Telematics in India

Stepping onto a road in India is an invitation to mayhem. There are cars and trucks, cows and goats, taxis and rickshaws. Some are headed in the same direction; others form a dizzying web of eddies and offshoots that lead to accidents, traffic jams, and a general disregard for lane dividers, traffic lights and stop signs.

This is a world, in one respect, primed for telematics. The ability to navigate from point A to B and avoid traffic jams, locate local businesses, save fuel and connect with people should all have high appeal. And yet cultural differences, a sensitivity to price, and an infrastructure in flux present challenges.

As a result, India falls on both ends of the telematics spectrum—a place to target and a place to avoid. Location-based products and services in India are growing at a rate faster than most markets around the world. The car market has exhibited steady growth in recent years, with India now producing more than two million passenger vehicles a year. That puts it in the top 10 of largest car producers in the world, and places it fourth for Asian auto exporters.

On the flip side, the country is still hampered by a lack of infrastructure and digital content. Many places are off the grid when it comes to digital maps, and local authorities are disconnected, making some services difficult or impossible to supply. Back in 2004, Frost and Sullivan forecast the passenger vehicle telematics market to grow from $6.4 million in 2004 to $80 million by 2011.

Current forecasts are more modest, with the passenger vehicle telematics market hovering around $40 million by 2013. “It’s a difficult market to predict,” says Jayendra Parikh, head of the advanced engineering group at Ashok Leyland. “It’s always changing, arguably as fast as anywhere in the world, which can offer rewards but also high risk.”

Fleet telematics

The market for fleet-based telematics is the most steady of any telematics market in India. The market is still fledgling—Parikh estimates that 15 to 20 percent of fleets utilize telematics—but increasingly fleet managers are expressing interest in productivity tools to improve management, which has led to an increased interest in telematics solutions.

Taxi operators are becoming more accustomed to monitoring and routing applications, while fleet managers are warming to features like geofencing to geographically track where vehicles are and when and if drivers are going out of bounds and products that can highlight driver behavior like speeding, overloading, and harsh breaking. “It all boils down to how efficient your fleet can be,” says Parikh.

Ashok Leyland is the second largest commercial vehicle producer in India. Parikh says that in addition to geofencing, fuel conservation is a second focus—known here as monitoring ‘kilometers per liter’—and ‘track and trace’ a third and perhaps the most coveted of the bunch. Fleet owners want the ability to track and trace where a vehicle and its packages are or have been so that they can better meet delivery time lines. (For more on fleet and asset management, see Emerging telematics opportunities in India and New telematics tech for fleet and asset management.)

“Primarily people are looking for track and trace,” Parikh says, “but once they realize there’s a lot more you can derive from telematics, you can span into many different areas that also provide operational value.”

Despite increasing adoption, the fleet market still faces challenges. Chief among them is the fragmentation of fleets in India. Unlike in the West, where legions of trucks trundle along under the banner of a few main carriers, in India most fleets are small, with transport businesses often defined by a handful of trucks or individual truck owners. Seventy percent of commercial vehicle owners claim fewer than 20 vehicles in their fleets.

A second deterrent is cost, as the price of telematics solutions is still comparatively high compared to the basic cost of a commercial vehicle. As a result, providers must pursue niche markets with small margins, or OEMs must build in telematics solutions as optional add-ons.

The consumer sector

The market for built-in and aftermarket telematics services continues to underperform in India. This is due in part to difficulties on the supply side and to lack of demand.

On the supply side, offering mapping and safety services is more difficult in India than it is in most parts of the developed world. Due to the rapid growth of population and the burgeoning middle class, infrastructure is constantly on the rise in India with “new roads, new bridges, new flyovers being built all over and all the time,” Parikh says. “Map companies often can’t update maps fast enough.”

At the same time, many rural regions in India remain in the digital abyss. Almost all major cities are digitally mapped, but providing a service that doesn’t extend beyond the boundaries of Mumbai, Bangalore, Calcutta, and Jaipur is not a winning business proposition.

Furthermore, safety and security services are plagued by local entities that are difficult to interconnect. Police, hospitals and 911 services vary by district, and even on the local level there’s often a lack of linkages between different agencies, which makes providing an OnStar-like service difficult in India. China presents the same challenge: Different provinces often have different regulations and emergency call numbers. (For more on the Chinese market, see Emerging telematics opportunities in China and Telematics in China: ‘Reverse innovating’ for success.)

