Telematics To Climb To $5 Billion By 2005, According To Research Group

Autoparts Report, Nov 15, 2000

The telematics industry will grow to a $5 billion industry in 2005 in equipment and service revenues, according to a recent report by a telecommunication research group. In its latest report, "The U.S. Telematics Marketplace," the Strategis Group, a Washington, D.C.-based research firm, finds that growth is being driven by auto manufacturers accelerating their introduction of telematics equipment and services, as they move to secure a strategic differentiation in the marketplace.

"Safety is a prime concern for both consumer and car manufacturers, and telematics is the best safety enhancement since the introduction of seatbelts," stated Elliott Hamilton, Senior Vice President at The Strategis Group. "In the future, car manufacturers will integrate wireless Internet and information services to their current safety applications."

GM Onstar's telematics service is leading the industry thus far in terms of subscribers, with nearly 1 million users expected by year-end 2000, the research group said. Onstar's success is spurring the other car manufacturers to introduce their own telematics services, and The Strategis Group forecasts that 84 percent of new cars sold in 2005 will have telematics available as optional or standard equipment.

The Strategis Group also forecasts that telematics subscribers will exceed 17 million users by year-end 2005. "The telematics industry is providing opportunities for new companies and start-ups to provide innovative products and services," said Hamilton. "Opportunities will abound for service bureaus, system integrators, content providers and device manufacturers."

The Strategis Group's telematics report addresses the drivers of growth in the market, the role of different industry players, consumer preferences for telematic services and provides forecasts for telematic subscribers, and equipment and service revenues.

Projected Number of Telematics Subscribers (millions), 1997-2005
Year      Subscribers    Year      Subscribers
1997            .01           2002            4.56
1998            .06           2003            8.02
1999            .25           2004           12.43
2000           1.01           2005           17.20
2001           2.39

Source: The Strategis Group, Inc.