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Telematics in Brazil and LATAM: Going beyond GPS

Jerri-Lynn Scofield reports on how, once all Brazilian vehicles are fitted with GPS devices, new services will become available and new players will enter the market

Implementation of the CONTRAN 245 law continues to be the major focus in the Brazilian telematics market. The legislation, scheduled to come into effect in January 2012, will require that all vehicles—cars, trucks, busses, and motorcycles—be fitted with antitheft devices and incapacitation capabilities by 2013. The major rationale: To reduce Brazil’s rate of vehicle theft and to lower insurance costs.

Civil liberties concerns delayed implementation, but now consumers can elect not to activate the tracking capabilities. Expectations for what may follow from a successful implementation of the law are muted, though, since hopes have been dashed in the past. “Every year people have expected telematics to explode in Brazil,” but that has not yet happened, notes Roger Dewey, founder and CEO of consulting firm M2MV. (For more on telematics in Brazil, see Telematics in Brazil: Is it for real this time? and Emerging telematics opportunities in Brazil.)

Yet prospects look better for meeting the new deadlines. Once all Brazilian vehicles are fitted with GPS devices, new services beyond more anti-theft and vehicle recovery options will become available. New players will also be drawn into the market, and the roles played by existing players will shift.

Concierge services

Once implementation occurs, a plethora of new concierge services will be offered, predicts Paulo Higuchi, sales and marketing manager, Altea, Brazil. Reservations for flights, hotels, and movies will be offered, as will location-based services arising from a vehicle’s proximity to certain businesses.

One big looming opportunity is the development of new services to be offered through rental cars. These products would cater to the large influx of tourists Brazil expects when it hosts the 2014 FIFA World Cup and the 2016 Olympics, suggests Marco Russo, Altea, Brazil’s CEO. (For more on concierge and related services, see Telematics in Latin America: Getting ready for infotainment.)

So far, though, Brazilian telematics has focused on the aftermarket and has been dominated by the needs and concerns of insurers. But once mandatory GSP systems become a reality, OEMS are expected to become much bigger players, instrumental in offering a much wider range of services, suggests Cileneu Jose Peres Nunes, technology vice president at Zatix, one of Brazil’s largest vehicle tracking companies. This will also have major implications for the future direction of telematics R&D in Brazil. (For more from Zatix, see Zatix: “The biggest impact is the online vehicle”.)

Beyond GPS

GPS can provide richer information feeds from vehicles, including speed, oil temperature, brake condition, lights, and battery condition. “The challenge is to transform this into useful information for customers and especially to create new services from the enhanced information,” says Nunes. The type of information it could get from vehicles limited Zatix’s past efforts, but richer information feeds should lead to richer product offerings.

Zatix uses two strategies in its approach to OEMs. The first is to offer basic vehicle recovery services required by the 245 law. The technologies for stolen vehicle applications are already in place, so capturing market share relies on effectively tapping existing dealer networks. The second is to help OEMs make greater use of telemetry and remote diagnostics for vehicle maintenance. “This strategy is more sophisticated, requires more R&D, and relies on more OEM involvement,” says Nunes.

Some of the biggest opportunities will arise in the fleet market, since trucks transport about 90% of goods in Brazil. As the country moves beyond some of the current crime-related focus, fleet management and maintenance options that have already evolved in the US will become more widely available.

Focus on fleets

“The primary focus of the Brazilian GPS market has been on security, safety and theft reduction as opposed to achieving operational efficiencies—completing more stops per day and reducing fuel costs—which drive North American fleet operators,” says Adam Wegel, vice president, products and marketing, Skybox Imaging, who has over a decade of experience at telematics-related companies. (For more on cargo tracking, see Telematics in Brazil: Ensuring security for cars and cargo.)

One hurdle to broad GPS adoption, though, is the downtime and cost associated with installing the device in the vehicle. But the upside, according to Wegel, is that once enabling devices are embedded, operational efficiency applications can be implemented at a much lower marginal cost. Plus, more sophisticated telematics options will make it easier for fleet operators to realize operational improvements.

Zatix has developed a product aimed at significantly improving fleet safety. Nunes points out that accidents account for ten times the number of losses than do cargo thefts. The company offers a solution that continuously monitors and controls driver behavior in the vehicle and includes an educational function designed to help prevent accidents. Insurers would also be significant beneficiaries of successful deployment of technology-based accident prevention solutions.

Not only will a greater variety of fleet management services be available but these will also be available to a larger range of fleet operators. Because of the new law, “the population is starting to understand the potential for tracking services,” says Altea, Brazil’s Higuchi. “The modules are already installed, so there’s no initial investment, and they will become cheaper. Smaller companies therefore automatically acquire a platform for tracking their vehicles and optimizing their total fleets.”

Jerri-Lynn Scofield is a regular contributor to TU.

For more on the growth of telematics in Latin America, join the sector’s other key players at Telematics Brazil & LATAM 2011 on September 19-20 in Sao Paulo.

For more on telematics and insurance, check out Insurance Telematics USA 2011 on September 8-9 in Chicago.

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