Frost: Chinese Telematics, Infotainment Market Will Grow in Next Five Years
January 29, 2007 // Published as a news service by IHS
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The Chinese telematics and infotainment markets are likely to see considerable growth and development over the next five years.
According to Frost & Sullivan, contributing to this upsurge will be continued growth in both demand and production of passenger cars, increasing disposable incomes, growing acknowledgment of the benefits of telematics and infotainment, the 2008 Olympic Games and the 2010 World Trade Exhibition.
Analysts said overall uptake of the markets will also get a boost with newer telematics and infotainment systems becoming more affordable, and the incorporation of navigation systems as a standard offering for many car companies.
Recent analysis from Frost & Sullivan of the Chinese telematics and infotainment markets found revenues totaled $422.3M in 2005, with estimates to reach $3,896.9M in 2012.
"Among the market segments, the Chinese productivity market, the roadside assistance market and the rear seat entertainment market are yet in their introductory stages," said Frost & Sullivan research analyst Angielina Tay.
"In comparison, the navigation market is in its growth stage and holds significant promise, especially considering China's high vehicle occupancy rate."
The Chinese vehicle occupancy rate was greater than 3 million in 2005. Analysts said this ensures huge potential for navigation systems (including both portable and personal navigation devices), as navigation is likely to become a daily requirement for people.
Regardless of whether people are driving or not, a navigation system also provides other value-added services, such as providing points of interest (POI). This is likely to have a high impact on the market throughout the forecast period.
Chinese consumers still lack sufficient knowledge of telematics and infotainment system functions, analysts said, and there are too many varieties available for consumers to choose from. This, coupled with unpleasant experiences, such as low-quality products and lack of after-sales service, are likely to hurt customer confidence in this developing market.
"The non-availability of all functions in a single system is an added barrier to penetration, much like the current high prices of telematics and infotainment systems," said Tay. "For example, the average price for an original equipment (OE) navigation system was about $1,463.4 in 2005 which is relatively high compared to the North American and Japanese markets."
Given these challenges, distributors and manufacturers need to work together on campaigns to raise awareness and promote the use of telematics and infotainment systems. Analysts said to make these systems more affordable, vehicle manufacturers should explore methods of lowering product costs, such as sourcing from local suppliers instead of importing parts.
Source: Frost & Sullivan.