Even if companies were able to overcome these hurdles, the general Indian population hasn’t shown signs that it would be particularly interested in the resulting solutions. Amongst the wealthy, many in India pay for chauffeurs, lessening the need for navigation services.

Professional drivers aside, it’s a cultural norm to roll down a window and ask for directions. And with the proliferation of cell phones in Indian society, it’s easy enough to search a mobile platform if a navigation question arises. Currently, more than 900 million of India’s 1.2 billion citizens are mobile phone subscribers.

As a result, personal navigation devices are very much a niche product in India. The SatGuide PND from SatNav, MapmyIndia Navigator from MapmyIndia, and TomTom and Garmin offerings control much of the market share, scant as they may be compared to other emerging and developed markets.

Likewise, most large OEMs with a presence in India—GM, Ford, Hyundai, Honda, Skoda—offer an option for navigation and in-dash systems with Bluetooth connectivity in their mid- to high-range vehicles.

But unlike in nearby China, where GM has launched a massive campaign with 500,000 customers subscribing to OnStar China, and where competitors have followed suit with telematics services of their own (like G-Book from Toyota, Star Wings from Nissan, and D-Partner from InkaNet), India’s market is bereft of mainstream infotainment and telematics platforms.

Indeed, OnStar is absent from the market completely. “Due to India’s use of GSM and GPRS, OnStar couldn’t really utilize their technologies here,” explains Parikh, who spent 25 years in Michigan with GM working on connected vehicles and wireless communication before joining Ashok Leyland in India. Nonetheless, OnStar’s absence is telling.

Going mobile

With a cell phone penetration rate close to 100 percent (and exceeding 100 percent in urban centers like Mumbai), mobile platforms offer the best opportunity for delivering telematics services to the Indian market. After all, the tepid demand for telematics services in India today doesn’t translate to indifference among average Indians toward connected services.

On the contrary, India represents the world’s second largest mobile phone market and the world’s third largest mass of Internet users. Rates for data and talk time are the cheapest in the world, further stoking mobile use.

“Everyone wants to have their information and communication data available wherever they are and whenever they want it,” says Parikh. “Integrating services with mobile is therefore an opportunity.”

Unlike in China, where official mandates prohibit use of services like Facebook and Twitter, in India use is widespread. 3G communications has grown rapidly in the past several years. Music is a major draw on phones, as most cell phones come equipped with FM receivers.

The path forward for offering connected services in the vehicle is therefore likely through solutions that link phones to dashboards. Drivers want to be able to turn their vehicles into radios based on their phones. They also want to be able to use Twitter and Facebook and leverage location-based services. It’s simply a matter of figuring out the price points to enable this integration.

“Connection to personal devices is very attractive for most people in India today,” says Parikh. “The market remains very price sensitive though, so it’s a balance.”

Hybrid vehicles

In addition to mobile avenues, telematics companies should consider the growth of the hybrid sector and the trend toward electrification in India.

In many respects, India’s chaotic streets, which require constant starting and stopping, breaking and accelerating, make ideal settings for hybrid vehicles. The commercial segment has already witnessed an uptick in demand for hybrid fleets, and a similar growth is expected on the consumer front.

“Hybrid can really give a good benefit of 25 to 30 percent improvement in fuel economy,” asserts Parikh. As hybrids enter the market, telematics services can piggyback their way in.

Likewise, the rise of electrical networks that allow companies to communicate with different parts of vehicles and send out information to telematics servers will create new opportunities on the commercial front. This market is growing steadily in India, and as it does, companies will be able to present more compelling, diverse value propositions to their clients.

“In order to extend value, it’s important that telematics units interface with the vehicle to get more information out of the system,” says Parikh. “With that information, you can do diagnostics, prognostics, and really deliver increased value.”

Andrew Tolve is a regular contributor to TU.

For more on emerging telematics markets, see Special report: Telematics and emerging markets.

For more on new telematics markets, visit Telematics Brazil & LATAM 2012 on September 19-20 in Sao Paulo and Telematics Japan 2012 in October in Tokyo.

For all the latest telematics trends, check out Content & Apps for Automotive 2012 on April 18-19 in Germany, Insurance Telematics Europe 2012 on May 9-10 in London, Telematics Detroit 2012 on June 6-7, and Insurance Telematics USA 2012 in September in Chicago.

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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