By: Luke Jones, Published on December 23, 2016 10:18 AM, Last Update on December 30, 2016 09:33 AM
Telematics devices are viewed as the future of the auto insurance industry, allowing customers to have affordable premiums and insurers to limit risk. According to Swedish market research firm Berg Insight, telematics service subscribers using embedded systems will grow at a compound annual growth rate (CAGR) of 36.4% between now and 2021.
A new 210-page report titled The Global Automotive OEM Telematics Market suggests the number of subscribers will increase from 26.5 million at the end of 2015 to 170.2 million subscribers at the end of 2021. Gothenburg, Sweden-based Berg Insight released the report on Wednesday with an accompanying press release.
Shipments of embedded car original equipment manufacturer (OEM) telematics devices will also see a sharp increase across the globe. The amount of systems will grow from nearly 13.8 million units in 2015 to 52.8 million units in 2021. This increase represents a CAGR of 25.1%, the machine-learning, IoT, and market research specialist says.
A telematics system monitors driver habits and other aspects of a vehicle. The technology is widely believed to be an avenue to help insurers combat a rise in autonomous vehicles. Telematics help with the implementation of usage-based insurance (UBI).
In its report, Berg Insight defines telematics as “an automatic system designed for passenger cars that incorporates some form of cellular communication.”
The company believes North America will be at the forefront of OEM telematics systems growth. “North America is the most advanced market with an attach rate of 37 per cent, followed by EU+EFTA (European Union and European Free Trade Association) with an attach rate of close to 20 per cent,” the report said. “Other developed markets such as Japan and South Korea currently have attach rates of approximately 17 per cent. China has emerged as an important market for telematics services with an attach rate of about 10 per cent in 2015.”
“Carmakers and car owners are starting to see the benefits of connected car services as a growing number of new vehicles are equipped with the technology,” said Jonas Wennermark, IoT/M2M analyst at Berg Insight. “However, the really exciting development will happen when we move from telematics services as an add-on to actually design a vehicle with connectivity in mind,” the release said.