Vehicle Telematics Market Size, Share & COVID-19 Impact Analysis, By Service (Information & Navigation, Safety & Security, Fleet Management, Insurance Telematics, Infotainment System, Others), By Technology Type (Embedded, Tethered, and Integrated), By Sales Channel (OEM, Aftermarket), By Vehicle Type (Passenger Cars, Commercial Vehicles) and Regional Forecasts, 2021-2029

The global vehicle telematics market size was valued at USD 64.93 billion in 2021. The market is projected to grow from USD 72.78 billion in 2022 to USD 213.67 billion by 2029, exhibiting a CAGR of 16.6% during the forecast period. The global COVID-19 pandemic has been unprecedented and staggering, with vehicle telematics experiencing lower-than-anticipated demand across all regions compared to pre-pandemic levels. Based on our analysis, the global vehicle telematics market exhibited a growth of 4.3% in 2020 as compared to 2019.

Vehicle telematics offers several benefits for drivers worldwide. This technology enables routing, improved logistics, and increased fuel efficiency. It aids in retrieving stolen vehicles, identifying underutilized assets, and reducing accident frequency and severity. The rise in popularity of connectivity solutions in cars and the implementation of necessary high-cost infrastructure are increasing consumer awareness and demand for automotive telematics solutions. These factors, in turn, are fueling the vehicle telematics market growth.

COVID-19 IMPACT

Accelerated Focus on Domestic Semiconductor Manufacturing Triggered Market Growth

The pandemic-induced lockdown in 2020 led to a severe downturn in vehicle production as factories were compelled to close down or operate at reduced capacity after production resumed at the end of Q2 2020.

Lockdown measures caused production and demand disruptions to automobile manufacturers and their sub-contractors. Furthermore, restrictions were lifted across different sectors and countries at a different pace, resulting in input shortages in the automobile industry’s complex value chains. For instance, production decreased by 19% in the U.S. and more than 30% in South America, with a decline of nearly 32% in Brazil.

The vehicle telematics industry recovered far quicker than anticipated in 2020, and consumers' demand for new vehicles was resilient. However, as facilities closed due to pandemic-induced shutdowns, semiconductor chip and wafer suppliers redeployed capacity to other sectors such as consumer electronics. Due to their complexity, these chips have extremely long lead times (around 26 weeks). Hence, chip makers have been unable to fulfill the sudden ramp-up in demand. This shortage has led automakers to cut production in 2021.

Several governments have introduced long-term plans to reduce the dependency on a small number of semiconductor chip manufacturers in Asia Pacific. Major manufacturers, such as United Microelectronics and Taiwan Semiconductor Manufacturing, have announced plans to increase production capacities. These factors will aid the recovery of the market.

The pandemic also had a positive impact in terms of the increasing comfort level of consumers with the installation of telematics devices in their vehicles for various purposes. For instance, in May 2019, Arity (a key player in the telematics industry) surveyed 875 drivers over 18. The survey was conducted to understand how many would be comfortable using typical telematics variables such as speeding, distracted driving, number of miles driven, and where and when they drive to adjust their insurance premiums.

However, in May 2020, the company re-ran this survey with more than 1,000 licensed drivers. Nearly 50% of drivers (a 12% year-on-year increase) were comfortable with having their insurance adjusted based on where they drive, what time of day they drive, and the number of miles they drive along with speeding and distracted driving.

Hence, these factors will positively influence the growth of the market in the long term.

LATEST TRENDS

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Increasing Adoption of Telematics-based Insurance to Augment Market Growth

There has been a growing demand for vehicle telematics-based insurance policies, and they are expected to increase in variety with the rapid adoption of telematics systems during the forecast period. Automakers recognize that being the hub that collects vehicle and driver information from in-vehicle embedded telematics devices gives them an excellent position to sell data to insurers or distribute insurance themselves. Additionally, automakers can broaden their financial services portfolio by offering data-driven insurance at the point of sale and support brand differentiation by providing value-added services.

Hence, implementing telematics systems in automobiles represent a significant opportunity for automakers to reduce costs and create new profitable avenues by repositioning themselves along the insurance value chain. These factors will positively influence the growth of the market.

DRIVING FACTORS

Improved Operational Efficiency for Fleet Management Companies to Augment Telematics Demand

Fleet managers can use some telematics devices to create more efficient routes. Tracking how and where vehicles operate can improve driver productivity, dispatching, customer delivery times, and service levels. Managers can identify opportunities to improve vehicle availability and reduce unintended expenses associated with unauthorized use by tracking the vehicles.

Fuel consumption can be reduced with the help of telematics devices by tracking idle time and maximizing efficiency on customer stops. This factor supports the company's emission-reduction initiatives and sustainability goals. These factors will fuel the growth of the market.

