Telematics in China (Part 1)



Telematics in China (Part 1)
GPS Business News recently met with Ralf Hug, President of The Trajectory Group, a boutique consulting firm specialized in telematics services.

Hug previously worked for Airbiquity, Navigon, Garmin and Mercedes-Benz USA. He has been recently spending a lot of time in China helping clients evaluate the Chinese telematics opportunity and he was keen on sharing with us his thoughts about this booming market.

In the first part of this interview he talked about telematics services and smartphone connectivity, The second part - to be published on February 6, 2012 - will focus on insurance telematics.

GPS Business News: At the end of last year you conducted a survey in China to better understand the attitude of Chinese consumers towards telematics. What have you learned?

Ralf Hug: Yes indeed, China is the new frontier for telematics and there is a lot of activity there by pretty much all major auto OEMs. So, we wanted to understand the end-user’s view point in China and interviewed 1,000 car owners about their attitudes, awareness, preferences and purchasing behaviors of telematics devices and services, including entertainment, convenience, navigation, maintenance, safety, insurance, in-car apps and smartphone apps.

We wanted to know how important telematics is when purchasing a vehicle. Is telematics in the consideration set at this point when buying a new vehicle? So, over 85% of respondents stated that they would include telematics features in the purchase decision of the next vehicle.

When asked if they are willing to spend more money on a car with the right telematics services over 75% responded favorably.

So, telematics is definitely becoming an important selling tool.

We also looked into which particular telematics services they are interested in. We tested over 56 services within 6 popular categories such as infotainment, navigation, convenience, safety, maintenance and insurance telematics.

Surprisingly or not, SOS Emergency is still the most important feature overall and in the safety category, but for me, I was most surprised at Wi-Fi hotspot being the top feature within infotainment and also ranking very high overall. Traffic is of course very high in appeal within the navigation category.

Telematics in China (Part 1)
Telematics in China (Part 1)
GPS BN: What about price sensitivity of the Chinese car owners?

RH: In regards to price sensitivity we found that 50% of respondents found RMB 60 roughly around US$10 per month for a basic telematics services bundle, which would include emergency services, roadside assistance, remote diagnostics and the like, already as too expensive so Chinese consumers are very price sensitive, even more so than in the US.

We also asked respondents to rank their preferred way of paying for services and found out that subscriptions do not rank very high, but they are still offered as the preferred way by many OEMs worldwide. So, I believe we really have to rethink subscription services as a whole and focus more on the value of connectivity to other stakeholders such as dealers and OEMs. We have done a lot of work in this area in recent consulting projects.

Continued...

Monday, February 4th 2013


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