A new research report by Berg Insight forecasts that shipments of OEM embedded telematics systems worldwide will grow from 8.4 million units in 2013 to 54.5 million units in 2020 – a CAGR of 30.6 percent.
The number of telematics subscribers using embedded systems is forecasted to grow at a compound annual growth rate of 38.1 percent from 16.6 million subscribers in 2013 to 158.9 million in 2020.
However, the research firms warns that by 2020 many users will only have access to safety services such as eCall. Berg Insight forecasts that the number of active subscribers using at least one additional premium telematics service will grow to about 112 million worldwide at the end of 2020.
“A key factor that influences the growth in active subscribers is the length of the free trial period included in the price of new carsâ€?, explained AndrÃ© Malm, Senior Analyst, Berg Insight.
The free period now typically ranges from 6—12 months in the case of Chrysler, GM, Mercedes-Benz, Toyota and Volkswagen to 3 years for Hyundai and 10 years for BMW.
“Renewal rates for telematics subscriptions after the free period expires are presently relatively low,â€? he added.
However, car brands are now launching packages or offer app stores to better meet the needs of individual customers.
“New split-billing solutions being introduced by telecom operators also increase flexibility in business models for car manufacturers offering connected car services to their customersâ€?, said Mr Malm.
Split-billing can for example enable car manufacturers to bundle services such as eCall, roadside assistance and diagnostics for the lifetime of the car, while high bandwidth applications like infotainment and car hotspot features are billed separately.