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Growing Popularity and Demand for Connected Cars in China

2019-06-04 11:30 Tuesday

The United States has dominated the global automobile for decades, but in recent years, China has overtaken the U.S. position due to a mostly stagnant auto industry in the United States. As early as 2015, China put over 8 million more vehicles on the roads than the U.S. This incredible growth in China has come with consumer demands, most namely: connectivity. Connected vehicles are stirring excitement for consumers, manufacturers and regulators for a number of reasons. Not only do they create new opportunities for entertaining riders, most importantly, they can keep pedestrians and passengers safe and reduce traffic, among a variety of other benefits.

Connected Cars

As a whole, connectivity has become a daily priority among Chinese citizens, and many new car owners wish to have Wifi and touch screen in their car in order to access connected functions and entertainment. These gadgets aren't simply for entertainment, but they can also bring efficiency to drivers and riders during their time on the road. When connected, the quickest routes can be suggested in real time, traffic updates provided, and for when you are stuck in traffic, numerous forms of infotainment can provide a convenient distraction from your road woes. Compared to other markets, customers in China are faster to accept technologies and therefore are more accepting of connected car technologies and are far more willing to purchase connected cars in the future.

Miao Wei, Minister of the Industry & Information Technology, clearly recognizes these opportunities and believes that the market will be worth US$14 billion by next year. This projection is in line with the forecast issued by the National Development & Reform Commission, which suggested that by 2020, one in every two new cars sold will be equipped with connectivity, or at the very least will be partially autonomous.

In an attempt to satisfy these growing consumer demands, many automakers are performing upgrades on Chinese models. According to Accenture, there are 11.6 million cars on the roads featuring online connectivity, accounting for 10.6 percent of the market. The reporting also suggests that connectivity is quickly becoming one of the top consumer considerations when purchasing a new vehicle. Projections assume that by the year 2021, there will be more than 40 million individuals making use of connected cars in China. With these statistics in mind, many vehicle OEMs are making modifications to their vehicles accordingly.

There are many other notable features of having more technologically intelligent vehicles. One feature, Usage-based Insurance (UBI), allows for better and more accurate vehicle insurance coverage. Similar to how Advanced Driver Assistance Systems (ADAS) provide convenience for drivers on the front end, telematics insurance technology provides some behind the scenes connected convenience.

China seems to be a country on a mission to gain leadership in the development of next-generation driverless cars with autonomous capabilities and internet connectivity. As opportunities in the automotive industry become clearer, more and more manufacturers as well as tech companies are investing in research and development in order to assist in the creation of more intelligent products.

One such company, Baidu, is competing with conventional automakers to produce road-ready, autonomous vehicles. According to news reports, the company has already tested the first self-driving bus over 10,000 kilometers with zero accidents. Manufactures such as Volkswagen, Hyundai, and GM are working with Baidu to provide "Baidu CarLife" systems in their new vehicles. Audi also announced in July of last year that it has entered into partnership with the China's largest telecommunications equipment and smartphone maker, Huawei. And this makes sense; Huawei, being the leader in high speed internet connectivity, is a natural fit for connected vehicles that constantly receive and exchange information. Having a high-speed and stable data connection is extremely important.

Audi is apparently also working with Tencent, operator of Wechat. Tencent sees the potential in user infotainment systems as an important part of the passenger experience. The company is rumored to be in the process of building a voice-operated version of its WeChat messaging app into vehicles and hope to also enable real-time navigation and the sharing of geographic locations. Concerns about safety are a priority and have kept the company from going public with the software for now. Tencent, which earns a major chunk of its revenues from gaming and social networking is expected to nurture a strong relationship with automakers in order to better integrate their technologies and services into the connected car of the future.


Key Words: Telematics, Telematics Insurance, Usage-based Insurance, UBI, Connected Vehicles, Driverless Cars, Autonomous Vehicles, Advanced Driver Assistance Systems, ADAS, Vehicle Insurance, Data Security, Claims Management, OEM, Infotainment, Big Data, Digital Cockpit, Fleet Management, Information Security, Information Technology

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