Plug-in devices, smartphones and OEM solutions jostle for telematics position

Oct. 6, 2017
As automakers look to a future of connected cars, the telematics landscape continues to get more crowded with a mix of dongle-based solutions that use the OBD-II port, smartphone apps and proprietary OEM solutions.

As automakers and legislators look ahead to a future of intrinsically connected cars, the telematics landscape continues to become more crowded with a mix of dongle-based solutions that use the OBD-II port, smartphone apps and proprietary OEM solutions.

For OEMs, built-in connectivity could be a big moneymaker. According to a survey by KPMG, cars with built-in connectivity could offer up to 10 times the revenue streams compared to those without. Research and Markets predicts a compound annual growth rate for telematics of 14.37 percent, reaching $40.84 billion by 2022.

For the automotive aftermarket, there are many challenges when it comes to vehicle telematics. In addition to the threat from OEMs, many emerging companies in the telematics space don’t consider themselves part of the aftermarket channel. They see themselves as outside market disruptors.

Traditional aftermarket suppliers and distributors will need to develop ways to partner with these emerging technology companies to remain relevant, and identify how to take advantage of these emerging systems and the flow of vehicle data.

“Plug-in devices and dongles and vehicle data from those devices is part of it, but not the whole thing,” says Chris Gardner, vice president of programs and member services at the Automotive Aftermarket Suppliers Association (AASA). “They are part of the larger telematics discussion. We’ve been working with other industry stakeholders to develop ways to be sure the independent aftermarket has access to vehicle data going forward.”

AASA is working closely with the Department of Transportation and the National Highway Traffic Safety Administration (NHTSA) to make sure these solutions address consumer privacy and security concerns.

That includes work on a secure vehicle interfaces (SVI) that would enable safe access to vehicle data for third parties, and cooperation with automaker trade associations and international standards body SAE in that effort.

Myriad of solutions

In the meantime, both new tech companies and automakers are releasing even more telematics solutions. Volkswagen has begun offering a free plug-in telematics service for fleet drivers (Connect) that provides data on fuel consumption, driving behavior and links to approved VW repair shops in the U.K. The solution, which is integrated with a smartphone app, is aimed at passenger car drivers and is separate from the company’s commercial vehicle telematics offering.

Ford also hopes to expand its own connectivity solution to older models by offering an OBD-II plug-in SmartLink device with a 4G LTE modem and Wi-Fi hotspot capabilities that can support up to eight mobile devices. The device is compatible with Ford/Lincoln vehicles from model years 2010 to 2016.

The Ford device also enables remote start, lock/unlock, and alerts that can be sent to a Web or mobile app. Ford developed the device with Delphi Automotive and Verizon Telematics.

“From security to performance, we’ve conducted extensive testing and made a number of improvements to ensure Ford SmartLink enhances the customer experience for our owners,” says Raj Nair, executive vice president for global product development and chief technical officer at Ford.

In India, Reliance Jio Infocomm is launching a plug-in telematics device that will provide immobilization, location, alerts and Wi-Fi hotspot features.

Others are migrating to smartphone-based systems. Hyundai has released its MyHyundai Blue Link app, which does provide access to some diagnostic information. It provides remote start, service scheduling and informs drivers if there is an active diagnostic trouble code (even though it doesn’t provide the specific code).

Insurers move toward OEM data

In the usage based insurance (UBI) space, plug-in devices still reign because of the technical challenges involved in getting some data (like how hard a driver hits their brakes) from a smartphone. Most insurers can’t easily correlate smartphone data to their insurance rating procedures.

Smartphones also can’t be tied to specific vehicles, and can be turned off – so data sets would be incomplete.

However, in a statement to investors, Progressive CEO Tricia Griffith recently indicated that UBI will eventually become the primary means of automotive underwriting and that OEM data will play a big role.

Progressive plans to expand its own Snapshot UBI system, and is rolling out a smartphone app-based edition of the service and would phase to the plug-in devices. This significantly reduces the cost of the program for Progressive because they no longer have to buy hardware. Eventually, Progressive wants to get data directly from the car without an intermediary device. The company has a deal in place with GM to obtain that type of data directly from vehicles made after 2016.

GM also was the first OEM to sign up for the Verisk Insurance Solutions Telematics Data Exchange, which can link insurers and consumers with connected car data. Verisk also formed a partnership with Driveway Software to leverage its smartphone-based telematics platform.

Ford and State Farm have also partnered on automatic UBI using Ford’s Sync platform. Toyota has partnered with a company called Gem to create a UBI system that would provide direct access to vehicle telematics data.

Security concerns

Dongle-based solutions present a security concern for connected vehicles, and OEMs are beginning to use these concerns as justification for closing off access to the OBD-II port for third-party developers.

That’s why Gardner says the SVI will be so important. “It would be a secure gateway that would appropriate entities to access vehicle data,” Gardner says. “There are so many different entities and groups that want access to the data, and so many potential applications, that there has to be a way to make this happen safety and securely.”

The specifics of what the SVI would look like are still being developed. Once in place, though, there will likely be a debate about who can grant access to the data – the owner or the OEM? First, though, standards need to be applied to a third-party telematics market that Gardner describes as the Wild West when it comes to security.

“One way to ensure that OEMS and the government and other stakeholders have a high comfort level with independent aftermarket providers having access to good data is that the shops will have a way to securely handle it,” Gardner says.

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