Benefits of Vehicle Telematics such as Improved Safety & Vehicle Maintenance to Boost Market Growth

Navigation and logistics tools are also only a small part of telematics systems. These systems offer fleet operators valuable risk assessment data and clear insight into the regular safety performance of drivers. Fleets using the aforementioned data and systems to detect hazardous driving habits also generally experience low losses and accidents. Fleet managers can mitigate potential risks by offering constructive driver feedback using the telematics data. When a risky driving maneuver occurs, real-time audible alerts will be sent to drivers so they can quickly alter their driving patterns.

Inefficient or costly driving performance that leads to unnecessary wear & tear can also be identified using telematics devices. Vehicle downtime can be reduced by alerting fleet managers to overdue routine maintenance and other potential vehicle problems. Fleet managers can have expensive assets with a lengthier useful life as they can be more proactive with maintenance repairs. Hence, these factors will drive the growth of the market.

RESTRAINING FACTORS

Differing Rate between Advancement of Telematics Technology will Restrain Market Growth

According to the study, Analysis of Automotive Telematics Industry in Japan, clock speed analysis is a method of understanding supply chain design, modular architecture, and product lifecycle acceleration to maintain or create a competitive advantage. The product tech clock speed, process tech clock speed, and organizational clock speed for automobiles are 4-6 years, 4-6 years, and 10-15 years, respectively. For semiconductors, it is 4-6 years, 2-3 years, and 3-10 years, respectively. For personal computers, it is less than six months, 2-4 years, and 2-4 years, respectively.

A boundary is created when two industries that evolve at different clock speeds come together. Regarding telematics, the pace of evolution differs significantly as the hardware and software that makeup telematics evolve rapidly. Hence, OEMs are under unwanted stress to provide vehicles and speed up upgrades for telematics products & services to avoid repeated obsolescence. Therefore, these factors can negatively influence the growth of the market.

SEGMENTATION

By Service Analysis

Fleet/Asset Management to Dominate Market Owing to Benefits such as Improved Operational Efficiency

By service, the global market is segmented into information & navigation, safety & security, fleet/asset management, insurance telematics, infotainment system, and others.

The fleet/asset management segment held the largest share of the market and is also expected to grow faster during the forecast period. Fleet management services permit operators to collect and store engine error data, locate vehicles on-demand, and identify dangerous driver habits, including harsh braking, idling, and speeding. For fleet operators, this driver data is invaluable. Hence, helping fleet operators cut costs through their operation will propel the growth of this segment.

The insurance telematics segment is expected to exhibit a high CAGR during the forecast period. Greater consumer comfort with sharing driving data and benefits such as premium reductions with personalized insurance offerings based on a user’s driving parameters will lead to the segment's growth.

By Technology Type Analysis

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Embedded Systems Held Largest Market Share Due to Better User Experience

Based on technology type, the market is segmented into embedded, tethered, and integrated.

The embedded segment held the largest market share in 2021. In embedded systems, connectivity is offered through a built-in telematics control unit that ensures constant connection and a better user experience. The assurance of continuous connectivity along with rich user experience leads to increased adoption of embedded vehicle telematics.

The integrated segment is anticipated to exhibit a higher CAGR during the forecast period. Consolidation of hardware components into a single device, which reduces cost and faster response time for fleet managers will surge the demand for integrated solutions.

By Sales Channel Analysis

OEM Segment Dominated the Market Owing to Low Operational Difficulty and Constant Upgradation

Based on sales channel, the market is segmented into OEM and aftermarket.

The OEM segment held the largest market share in 2021. Factory-fitted telematics units offer low hassle and low-cost advantages. Additionally, the software is a significant point of focus for OEMs. In 2022, Mercedes-Benz opened a new software center to enhance in-house software capabilities. Stellantis is looking to hire more software developers to create additional revenue from software-driven features. Consequently, the variety of available useful data will also grow rapidly. Hence, these factors will lead to a dominant share of OEM solutions in the market.

The aftermarket segment is also expected to witness promising growth during the forecast period. Aftermarket solutions require installation, troubleshooting, and periodic replacement of obsolete units, and they need to be reinstalled properly after every servicing, creating a substantial logistics burden. Additionally, low-cost external hardware is also more susceptible to cybersecurity risks. Hence, these factors will negatively influence the growth of the segment.

By Vehicle Type Analysis

Passenger Cars Held Largest Market Share Supported by Consumer Demand for Connected Mobility Solutions

Based on vehicle type, the market is segmented into passenger cars and commercial vehicles.

The passenger cars segment held the largest market share in 2021. Consumer purchasing preferences have witnessed a rapid shift, and telematics is a highly desired system by consumers. The rising demand for safety and convenience-related services, such as fuel & routing optimization, vehicle maintenance alerts, real-time tracking, and stolen-vehicle recovery, will drive the segment's growth during the forecast period.

