As overall new vehicle sales begin to plateau after years of explosive progression, connected car services in China are switching gears, with trends predicting strong growth in the upcoming years. In the latest study conducted by ABI Research, a leader in technology market research, data shows this regional market acceleration will provide important new revenue opportunities for original equipment manufacturers (OEMs). According to the report, Chinese OEM consumer telematics revenues will exceed $2.6 billion (16.6 billion yuan, approximately) in 2020.
On the consumer telematics front, foreign Telematics Service Providers (TSPs), such as Verizon Telematics and WirelessCar, are optimizing their partnerships with local carriers and content providers to better adapt their services to China, while simultaneously fulfilling a host of complex licensing requirements.
“The problem of legislative hurdles in China is perhaps a little over exaggerated,” said James Hodgson, research analyst at ABI Research. “Doubtless, they can stop a foreign OEM or TSP trying to ‘go it alone’ dead in their tracks. The key to success is in forming effective partnerships with local players who already have the necessary licenses and knowledge of the local value chain to provide connected car services tailored for the Chinese consumer. There’s something to be said for accepting a smaller piece of what has been a fast-growing pie.”
However, this does not mean that OEMs or TSPs should become passive. Players from across the connected car value chain are recognizing the need for increased availability and improved consumer uptake.
“In emerging markets, vendors can often fall into the trap of resigning themselves to low penetration while waiting for high growth in overall new vehicle sales to bring in connected car service revenues,” said Hodgson. “Slowing growth in new car sales has prompted many OEMs to repackage their services and lengthen the amount of time services are free.”
In the meantime, connected infotainment has been invigorated in 2015 by smartphone integration, as many OEMs continue to announce support for protocols, including Apple CarPlay, Baidu CarLife and MirrorLink. The ability to safely provide a smartphone-like user experience, while simultaneously leveraging more of the smartphone’s existing processing capacities, will help further democratize the connected car in China, according to ABI.
Click here to read ABI Research’s Connected Car Solutions in China report.
