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Strategic Analysis of the Automotive Connected Services Market in Brazil and Mexico

  • June 2014
  • 108 pages
  • Frost & Sullivan
Report ID: 2212030

Summary

Table of Contents

Brazil and Mexico to Grow to Over 1.6 Million Subscribers by 2020

Vehicle theft and expected regulations are key drivers for the automotive connected services market in Brazil. Original equipment manufacturers (OEM) and the overall connected services ecosystem are gearing up to introduce value-added services beyond vehicle tracking and immobilization. This study focuses on the OEM-fitted connected services market for the passenger vehicle segment in Brazil, in addition to providing a top-level view of the Market in Mexico. This research service forecasts the growth in the subscriber base in 2020 and evaluates various scenarios as to how the market will evolve in Brazil. The study also details the service providers and hardware manufacturer base and contains key OEM profiles, concluding with the top predictions and future outlook.

Key Findings

CONTRAN 245 015—more delays? What to expect
-As of May 2014, DENATRAN’s latest resolution states that the implementation date for the CONTRAN 245 mandate set in resolution (December 31, 2013) has been delayed by months.
-Frost & Sullivan expects that irrespective of the CONTRAN mandate, original equipment manufacturers (OEM) in Brazil will introduce automotive connected services on limited models in the short term (1 to years).
-Frost & Sullivan expects that the most likely scenario is that the CONTRAN 245 mandate will be implemented in a modified state: Changes with the technical specifications.
-OEMs will be required to install telematics boxes in all new vehicles; however, only immobilization is expected to be mandated. OEMs can create their own strategic preferred partnerships with telematics service provider (TSP) and telecom providers, prompting proprietary connected telematics services.
Brazil market scenario—a million subscriber market

-The automotive connected services market is expected to grow to over million subscribers in Brazil by 2020 and is expected to account for a penetration of about to % within the new car unit shipment in Brazil by 2020.
-Volvo, the only OEM offering telematics services, is currently the market leader in Brazil. General Motors (GM), Volkswagen (VW), and Fiat are expected to have over subscribers each by 2020.
Service providers (SP) or complete, high-end TSP?
-Although the aftermarket in Brazil is strong and well developed with providers such as Ituran, Autotrac, and Sascar, the services are limited only to business-to-consumer (B2C) stolen vehicle tracking (SVT) and immobilization offerings.
-Currently, WirelessCar is the only complete, high-end connected telematics SP for the personal passenger car (PC) segment in Brazil.
-Frost & Sullivan expects these SPs to partner with infrastructure providers such as OCTO Telematics and Cobra to become complete, high-end TSPs by 2020.
Complementary partnerships rather than competition

-OEM-TSP partnerships such as GM-Ituran, Ford-Autotrac, and VW-Zatix are expected to pave the way going forward for the automotive connected services market in Brazil, taking advantage of the bandwidth and scope that aftermarket providers currently enjoy.
-These partnerships are expected to extend even with the hardware manufacturers such as Kostal, Continental, and Magneti Marelli. However, OEMs expect innovation and flexibility with these participants as key decision-making factors to create partnerships.
-The Brazilian government’s decision to reduce taxes on subscriber identity module (SIM) cards for machine-to-machine (M2M) devices is a key driver for the connected services value chain to innovate new, value-added, and futuristic solutions.
Connected telematics service business model
-Frost & Sullivan has identified 3 key business models that show how OEMs will operate with the automotive connected services space in Brazil: warranty/insurance, free trial + renewal subscription, and purchase.
Connected telematics service business model (continued)

-The free trial + renewal subscription business model is expected to be the most entrenched and is similar to that in the US market.
Connected telematics service packages
-Frost & Sullivan has identified 4 levels of connected telematics service offerings. Level 2 includes SVT, immobilization, and smartphone app/remote services/RVD/vehicle maintenance and is expected to be the most common package offered by most OEMs in Brazil, with a focus on small-to-medium vehicle segments.
Insurance coupled with telematics—opportunity or challenge?
-Car insurance is not mandatory in Brazil; therefore, telematics services coupled with an insurance coverage may be challenged. However, some participants such as Ituran offer these types of solutions, which is understood to be an opportunity for both OEMs (attractive telematics service packages) and end consumers (high theft rate in Brazil). Furthermore, participants such as Cobra and OCTO telematics are expected to partner with insurance companies to facilitate telematics services.
-Additionally, this is an opportunity for banks such as Itaú that currently provide auto theft insurance solutions.
Market scenario

-The automotive connected services market is expected to grow to about 330,000 in Mexico by 2020 and is expected to account for a penetration of about to % by 2020.
-OEMs and TSPs: GM is currently the market leader in Mexico, with BMW expected to follow closely by the end of 2014. Therefore, OnStar is one of the key complete, high-end connected telematics SPs for the personal PC segment in Mexico.

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