Adapting in order to tap into the growing demand for connected services in china

Adapting in order to tap into the growing demand for connected services in

China

Telematics Japan 2010

Andrew HartSenior Telematics & ITS Specialist

Good newsDemand for connected navigation & infotainment is growing rapidly…

Bad news…But you may not be in a position to benefit from this.

A Chinese dilemma

Challenges

Risks

Solutions

Challenges

Risks

Solutions

Aftermarket ‘look-alike’ Smartphone navigation

Vehicle manufacturers are being squeezed

Squeeze

2009 2010 2011 2012 2013 2014 2015

2.53

3.6

4.5

5.7

7

2.52.85

3.33.8

4.24.6

Pessimistic

Optimistic

Aftermarket pressure

Market for look-alike systems may

reach 7 million by 2015

Look-alike systems are significantly cheaper compared to OE systems…

…but there are other factors to consider too


~ $600 ~ $1600

Dealerships offering both aftermarket and

OE navigation solutions

11%

67%

11%

11%Only OE

Both OE and aftermarket

Only aftermarket

Neither


Dealers offered:


1st GenerationImitation

2nd GenerationInnovation

3rd GenerationTelematics services

Aftermarket navigation

is evolving


CTMSSingle data

centre & Single call centre

10 aftermarket suppliers

Collaboration

Aftermarket suppliers collaborating towards a

joint service

telematics

Unique Selling Point


Using as a

may be short-lived

2009 2010 2011 2012 2013 2014

2535 40

60

100

150

Smartphone sales expected to

surpass 150 million by 2014

Smartphone pressure

Growth in consumer demand for innovation

Drop in willingness to pay for innovation

The ‘Nokia-effect’

Smartphone pressure

Challenges

Risks

Solutions


Vehicle manufacturers are being squeezed

Squeeze

Challenges

Risks

Solutions


OEMs face short and long-term risks

Loss of revenue

Short-term

Loss of control

Long-term

Squeeze

Vehicle manufacturers could be losing out on as much as

$1.12 billion by 2015

Risks

2010 2011 2012 2013 2014 2015

$-440

$-530

$-640

$-780

$-960

$-1,120

Loss of control over

in-car experiencecould be even more costly

Risks

Challenges

Risks

Solutions


China requires China-specific strategies

Loss of revenue Loss of control

Short-term Long-term

Local partnerships Listen to consumers

Squeeze

Requirements for China-specific solutions

Overcome regulatory hurdles

Reduce costs

Partnerships with domestic companies help to…

Local partnerships

But what about Quality?

Vehicle manufacturers losing the battle of

‘quality perception’

Local partnerships

‘My GPS always guides me to the

wrong destination!’

?

Consumer voice

Adapt to consumer expectation…

…currently defined by Smartphones

SBD survey of smartphone users in China

• How often do you download Apps?

• Are you interested in in-car Apps?

• What types of Apps would you like?

• How much would you be willing to pay?

Consumer voice

50% of smartphone owners regularly download Apps

Never

Annually

Monthly

Weekly

Daily

32%

17%

35%

14%

3%“I download Apps…”

Consumer voice

Almost 50% are interested in accessing Apps through

the car

12%

34%

28%

27%Very interested

Interested

Neutral

Not interested

“For accessing Apps in car I am…”

Consumer voice

68% rank Maps & Navigation as an important

in-car App

“For accessing Maps & navi I am…”

37%

31%

14%

18%

Very interested

Interested

Neutral

Not interested

Consumer voice

30% would be willing to pay more than 1,000 RMB

39%

33%

15%

11%

3%

1%

Nothing

Less than 1,000 RMB

1,000-4,999 RMB

5,000-9,999 RMB

10,000-20,000 RMB

More than 20,000 RMB

“I would be willing to pay…”

Risks

Loss of revenue Loss of control

Short-term Long-term

Solutions

Local partnerships Listen to consumers

Challenges


Squeeze

Summary

Technical research

End customer surveys & analysis

Program management and

product development

Market intelligence

Strategic business planning

Independent testing & benchmarking

Adapting in order to tap into the growing demand for connected services in china

Automotive

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