Frost: Service Features to Boost Demand in S. Korea Telematics Sector

October 30, 2007 // Published as a news service by IHS

South Korea is one of the top six passenger car manufacturing countries in the world. With 16 million cars on the road in 2006, and a low penetration rate for telematics, the country is considered a high-growth market for telematics.

With the high density of vehicles, traffic congestion is a major problem in cities such as Seoul. "Telematics services, such as live traffic information and navigation, provide a great respite and are likely to drive the demand for telematics," said Frost & Sullivan research analyst Samjeen Yun.

Recent analysis from Frost & Sullivan of Korean passenger vehicle telematics estimates the market to grow at a compound annual growth rate (CAGR) of 55.4% to reach $635 billion in 2013, up from $30.33 billion in 2006.

The South Korean government understands the importance of telematics and is promoting the segment as one of the nine new engines of economic growth under its IT839 strategy unveiled in 2004. The strategy is designed to make South Korea one of the leading IT powerhouses in the world.

"Considerable investments to develop telematics infrastructure and platforms can be expected, which in turn will drive market growth in the medium and long term," Yun said.

High system prices and the lack of consumer awareness are restricting the usage of telematics systems to high-end customers. Analysts said telematics systems also face competition from stand-alone navigation systems, which offer similar functions, such as navigation and route guidance, at a cheaper price.

"This affects telematics market growth in the original equipment market," Yun said.

Source: Frost & Sullivan.