Market Watch

In the United States, total telematics unit sales—including both OEM installed and aftermarket—will rise to 13.1 million units in 2011, up 22.6 percent from 10.7 million in 2010. The total then will climb to 32.3 million in 2017.

The U.S. telematics market is the largest in the world and will remain so at least through 2017. The automotive telematics industry in the United States is more than a decade old, with Ford and GM having sold the first telematics systems in 1996.

By 2011, the total telematics attach rate in the United States will surpass 100 percent, with many autos possessing both an embedded and mobile device communication link. In fact, since model year 2009, most GM vehicles have featured a new OnStar system that included Bluetooth—utilizing elements of both systems.

At present, mobile device telematics is the largest telematics segment in the United States, having surpassed embedded telematics at the end of 2009. Mobile telematics relies on connections to a smart phone or other mobile device to implement communications, while embedded telematics is built into the head unit of the car. The strength of mobile device telematics is due not only to strong growth at Ford and at other OEMs, but also because many of the autos with embedded telematics are getting Bluetooth systems—which qualify as mobile device telematics.

All told, sales from OEM mobile device telematics systems will jump from 4.8 million units in 2009 to 16.2 million in 2017, a Compound Annual Growth Rate (CAGR) of almost 16.5 percent.

In comparison, sales from OEM embedded telematics are projected to grow from nearly 2.5 million systems in 2009 to just over 12.4 million units in 2017, equating to a CAGR of 22.2 percent. With deployment of embedded telematics by General Motors nearly at 100 percent, the number of models with embedded telematics in the United States has stalled. Nonetheless, the percentages are expected to increase for model year 2011 with the introduction of embedded telematics by Toyota/Lexus as well as the launch of new Mercedes-Benz services.

With their higher hardware and infrastructure costs, embedded telematics is less popular than mobile device telematics, including Bluetooth human machine interface (HFI). Japan currently leads in telematics service mobile-enabled solutions, followed by the United States because of Ford Sync.

Thanks to GM
The United States is the leader in telematics deployment due to efforts from GM, which has been the principal force in telematics deployment for a decade. GM’s decision to make OnStar a standard feature on all models as of 2009 has put pressure on its competitors to enter the telematics market. Until now, BMW and Mercedes were the only other OEMs to provide embedded telematics. However, their impact has been limited because they offer only luxury and premium vehicles.

With GM now selling approximately 2 million autos with embedded telematics per year, down from about 3 million in 2008, the company’s competitors have been forced to react. In response, Ford—which introduced Sync in late 2007—has since added telematics offerings. 

Also entering the market are Toyota and Lexus with the Safety Connect product as well as the Lexus-branded Enform offering. Likewise, Mercedes-Benz introduced its new mbrace service in November 2009 with the help of Hughes Telematics, even though it has offered telematics service for some time now.

Mobile device telematics is also doing well but has been primarily used as a hands-free interface for mobile phone usage. Ford’s Sync system changed this pattern by adding a hands-free interface for mobile music devices; it has also added functions and services previously only offered by embedded telematics in the United States. Currently, Ford Sync supports automatic crash notification (911 Assist), remote diagnostics (Vehicle Health Report) and a Traffic, Directions and Information service (TDI).

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