TechNavio: Telematics market to grow at a 22.7% CAGR through 2016

Enterprise and consumer demand will fuel the telematics increase
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The global telematics market is forecast to increase at a compound annual growth rate (CAGR) of 22.7 percent through 2016, according to the latest stats from TechNavio.

Telematics involves the integrated use of IT in vehicles. Enterprise applications include fleet management, package delivery, capacity planning and vehicle safety communications.

A key factor contributing to this market growth is the increasing deployment of road safety devices, such as voice recognition systems to enable hands free manipulation of in-vehicle systems.

The demand for telematics is not confined to the enterprise market. Consumer demand is growing as well, particularly in the area of automotive infotainment systems, such as audio-visual entertainment systems, communications systems and automotive navigation.

"The increase in global vehicle production and increased usage of infotainment devices would play a vital role in the growth of the global telematics market. Infotainment devices are used for communication, entertainment, and navigation and this will further influence the demand for telematics devices, which will lead to increased market growth," commented a TechNavio analyst.

Major vendors in the space include BMW, Ford, General Motors, Toyota, Delphi Automotive, Robert Bosch, Continental and WirelessCab.

Frost & Sullivan shares TechNavio's enthusiasm for the telematics market.

"Vehicle manufacturers are waking up to the advantages of signing up users for a connected service for three or more years than having them pay a monthly subscription of $15 or $20 for a year. Manufacturers are increasingly offering these services as a standard feature in their models and are tying their costs into the overall vehicle costs to lower upfront costs," said Praveen Chandrasekar, Frost & Sullivan telematics and infotainment research manager.

According to the research firm, General Motors has decided to make its OnStar emergency response system standard on most models. This move has added almost 35 percent net revenue to its margins every year. Other auto makers are following suit.

Frost notes that an average telematics service costs $15 per month. With more than six million subscribers, telematics is a $1 billion service market in North America.

For more:
- see TechNavio's release and report summary
- check out Frost & Sullivan's release

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