Innovations in Aftermarket Telematics Interview


Published on

Interview with NaviBiz in China before the Telematics@China Tour event in Guangzhou where industry executives gathered to discuss Innovations in Aftermarket Telematics

Published in: Automotive, Business, Technology
  • Be the first to comment

  • Be the first to like this

No Downloads
Total Views
On Slideshare
From Embeds
Number of Embeds
Embeds 0
No embeds

No notes for slide

Innovations in Aftermarket Telematics Interview

  1. 1. Innovations in Aftermarket Telematics Interview with Ralf Hug and NAVIBIZ China The 2012 Telematics@China Tour in Guangzhou on May 16th 2012 will cover innovations in aftermarket telematicsRalf Hug – President, Trajectory Group LLCRalf is President of the Trajectory Group, a strategic advisory, business development and marketingconsulting services firm with deep expertise in the automotive telematics space. He helps clients stay on the trajectory of success by shaping compelling business models, attractive value propositions and winning business and marketing strategies. Previously Ralf was VP Marketing & Product Management at Airbiquity, a leading cloud platform for connected vehicles. Ralf was also VP of Marketing & Product Management at Navigon, a leading software navigation company, Director of Automotive Marketing at Garmin and Director of the Accessories and Telematics business at Mercedes-Benz USA. Ralf Hug is based in Chicago, Illinois USA, holds a Master’s of Business Administration (MBA) in marketing and finance from the University of Bayreuth in Germany, and speaks fluent English and German. Connect withRalf via LinkedIn: Ralf, you will be a keynote speaker at the upcoming Telematics@China tour event inGuangzhou on Aftermarket Telematics. What are the opportunities in aftermarket telematics?Ralf: There is a wide range of opportunities for companies to deliver compelling hardware, software andservices solutions in the aftermarket delivering on connectivity experiences inside the car that fulfill end-user needs in regards to safety, productivity, convenience and infotainment alike. Since China hasbecome the largest and most important automotive market in the world with vehicle sales of around 20million in 2012 and an additional almost 100 million vehicles in operation we are seeing a true massmarket potential with economies of scale and scope even in niche markets that are very attractive tocater to. The key strength of the aftermarket compared to OEM-fitted solutions is clearly to bringinnovations to the market a lot quicker than automotive OEMs would.NAVIBIZ: What specific opportunities in aftermarket are we talking about?Ralf: There are opportunities for consumer as well as commercial telematics solutions. For exampleinfotainment solutions that seamlessly connect your smartphone to your car and make many drivingand entertainment relevant apps safely accessible while driving leveraging a standard created by the
  2. 2. Connected Car Consortium called MirrorLink or 1-Din or 2-Din replacement head-units that run theAndroid operating system and allow a broad range of apps to be developed for cars.Or, specifically installed connectivity black-boxes or OBDII-dongles turn vehicles into wireless hotspotsallowing mobile office solutions or streaming of entertainment solutions to passengers incl. movies ormusic.Furthermore these telematics solutions allow many safety services such as emergency & roadsideassistance, vehicle tracking and recovery services and many more.An interesting global development is for insurance companies to offer mileage-based or behavior basedinsurance rates providing discounts for less and safer driving.On the commercial side it is all about managing fleets in the most economical way incl. monitoringdriver safety, routing truck fleets most economically or complying with safety regulations such as hoursof driving or automating safety inspections. These among other exciting solutions I will cover at theupcoming Telematics@China Tour in Guangzhou in more detail.NAVIBIZ: How do the automotive OEMs look at the aftermarket?Ralf: In theory the aftermarket but also OEM accessories compete with factory-fitted OEM solutions soit looks like a competitive environment. However, I see opportunities on both sides to work incollaboration. The reality is as mentioned before time-to market is essential and customers demand thelatest and greatest technology to be available in their cars today - not two years down the road. Theautomotive OEM dealer channel is therefore an important distribution channel for aftermarket solutionsand can help enhance the value of vehicles in the new vehicle sales as well as pre-owned sales area evenover the life-cycle of the vehicle. Needless to say generating significant revenues and profits for dealersor as OEM approved accessories for the OEMs as well.NAVIBIZ: What can be learned from the US or Europe in regards to business models since there is aconvergence of hardware, software and services solutions within telematics that can be rather complex?Ralf: Indeed it is very complicated for companies that have a hardware-centric business model to adaptto a service-centric model or a combination thereof which is a core challenge of telematics solutions. Toclarify a bit when people think of business models, most think of them only in terms of revenue streamsand the aftermarket is dominated by hardware centric pricing that follows a rapid commoditizationpattern. With a service component things become even more complicated introducing subscriptionmodels, advertising models, and the like. To better understand a business model we have to understandthe critical interdependencies within a good business model that are often ignored: in particular howvalue is being created (value proposition), how that value is being captured (profit formula), as well ashow it is delivered (key processes and resources). The interrelations are significant and often misaligned
  3. 3. and cannot easily be copied – or if they are copied don’t work in isolation of the rest. The willingness topay a subscription for telematics services has been somewhat disappointing which leads to the questionwhat the root cause is. I will cover the business model creation framework at the telematics event and inparticular look at the value creation and the value delivery portion.NAVIBIZ: With value creation and delivery you mean also the innovations process and distributionchannels?Ralf: Yes indeed. Let me elaborate on that a bit further. In today’s market place it is not enough anylonger to just speak to functional benefits. The most powerful differentiators speak to some metabenefit above and beyond the functioning of the product itself. We are talking about end-to-endsolution experiences – think of Apple - that are required in particular in this rather complex telematicsecosystem of hardware, software and services that can create an awful customer experience if offeredin a fragmented way. This experience also goes to the core of product and service delivery at the Point-of-Sale as well as the touch points during product ownership. I will highlight at the Guangzhou event thedealership channel as a key Point-of-Sale/Purchase for aftermarket telematics in more detail. With someinnovative best-in-class processes, revenues, profits and attach rates can be significantly improved whileproviding a solid customer experience.NAVIBIZ: This sounds very exciting indeed. Thank you. We look forward to the event and learning moreabout the aftermarket telematics opportunities at the Guangzhou event on May 16th 2012.