Dennis Foy, editor of ABOUT Automotive’s monthly automotive telematics bulletin and a new report on 42-volt technology, comments on the relatively poor take-up rates for telematics systems. Is it something to do with the way most new cars are sold?
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I had an interesting conversation with a chap from Fiat recently. As you might recall, in 2000 the giant Italian car maker announced that it was launching its own telematics service; the first vehicle range to benefit from the system was the Alfa Romeo 147, followed by Fiat’s Combi, Stilo and Multipla. Fiat’s plan is to integrate the system into each model as it arrives in the showrooms.
The system, built around the company’s Targa multi-lingual call centre in Arese near Milan, offers navigation, route guidance, traffic information and a full concierge service-all for about €1,600 on the new car options list and a modest monthly subscription.
Unfortunately, despite the efficiency and modest cost base of the system, take-up rates appear to be lamentably low; according to our sources, there are only some three hundred subscribers in the UK, despite sales that run to more than 114,000 units (including Alfa Romeo). Or putting it another way, the Fiat telematics system has a penetration rate of 0.3%.
Fiat is by no means alone in this; although the take-up rates for, say, Jaguar are higher, they are still relatively tiny percentages when compared to the number of cars being sold. So why is this the case?
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By GlobalDataIs it the salesman?
The obvious target is the man in the suit who approaches you whenever you enter a new car dealership. Despite the concerted attempts of manufacturers to educate the car salesman (and for the most part they are men, although some women are now beginning to gain a manicured toe-hold in this most macho of industries) he remains resolutely indifferent to new technologies.
Many years ago, I was talking over dinner with Sam Toy, when he was at the helm of Ford of Britain. “The problem with salesmen,” he told me, “is that they can lack imagination. If you ask them what they want in the next generation of cars, they’ll point to the one in the showroom and say something along the lines of: ‘one of those, but in purple.”
What Sam was alluding to was that salesmen are, by definition almost, driven by the ability to make their bite, to get their commission on a sale. Whenever the manufacturers bring out a new car they will spend a lot of time demonstrating it to the dealership sales staff but, and I have this on good authority from several sources, what matters most to them is the margin that they will have to play with.
Glorious indifference to flogging extras
This affects their ability to offer discounts or trade-ins to clinch the sale, and at the same time affects the level of commission that each sale will generate. They are gloriously indifferent to flogging extras (the exception being warranty extension schemes, which bung well) as those extras will not make them much more money. So they don’t waste energy on selling accessories or line-fit extras, instead preferring to move onto the next new car sales prospect.
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This is, of course, a sweeping generalisation and there are bound to be exceptions-I just haven’t met any. But as a rule, it is pointless to expect dealer sales staff to show any more than a passing interest in anything that won’t make them money. So what is to be done about this? If developments such as telematics systems are to enter the mainstream, and to gain use patterns that justify the massive investments that have been made to create them, it is pointless to rely on the dealer sales force as the primary marketing channel.
A British marketing executive once said that: “50% of our advertising is effective. We just don’t know which 50%” and that hints at the scale of the problem.
Cohesive marketing attractive to some, but unlikely to materialise
“What is obviously needed for the good of the telematics industry is some form of cohesive marketing campaign,” said a contact of mine that works in the advertising industry. But then he would say that, because his living is geared to taking a few percent off the total budget. What he did not seem able to grasp was the very real danger of attempts at creating such a campaign devolving into an endless round of committee meetings. Or maybe into a good punch-up between rival factions. Either way, the chances of a cohesive strategy are slim.
Big boys will build awareness
More likely is that one or two companies (and I expect Ford will be one of them) will gradually build awareness of their products. Those who do not have either the budget or the imagination (or are lacking both) will ride along on the shirt tails of such campaigns, hoping to collect some of the magic along the way.
The telematics industry is bordering on unique in that it has no formalised industry group, forum or organisation to fight its corner; there is Ertico, but that is more of a political machine than a trade association. Maybe the time is right for such a body to be created, if only to act as a central marketing device?
