some infotainment features. But we need providers to develop local services.”

On the high end, Colon sees a lot of pent-up demand among Mexican drivers – who travel frequently to the US for work and pleasure – for the kinds of telematics services available north of the border. That’s one reason why, in Mexico, ConnectedDrive will arrive in tandem with an upgrading of the BMW iDrive user interface allowing customers to more readily add infotainment services after purchasing a car.

The German luxury carmaker plans to roll out services in stages, starting with convenience and safety functionalities – real-time traffic information, LBS, news and weather information – and followed by BMW TeleServices, a maintenance solution that can notify a dealer to set up a service appointment.

Meanwhile, the BMW ConnectedDrive team is busy assembling a chain of system and service suppliers to support the system – something easier said than done, Colon says.

“We know that there are local providers, but at this stage they are not so big, and for this market we need them to be more proactive, to develop more content and quality services,” he says. “Mexico is a big country in terms of territory, but providers are focused on just one city. They need to improve services and widen coverage in order [for us] to … consider them as providers for future alliances for BMW.”

(For a Telematics Update interview with Colon, see Q&A: Breaking new ground with telematics in Mexico.)

The tipping point

In the public sector, the tipping point toward greater, more widespread demand for telematics functionality – beyond safety and security – could also be on the horizon, according to Driscoll.

“The market is growing,” he says. “As the market matures on the fleet side, I see the market extending into other types of fleets besides trucking. There is some of that now, and there is certainly a market for government fleets, and that will continue to grow. I think the utilities sector too.”

Brian Kenety is a regular contributor to TU. 

For all the latest telematics trends, check out Telematics for Fleet Management Europe 2014 on March 12-13 in Amsterdam, The Netherlands, Content and Apps for Automotive Europe 2014 on April 8-9 in Munich, Germany, Insurance Telematics Europe 2014 on May 6-7 in London, Telematics India and South Asia 2014 on May 28-29 in Bangalore, India, Insurance Telematics Canada 2014 on May 28-29 in Toronto, Telematics Detroit 2014 on June 4-5 in Novi, Michigan, and V2X and Auto Safety USA 2014 on July 8-9 in Novi, Michigan.

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.