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December 23, 2013

Consumer Electronics to See Strong Growth in Chinese Automotive Telematics Segment

Consumer electronics (CE) device-based services are expected to see a strong growth within the Chinese automotive telematics segment over the next seven years, a paradigm shift from the current trend where factory-installed embedded solutions rule the roost. The research study commissioned by Polk and driven by IHS (News - Alert) Automotive, predicts that the CE devices and hybrid systems sales will reach 4.6 million units each by 2020 while OEM embedded solutions are expected to record 4.3 million units in sales. The results from the study were published in a report titled “Infotainment Market Overview: APAC”

The automotive telematics segment is expected to clock 1.5 million units in sales for 2013 with CE devices amounting to a meager 119,000 units and hybrid systems recording 104,000 units in sales. The paradigm shift is mainly because services based on CE devices are highly cost effective leveraging the user’s mobile telephone device to create a two-way data connection. Hybrid systems offer an ideal solution as these solutions combine the features of a wireless device with telematics control units. However, embedded systems will continue to play a key role in the market particularly for applications such as remote vehicle control, remote diagnostics and anti-theft tracking.

In a release, Celina Li, Senior Automotive Analyst at IHS, said, “For Chinese consumers, embedded telematics solutions represent luxury. Motorists in China treasure the capability of embedded systems to access call-center operators for services, such as concierge and destination download. They associate these operator services with high social status, almost like having their own personal secretary. As a result, higher-end car buyers in China at present favor embedded systems over a pure CE-device approach. Easy access to cheap labor also makes deploying call-center services less expensive to maintain for OEMs in China compared to other regions.”

The strong demand for OEM embedded solutions triggered a solid growth for the segment in 2010 and 2011 but the pace was slowed down during 2012 with consumers’ inclination towards CE-based devices and hybrid solutions. The trend of CE-device telematics was fostered in China with the launch of Chevrolet's Epica model in the second quarter of 2011, which was followed up closely by nine other popular automotive manufacturers. As per the study, CE-device telematics and hybrid solutions will see a steady fast growth during the next three years and expected to maintain the pace to exceed the sales of OEM embedded units by 2020.

The OEM telematics availability in the Asia-Pacific region falls distinctly behind North America and Western Europe. However, with China emerging as one of the lucrative markets for OEM telematics, the trend is expected to pass on to other countries in the region. China is currently the largest market for cars in the world and motorists are now affording high-end vehicles and widely using smartphones and other wireless devices, a trend which is expected to help the growth of automotive telematics in the country.

IHS is engaged in providing independent analysis and comprehensive content related to various industry trends to enable organizations as well as governments to make strategic decisions. The company was started in 1959 and has emerged to ensure a global presence in more than 165 countries.




Edited by Ryan Sartor
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