Defining the Boundaries of Vehicle Telematics

The electronic technology and computing integrated into a vehicle are known as telematics. As the demand for built-in car electronics has risen, the telematics industry has had to rapidly develop in response. Worldwide, the telematics market is poised to grow exponentially, with approximately 104 million new cars expected to have some form of connectivity by 2025. The penetration of integrated telematics is expected to reach 88% of new cars by 2025, according to Ernst & Young, with smartphones and driver safety regulations being of particular importance in this advance. This technology ranges from satellite navigation GPS to wireless options like Bluetooth.

As the fourth exporter of vehicles worldwide, and having surpassed Japan as the main exporter to the US, it would be natural to see the seeds of telematics being sown in Mexico. This is especially true when considering that the US market is expected to welcome over 16 million new cars with telematics by 2025. Track and trace currently dominates the Mexican telematics scene with sales of GPS devices rising 20% annually. The most common application of telematics in Mexico so far is vehicle and trailer tracking, which enables companies to track workers and plan important and complicated routes. This has already proven the usefulness of telematics to Mexican fleet owners, as such equipment has resulted in increased efficiency by cutting down on human errors. The launching of GM’s OnStar and BMW’s introduction of its ConnectedDrive premium service hail the entry of new telematics solutions into Mexico, with applications including roadside assistance, navigation functionality, and safety integrated systems.

The intended users of telematics can be divided into three layers: end users, the companies that deliver those services, and the stakeholders who manage the information. In the automotive industry, telematics will offer OEMs an improved manner to interact with their customer base and expand brand experience, while auto suppliers will develop human- machine interface (HMI) technology to present telematic offerings to auto makers. Even dealers will better be able to understand customers by interacting with them on an ongoing basis. Given the fast-paced growth of vehicle telematics, a key question needs to be answered. Who owns the data acquired by the technology: auto makers, vehicle owners or third parties? Tjahny Bercx, CEO of LeasePlan, the largest fleet and mobility service provider in the world with a fleet of 1.4 million cars, including 10,500 in Mexico, is pondering the same question. “This is an ongoing debate in the automotive industry. Telematics generates a lot of information and the debate revolves around who will ultimately have ownership of all this data,” he adds. For Bercx, not one segment yet has the upper hand, but he believes that as a mobility integrator and motor insurer, LeasePlan deserves a slice of the cake. “With such a large vehicle park, we have the right to see the information as the vehicles belong to us, and we want to manage the units and their costs.” According to Bercx, that is where the crux of the matter lies. “OEMs also want to have the information to better set their pricing. But as a result, a conflict might arise in terms of what the pricing of the vehicle should be because of the various types of information provided by telematics.”

LeasePlan’s services are centered on reducing Total Cost of Ownership (TCO), covering all the variables that go into procuring and managing a fleet, ranging from license plates, vehicle damage, component replacement, maintenance, mileage, fuel costs, and insurance. “When offering TCO management services, it is imperative to have knowledge of the car brands, maintenance, usage, and all the dealership networks that are trying to sell the units to us to get a better price,” Bercx explains. “Being a company that provides detailed TCO and fleet management services, LeasePlan is now considering telematics as a must. It will provide us with all the information about the cars, which will help us to improve the fleet policy of the company.” Telematics will offer LeasePlan an opportunity to enhance the efficiency of its business model, while it can also spark innovation. The company has already picked up on the consumer market’s fascination with telematics gadgets. “At the moment, we are working on a project that makes it possible to inform drivers via mobile phone when they have to bring in the car for servicing,” Bercx adds. While the telematics debate rages on in other countries, it is yet to fully arrive at Mexico’s doorstep, according to Lease Plan.