Telematics in India: Ready to grow

Telematics in India: Ready to grow

With a population of over 1.2 billion and some 2.7 million miles of roads, India has been regarded for years as a ‘can’t miss’ market for passenger vehicle telematics systems, second only to China in potential.But up to now, market growth has fallen well short of projections. As a result, says Stephen Longden, analyst in the Advanced Research Division, Connected Car and Safe Car, for the UK-based consultancy SBD, Western OEMs have started taking a closer look at other potentially lucrative markets in the region.

“A few years ago we had a lot of interest from manufacturers for research in India,” he says. “But now there’s less, and more of them are asking about Indonesia, Malaysia and Thailand.” (For more on telematics in Southeast Asia, see Telematics in Southeast Asia, part I and Telematics in Southeast Asia, part II.)

One reason for the sluggish telematics market in India, he says, is that “consumer awareness hasn’t taken off yet. In China, there is a far higher awareness of what services are available.” (For more on telematics in China, see Telematics in China: Making sense of the market, Emerging telematics opportunities in China and Telematics in China: ‘Reverse innovating’ for success.)

In addition, the country’s relatively underdeveloped infrastructure makes telematics still a low consumer priority. According to figures published by the World Economic Forum, in 2011 India ranked 117th of 142 countries in the quality of its electricity supply and 85th in the quality of its roads, tough conditions for a passenger-vehicle telematics boom.

Driving habits

Indian driving habits pose another obstacle, says Vijay Kakade, director, Automotive and Transportation Practice, at the global business research and consulting firm Frost & Sullivan.“Most car trips are over simple routes, from home to office and back, or to the shopping area and back,” Kakade says, “and everyone knows the way. And if someone does get lost, they prefer to ask people the way. So they see no need for a navigation device.”

Consequently, available traffic information is limited, he says. “We do not have online traffic data. All that is offered currently is point-to-point navigation.” As a result, of the approximately 2.6 million passenger vehicles sold in 2012, only 7,000 had an embedded navigation system.

Growth on the horizon

However, Kakade sees growth in the market just over the horizon. He expects sales of embedded navigation systems to soar to 255,000 units in 2018, while the market for aftermarket fitment of embedded navigation systems is expected to grow from the current 7,500 units to 185,000 units in 2018.And Kakade projects telematics sales to rise from this year’s $35 million to $130 million by 2018, with most of that growth accounted for by aftermarket navigation systems for low-end automobiles. (For more on telematics growth in India, see Telematics in India and Emerging telematics opportunities in India.)

Kakade’s optimism is based partly on projections for passenger vehicle sales, which are forecast to more than double, to 5.5 million units in 2018, of which 3.2 million will be low-entry passenger vehicles. However, Kakade says OEMs need to offer dynamic navigation systems that provide practical online traffic data. “Much of the driving in India takes place in one-lane traffic, and there are many traffic jams,” he says. “It would be helpful to provide alternate routes. This service is currently not available”

Longden agrees. “The traffic in Indian cities is the worst in all of Asia,” he says. “If I were advising the Indian government, I'd tell them to build a road traffic control system with congestion data collection.”

To make the product more attractive to customers, Kakade says it should bundle the on-line traffic data with maintenance and service diagnostics and an alarm system with SVT, and sell it inexpensively. Currently, an embedded navigation system costs about $660 to $755. Omkar Barde, practice head, telematics at KPIT Cummins, a global technological consultancy headquartered in Pune, India, says the price for such a package should be between $100 and $200 dollars.

Mobile platforms

Barde agrees with most analysts that, with some 930 million mobile phone subscribers and rates for data transfer as low as $1 dollar a month, mobile platforms represent the best chance for delivering telematics. “You can find a network everywhere in the country,” he says, adding that several providers, such as Vodafone, are currently working on plans for programs to deliver 2G data to OEM servers. “However, 3G data transfer is not ready yet,” Barde says.

According to Egil Juliussen, director and principal analyst, automotive at the California-based global market research firm IHS iSuppli, by 2019 some 57 percent of automobiles sold in India will offer a Bluetooth interface for mobile devices as optional or standard equipment. And 61 percent of passenger cars will offer UBS connectivity, compared to the current 15 percent.

As a result, he says, the take-up rate for connectivity via smartphone is expected to rise from 5.4 percent to 27 percent in 2019. “This will offer Indian drivers the capability to connect telematics via a hands-free interface,” Juliussen says. He sees one major problem. “India is a mess to map,” he says. “The cities have been mapped but not all of the country.”

And SBD’s Longden sees yet one more issue that must be resolved. “The numerous government entities of the Indian federal structure need to be severely streamlined,” he says. “When you’re negotiating services, such as eCall, you need confidence that the government will provide a link and that the emergency services will turn up. There are just so many entities to deal with that it’s difficult to get a decision.”

Nonetheless, everyone agrees that all the obstacles to a vigorous telematics market in India will eventually be overcome. The only question is when. Barde, of KPIT Cummins, is very optimistic. “The market will begin to move in two years,” he says, noting that his company is currently in discussion with several OEMs that are ready to launch telematics packages for passenger vehicles in India. “Once they are active, others will jump in,” he says. “But they must be decisive. The OEMs must take the initiative.”

Siegfried Mortkowitz is a regular contributor to TU.

For emerging markets, see Industry insight: Telematics and emerging markets.

For the latest on telematics in India, check out Telematics India and South Asia 2013 on April 17-18 in India.

Coming up in 2013: Consumer Telematics Show 2013 on January 7 in Las Vegas, V2X for Auto Safety and Mobility Europe 2013 on February 20-21 in Frankfurt, Telematics for Fleet Management Europe 2013 on March 19-20 in Amsterdam and Insurance Telematics Europe 2013 on May 8-9 in London.

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

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