European Automotive Telematics Market: A New Study by Frost & Sullivan

The European Automotive Telematics Market for Hardware and Services: A New Study by Frost & Sullivan

Telematics: the race to connect with the consumer has begun!

Technology is driving the European automotive market to new heights as key automakers engage in a battle for a share of the market. The weaponry being used to gain a competitive advantage in this war is telematics - sophisticated technology aimed at enhancing the motoring experience and connecting with the consumer.

Broadly defined, telematics concerns the interactive exchange of data over a wireless communication network. The automotive telematics market is where players from the automotive, IT and telecom industries converge. The wireless players aim to deliver telecommunications connectivity through GSM and ultimately the promise of 3G. The IT players contribute the all important network software and applications expertise. The traditional automotive suppliers have the in-vehicle systems and the ability to integrate it all. But it is the automakers, which have the vehicle for delivering telematics services and the end-user, who have the potential to gain the most.

Latest research from international marketing consulting company Frost & Sullivan ? http://transportation.frost.com ?valued the European telematics market for systems and services at 1.03 billion Euros in 2000. Frost & Sullivan forecasts the market will grow steadily until 2004 when most volume automakers will launch affordable telematics systems across the range, accelerating growth and propelling revenues to a staggering 8.55 billion Euros in 2007.

The study examines the two main areas of the emerging automotive telematics market: hardware systems and applications and services. Hardware systems hold the biggest share of the market at this stage, bringing in around 82 percent of revenues in 2000. However, Frost & Sullivan predicts this will drop to 42 percent in 2007 as services take over the dominant position.

Automotive analyst Tif Awan explains: "The growth in the telematics systems car parc and the broader choice of applications and services in the long term will be the key driver for service revenues."

Mr Awan says the market potential is unlimited. "Significant growth in the market should create valuable opportunities for all the companies in the telematics value chain. However, there are also numerous challenges for players principally unlocking the value of telematics for end-users in terms of desirable applications and services.

"For example, the safety and security applications favoured by US consumers do not appear to have gone down well in Europe where the navigation applications seem to have a higher value proposition."

Mr Awan believes automakers could enhance consumer awareness of the telematics market as a whole by making on-board CD-based navigation systems more attractive to end?users. Frost & Sullivan predicts the current systems used to deliver safety and security applications and these navigation systems will converge into a single modular multifunction unit with multimedia capabilities by 2004.

"In order to release end-user value companies have to unleash the commercial potential of the available and emerging technology," Mr Awan continues. "Any technology that does not create superior value for users has a limited future. This is a lesson that was learned from the development of Internet. It is also vital for companies to begin generating greater awareness among drivers.

"For the European automotive telematics market to yield its potential the industry must move from a technology push to a market pull strategy."

Key markets expected to dominate the European telematics market are Germany, Italy, France and the UK.

Frost & Sullivan is an international marketing consulting company that monitors a comprehensive spectrum of industrial markets for trends, market measurements and strategies. This ongoing research is utilised to complement a series of research publications such as the European Automotive Electric Motors Market to support industry participants with customised consulting needs. Free Executive Summaries of all Frost & Sullivan reports are available to the press.

Report Code: 4246, Publication Date: April 2001, Price 5319 Euros

For more information contact: Nikki Cole nikki.cole@fs-europe.com Tel. +44 (0) 20 7343 8325 http://transportation.frost.com