The commercial vehicles segment is anticipated to exhibit a higher growth rate during the forecast period. Fleet operators can maximize uptime, enhance safety, and optimize operations. With the aid of telematics solutions, cost-saving opportunities can be identified and operators can deploy programs to implement corrective measures. These factors are attributed to the positive growth for the segment.

REGIONAL INSIGHTS

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North America dominated the vehicle telematics market share (with the U.S. accounting for most of the share), and it stood at USD 23.94 billion in 2021. The rising security and safety concerns of drivers and passengers and the focus on preventing accidents are the foremost factors contributing to the adoption of telematics in this region. Moreover, government norms that favor automotive telematics are boosting the market growth.

For instance, in January 2022, the U.S. government recently signed a contract with Geotab to equip 217,000 vehicles with fleet management telematics technology. Several insurance companies in North America use telematics solutions to minimize the risk by tracking various aspects such as usage, security, and maintenance. Hence, these factors are attributed to the region's larger market share.

Europe is expected to show significant growth in the market due to steadily declining hardware costs. Aftermarket suppliers offer systems at no upfront cost while the services and hardware cost are distributed over fixed contract periods. The entry of established OEMs that provide warranties and offer solutions supported via dealerships will further aid market development.

The Asia Pacific vehicle telematics market is expected to exhibit a higher CAGR during the forecast period. In recent years, the number of Telematics Service Providers (TSPs) in China and India has increased substantially. In 2021, Tech Mahindra (an Indian IT company) conducted a survey (of Indian consumers) to understand the awareness level and buying behavior for automotive telematics technologies.

The survey shows around 90% of respondents prefer buying a four-wheeler with telematics technology. The demand for vehicle navigation in entry-level cars, escalating fuel prices, and fear of theft will further propel the demand for this technology.

KEY INDUSTRY PLAYERS

Webfleet Solutions Holds a Larger Market Share Owing to Productive Partnerships and Industry Leading Products

Webfleet Solutions (previously known as TomTom telematics) is one of the leading telematics solution providers dedicated to fleet management, connected car, and vehicle telematics services. The company’s main Software-as-a-Service solution, WEBFLEET is utilized by businesses of various sizes to enhance vehicle performance, save fuel, support drivers, and improve overall fleet efficiency.

Additionally, Webfleet Solutions provides services for rental, insurance, and leasing industries, car importers, and firms that address the requirements of businesses and customers. The company has over 50,000 customers worldwide and service centers in over 100 countries globally. These factors have enabled the company to capture a larger market share.

LIST OF KEY COMPANIES PROFILED:

• Robert Bosch GmbH (Germany)


• Webfleet Solutions B.V. (Netherlands)


• MiX Telematics (South Africa)


• Trimble (U.S.)


• Verizon (U.S.)


• Zonar Systems (U.S.)


• Octo Group S.p.A (Italy)


• Microlise Telematics Pvt. Ltd. (U.K.)


• Harman International (U.S.)

KEY INDUSTRY DEVELOPMENTS:

• December 2021 – Trimble announced that it acquired AgileAssets, an asset management software provider to government and private organizations (including state-level transportation agencies and national road authorities in the U.S.). AgileAssets’ asset management solutions will offer organizations advanced analytics for real-time decision-making and insights for maintenance operations and efficiency management.


• December 2021 – In partnership with the parent company Continental AG, Zonar launched the Light Duty Telematics Control Unit (TCU). The Zonar LD TCU is specially designed to meet the evolving requirements of light-duty vehicles within fleets, including access to telematics data and diagnostics to improve security, efficiency, and performance.


• November 2021 – Bosch introduced Ridecare solutions for fleet managers. Ridecare solutions are specially designed for a fleet of vehicles or ride-sharing services to reduce the skyrocketing maintenance cost due to damage or misuse of the vehicle. Bosch’s Ridecare solutions utilize a single sensor box. This box is highly sensitive and can detect minor scrapes such as fender scuffs or underbody dings. It can even tell if the occupant has been smoking inside the vehicle during the rental period.


• September 2021 – Trimble announced that its eDriver Logs Electronic Logging Device (ELD) software had been certified to comply with the technical needs of the Canadian ELD mandate. The certification applies to using eDriver Logs ELD when paired with Trimble’s PeopleNet Mobile Gateway hardware.


• January 2021 – Mercedes-Benz Connectivity Services joined Webfleet’s OEM.connect partner program. This factor allows Mercedes-Benz vans and passenger cars with factory-fitted connectivity to connect with WEBFLEET, Webfleet Solutions’ service platform.

REPORT COVERAGE

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The market report covers a detailed market analysis. It focuses on key aspects such as leading companies, product types, and leading vehicle telematics applications. Besides this, the report offers insights into the market trends and highlights key industry developments. In addition to the abovementioned factors, the report delivers an in-depth electric bike market analysis of several key factors that have contributed to its growth in recent years.

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