W001 - World Visions Orario 09.30 – 13.00 Sala 4 TECHNOLOGIES, PARTNERSHIPS & BUSINESS MODELS Developing new value-added services in the navigation markets

1. Challenges for the Automotive
Industry and Telematics opportunites
Jan Unander
Executive Director
Telematics Valley

2. Telematics Valley
• Non profit organisation
• Established 2001
• 47 members
• European organisation
• Collaboration community
• Focus on business
• Not a Science Park
• Workshops, seminars,
conference
• Based in Gothenburg, Sweden

3. Automotive Industry
Challenges
• Traditional car business model under threat
• Future alternative business models unclear

4. New rules in Europe ‐ 2003
Block Exemption is gone
– Any vehicle distributor can sell any brand
– Any vehicle workshop can do warranty work on
any brand (if fulfills certain standards)
– Information access to all players
Spares and services
approx. 70% of the profit

5. What happens?
TIER1 New players ‐ wholesalers
14,000 workshops Consolidating the
141 Countries market

6. Consequence
• Less visits at dealers
– First owner
– Second, Third owner
• Less feedback from vehicle status
• Reduced brand loyalty
OEM lose the customer relation
and thus loyalty

7. Decreased revenues
• New car sales
• Service and spares
• Acessories

8. Can today’s telematics driven
services contribute to loyalty?

9. Difficult to create attractive services?
Frequency
of use
Navigation
My
car.com
ECall Perceived
value
© Jan Unander

10. Difficult to create attractive services?
Frequency
of use
Navigation
My
car.com
ECall Perceived
value
© Jan Unander

11. There are attractive services!
Frequency
of use
True need
RELATIONS Hands free
telephony
E‐Mail
SMS
Navigation
My
car.com
ECall Perceived
value
© Jan Unander

12. How are car services generated?
Internet
driven
services
OEM
Driven Hardware
services driven
services

13. Is this the new gold mine?
Internet cloud
Apps
Cars
App‐store
Developer

14. Internet driven
Services
• Attractive applications are key to success
• I‐Phone business model – revenue sharing was a
winning factor – today adopted by more suppliers
• Market penetration attracts developers (Nokia 41%,
I‐Phone 11%, TomTom?%)
• Need marketing channel – App stores
• Applications needs big volume to give big business
• Car centric services not enough volumes
• Car OEMs have to accept consumer services

15. Internet driven services?
Frequency
of use Relations
Spotify Listen,
Talk!
Skype
Facebook
MSN
Relations
Perceived
Read, value
Look!
© Jan Unander

16. Conclusions
• Services
– Not always safe to consume
– Not always easy to use
• Business model
– Small market
– Same consumer want one subscription
– Drive bandwidth – restrictions
– Low income for all parties

17. Safe/Secure services
• ECall*
• BCall
• Lock/ unlock door
• Immobilizer
• Honk the horn
* EC –all new cars in Europe must have eCall from 2014
i.e. a telematics platform will be in the cars by default.

18. Safety/security driven services?
Frequency
of use
Honk the horn
BCall
Lock/unlock
Immobilizer ECall
Perceived
value
© Jan Unander

19. Conclusions
• Services
– Functions not services
– Negative ‐ insurance
• Business model
– Not prepared to pay for

20. Ownership
• Vehicle technical status
• Proposals of actions
• Commercial offers
• MyCar.Com

21. Conclusion
• Services
– Marketing not services
• Business model
– Not prepared to pay for

22. The internal business case
Challenges
• Very high warranty cost
• New financial solutions for driving a car
• Block exemption gone – lose contact with owner –
need to keep in touch (2:nd, 3:rd owner)

23. Reduce warranty cost
1600
Number of defects
1400
1200
1000
800
1 = W Proactive M1
ith Series.
2
600 =W Series 2 .
ithout ProactiveM
400 3
200
0
1 2 3 4 5 6 7 8 9 10 11 12 Months
Production Delivery to
start dealers
Phase 1 Phase 2 Phase 2,5
Capture LUS LUS vehicles
Fleet vehicles from production
© Jan Unander

24. Conclusion
• Through an telematics based early warning
system cost can be reduced throughout the
life cycle of the car.
• Ford estimate warranty cost >$650/ vehicle
• JD Power rating better – sales better

25. New financial solutions
• Private leasing
• Extended warranty
• Service contracts

26. Conclusion
• When contracts replace purchasing
yesterdays income becomes a cost in
contracts
• Relations are kept longer with contracts

27. Keeping relation with owners
• Need a communications channel to reach owners
(going to independent garages)
• 2:nd and 3:rd owners are very hard to identify

28. Conclusion
• Creating adapted offers communicated via
telematics will improve relation and business
• Special offers to 2:nd and 3:rd owners that
have special needs

29. Summary
Car manufacturers
• Probably few Internet based car adapted services ‐
low income
• Safe and security services are functions ‐ difficult
to charge for
• Controlled ownership services are Marketing Tools
– no income
• Internal business case is a huge profit maker and
decisive for the car manufacturers survival

30. Message
TELEMATICS IS THE ENABLER AND
SHOULD BE FACTORY FITTED IN ALL
CARS
*
THE BUSINESS CASE IS ALREADY
THERE
eCall will force car manufacturers to install a telematics
platform from 2014 anyway.

31. Thank you