Telematics In Cars - Frost & Sullivan's Survey Of Customer Perception And Attitudes
End-User Emphasis On Safety And Competitive Pricing Persists In Telematics Community Despite automakers' ambitions and huge financial outlay to add electronic gadgets and services to their vehicles, telematics - the umbrella name for in-car information and entertainment services - has found itself on a rocky road to mass consumer acceptance. Automotive manufacturers across the globe anticipate that they would own and operate telematics services, creating a large profit stream in the process. Against a backdrop of sluggish vehicle sales, it is no surprise that carmakers have leapt at this nascent but enticing market. Recent initiatives and partnerships to accelerate the development of telematics solutions have suffered a succession of setbacks as a result of prevailing uncertainty over the type of content end-users envision telematics systems and services packages to offer. Without the support of real business case examples, the plug has been pulled on a number of telematics projects and joint ventures. The demise of Wingcast, a joint venture between Ford and software company Qualcomm, which was supposed to turn cars into four-wheeled communications devices that would generate steady revenue streams from various telecom services, is just one of the recent well-publicised examples. European drivers are willing to pay between EUR 1,800 and EUR 1,900, constituting 50 per cent of the current average recommended retail price, for the perfect telematics system. Consumers expect this system to boast the most advanced navigation system, full safety and security system, remote vehicle access and infotainment system with voice activation and ability to plug in mobile phone/PDA. This claim follows Frost & Sullivan's analysis of European customer attitudes and perceptions towards telematics in passenger vehicles, conducted amongst 1,500 vehicle owners using a phone-post-phone approach, and furnishing 400 select participants of the sample base with an information pack containing all the necessary technical background information. The analysis also included a form of conjoint analysis (Stated Preference) using games and exercise enabling the respondents to make a realistic decision over the features he/she most preferred in relation to features and a price variable. ”Consumers expect to pay an average relative price of EUR 219 for a navigation system, the survey shows, and demonstrated willingness to pay an additional EUR 132 if a navigation system would direct them around traffic congestion. They were also happy to pay an additional EUR 36 to be able to receive directions to points of interest such as petrol stations and car parks,” notes Frank Leveque, Project Manager at Frost & Sullivan. “These costs are all based on readiness to pay one-off charges without any further subscription or system use fees. As can be expected, we could monitor distinct differences in price acceptability across driver groups. Drivers in UK are willing to pay EUR 313 more than those in France and owners of high value cars are willing to pay up to EUR 717 more than those at the lower end of the scale,” he explains. The study underlines that over 40 per cent of European customers prefer a dual payment structure integrating both a one-off payment with a level of subscription, preferably linked to the mobile phone bills. Vehicle manufacturers feel encouraged by the strategic advantages associated with telematics, such as utilising the technology as a critical customer relationship management (CRM) tool with long-term benefits. During Frost & Sullivan's survey, it emerged that consumers were surprisingly open to receiving information related to their vehicle from the vehicle manufactures. Drivers want a more intimate relationship with the manufacturers, offering carmakers a golden opportunity to develop and implement their CRM strategy. Within the telematics services sector, German car manufacturers (Mercedes-Benz, BMW, Audi and Volkswagen) enjoy the strongest level of brand awareness across Europe, with the exception of a few local players, such as TrafficMaster in the UK and Renault in France. Frost & Sullivan's survey uncovers poor brand awareness rates for systems manufacturers and specialist service providers (such as Onstar, Tegaron or Intellicast) amongst consumers. According to Frost & Sullivan, visibility and awareness of the term telematics scores surprisingly low amongst European vehicle owners, with only about 36 per cent of respondents demonstrating knowledge of the services. Although recognition of the term telematics is limited across Europe, understanding of certain telematics features (such as navigation systems) without immediate association with the term telematics is more widespread. Italy shows the highest level of awareness of the term telematics (79 per cent), while the UK recorded the lowest awareness level (4 per cent). No doubt the hype of telematics has exceeded what has actually been delivered, however, Frost & Sullivan is confident that the technology’s success will be a reality soon. The findings indicate that 88 per cent of parties surveyed were receptive to the idea of adding telematics features to their future vehicles. Airbag deployment notification and colour map navigation (with congestion avoidance and points of interest) rank as the most desirable feature amongst customers. Interestingly, a vast majority of the Europeans prefer steering wheel button activation to voice recognition systems for operating a telematics system. The advent of next-generation wireless is set to transform the entire vehicle into a mobile entertainment centre. However, entertainment features, including TV, games, MP3 and DVD, were not considered important and their cost/performance ratio turns these systems into “nice-to-have” rather than “must-have” items. A large majority of respondents expected to find telematics systems at car dealerships. This can mainly be attributed to the fact that telematics is still predominantly a niche market technology and consumers have more faith in specialists. This is likely to change as the product life cycle evolves. Frost & Sullivan recommends that suppliers offer both basic as well as premium price packages to achieve a core competitive differentiator. “The market share winners will be those companies who reduce prices while simultaneously communicating the benefits of telematics and subsidising its launch in order to increase exposure and thus enhance the perceived value of the technology,” Mr Leveque concludes. Publication Date: January 2003 Price: EUR 16,500 Report Code: B140 Background Frost & Sullivan is an international marketing consulting company that monitors a comprehensive spectrum of high-tech markets for trends, market measurements and strategies. This ongoing research is utilised to complement a series of research publications to support industry participants with customised consulting needs. Interviews and free executive summaries are available to the press. For more information contact: Kristina Menzefricke, Public Relations Department Tel. +44 (0) 20 7343 8376 Fax. +44 (0) 20 7343 8380 kristina.menzefricke@frost.com http://frost.com http://pressroom.frost.com --------------------------------------------------------------------- If you would prefer not to receive further messages from this sender: 1. Click on the Reply button. 2. Replace the Subject field with the word REMOVE. 3. Click the Send button. You will receive one additional e-mail message confirming your removal.