2014/11/28 Revenue from telematics services will come not only from subscriptions but also telematics-enhanced CRM and cost containment

Global Telematics Service Revenues to Exceed $7 Billion by 2019 says Strategy Analytics

Boston, MA - November 25, 2014 - Automotive OEMs have long charged customers subscription fees in order to generate revenue from their telematics offerings. The number of vehicle owners who don’t subscribe to OEM telematics services, however, means subscriptions represent a barrier to deriving a range of other benefits from telematics, including aftersales business and cost savings. Strategy Analytics has released a detailed report titled Monetizing Telematics Service Revenues, including scenario-based forecasts up through 2019. According to Strategy Analytics’ most optimistic scenario, by 2019 telematics service revenues globally will reach approximately U.S. $7.3 billion, as shown in the chart.

“Although telematics service revenues are forecast to increase, the actual revenue per customer is set to decline steadily during the forecast period, making it essential for automotive OEMs to look to other ways to monetize their telematics offerings,” said Greg Basich, Senior Analyst for Strategy Analytics Automotive Multimedia and Communications Systems (AMCS) service.

“More importantly than subscription revenue is the potential for massive cost containment, and aftersales revenue, from customer retention management solutions enhanced by telematics,” said Roger Lanctot, Associate Director for Strategy Analytics Global Automotive Practice.

This report examines the potential that telematics represents to enhance CRM for OEMs and how it can improve OEMs’ ability to control costs from software-related recalls. It also provides an overview of telecommunication carriers’ roles in the telematics ecosystem.

“The ability to keep recall-related costs under control is increasingly important to automotive OEMs, especially in light of the very large number of recalls issued this year,” said Richard Robinson, Director of Strategy Analytics’ Automotive Multimedia and Communications Systems service. “Telematics enables much better control of, and understanding of, recall issues that could potentially cost OEMs billions of dollars.”