Automotive, electronics, computing and telecommunications technologies are advancing to unparalleled levels, allowing automakers to equip cars with remote monitoring products.
However, consumer awareness and acceptance have yet to be determined, prompting automakers to initiate market development in the absence of clear demand dynamics.
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According to new strategic research conducted by Frost & Sullivan (www.frost.com), “Remote Vehicle Diagnostic Markets: Strategic Analysis,” OnStar nearly doubled its subscriber base to approximately 70,000 from 1998 to 1999. Similarly, ATX is projected to achieve 70,000 subscribers by the end of this year. As consumers become more aware of technology integration and the benefits of remote vehicle diagnostic systems, the market is expected to witness strong growth.
While remote vehicle diagnostic systems offer a plethora of consumer benefits – improved maintenance and fuel economy, greater reliability and longevity, and reduced emissions -manufacturers must monitor consumer acceptance and avoid instituting production schedules based on technological feasibility.
“Onboard computing and communications capacity will increase substantially in coming years, but companies must understand application dynamics in order to realize system potentials,” says Joerg Ditmer, the lead analyst for this research. Centralized expert systems that analyze fault codes are the element most dedicated to remote systems. Virtually all other peripherals and equipment have other industry applications and require synergistic collaboration. From monitoring emissions to proactive maintenance and from telematics to global positioning systems (GPS), manufacturers must address emerging application avenues.
As markets emerge and products advance, manufacturers will inevitably form standards for interoperability of onboard components and communication links. Consequently, information and software access rights must be determined. As Ditmer affirms, “Consumer perceptions will play a critical role in determining who has access to which types of information.”
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By GlobalDataAftermarket and repair services will be contingent upon manufacturer adoption rates of proprietary or universal systems. While challenges and obstacles loom around every corner, companies that monitor the consumer pulse and institute cost efficient features and equipment, will be poised to gain market share.
The Executive Summary of “Remote Vehicle Diagnostic Markets: Strategic Analysis” is shown below.
Executive Summary
Introduction to the Remote Vehicle Diagnostics Market
Remote vehicle diagnostics combine several technologies into systems that offer new benefits.
The technologies involved are:
A remote vehicle diagnostic system enables a vehicle to transmit fault codes from its electronic control modules (ECMs) to a central site for analysis by an expert system. The vehicle’s identification number and location from its global positioning system (GPS) can also be transmitted.
Benefits of remote diagnostic systems include:
Remote diagnostic systems use fault codes from the vehicle’s ECMs, communicated through the vehicle’s cellular phone or PCS (personal communications system). Thus, these systems are closely tied to other systems and services. For example, the OnStar system available on General Motors vehicles provides the following services, in addition to the ability to remotely download fault codes to the OnStar response center:
Summary of Major Findings
Market Drivers and Restraints
Major market drivers and restraints, which are detailed in the report, are listed below. The interaction of these factors will determine the nature of the market for remote diagnostic systems in the future. Since a remote diagnostic system is not something that is sold as a unit, no price drivers or restraints are listed. Rather, the listed factors all pertain to unit shipments or demand, which is the product of the installation rate and the vehicle build rate. In the absence of prices, the concept of total market revenue does not apply, since market revenue is the product of unit shipments and average price. Individual components of a remote diagnostic system, of course, will generate revenues, but most components are not strictly associated with remote diagnostics. For example, ECMs and cellular communications links, key components of remote vehicle diagnostic systems, primarily exist for purposes other than remote diagnostics. Centralized expert systems that analyze fault codes are the element most dedicated to remote systems.
Drivers
Major drivers for the remote vehicle diagnostics market include:
Restraints
Vehicle production is cyclical, and is therefore a unit shipment driver in some periods and a unit shipment restraint in others. Production was above its long-term trend line in the 1994-1998 period, meaning that there is no pent-up demand for vehicles that could support higher production in the near term. Vehicle production is more likely to be a restraint than a driver for automotive component markets in the 1999-2000 period.
Other restraints for the remote vehicle diagnostics market are:
Limitations
Limitations of remote vehicle diagnostic systems currently include:
Issues
Issues that need to be resolved to facilitate this market include the following:
Conclusions
Onboard computing and communications capacity is sure to increase substantially in coming years. The uses to which this capacity will be put depends on what makes economic sense and what is acceptable to vehicle owners, rather than simply what is technologically feasible. Benefits of remote diagnostics accrue to automakers, auto lessors, and possibly to environ-mental agencies. For vehicle buyers, remote systems offer benefits over systems that simply illuminate a dashboard light to indicate that service is needed. Remote systems may be able to warn of impending failure and may prompt owners to have vehicles serviced more promptly. Owners might like knowing the nature of the problem before they take their vehicles to a shop. However, future onboard systems may be able to provide this information without remote connectivity.
The open question is, how acceptable will motorist find monitoring by automakers, auto lessors, and/or environmental agencies? In all likelihood, motorists will need time to get used to this concept. Factors indicating that monitoring will become acceptable in time include:
Thus, it appears that the initial impetus for remote vehicle diagnostic systems will come from automakers rather than from vehicle buyers. Eventually, systems that transmit emissions-related
information may be required by environmental regulations. (These systems are commonly called OBD III, although there is no formal definition of the term. It is generally agreed that OBD III means OBD II capabilities with some form of broadcasting.)
Competitive Analysis
Numerous companies supply automotive test equipment, and several supply diagnostic soft-ware and services. These companies are considering how to position themselves for a future environment of remote diagnostic systems. Telematics systems are becoming available on more and more vehicles. Telematics systems can be defined as a combination of wireless voice and data communication systems aimed at providing drivers with safety and information, including automatic airbag deployment notification, vehicle tracking, personalized information, real-time traffic data, emergency aid, and entertainment from a central service center. Currently, most telematics systems do not offer remote vehicle diagnostics functions, however, OnStar is pioneering this area by offering remote vehicle diagnostics in selected OnStar-equipped vehicles.
The following automakers are offering telematics systems on selected vehicles in North America:
Copies of the “Remote Vehicle Diagnostic Markets: Strategic Analysis Report: 5893-18” are available form Frost & Sullivan – Report price $3,450. For more information or details on how to order the Report, please visit www.frost.com
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