1. Development Trends of Internet of Vehicles and Intelligent Transportation Systems
Currently, the Internet of Vehicles and intelligent transportation systems are playing an increasingly significant role in solving urban traffic congestion issues. The Internet of Vehicles can provide voice navigation prompts to help drivers quickly find their destinations and nearby points of interest. In Japan, the Internet of Vehicles can also receive real-time information released by the intelligent transportation system VICS. In some high-end GPS devices in China, link-based coding and point-based coding technologies can be utilized to receive real-time traffic information every five minutes through FM subcarriers, providing real-time navigation for drivers. In the transportation sector, the electronic toll collection system ETC allows vehicles to pay highway tolls without stopping, using an on-board device “On-Board Unit OBU + IC card” to communicate with road equipment RSU based on 5.8G frequency band microwave dedicated short-range communication (DSRC) technology in ETC lanes. In Japan, OBU can also receive real-time traffic information such as obstacles ahead and merging assistance provided by roadside RSUs. Additionally, drivers can access professional traffic map websites like Baidu via mobile phones and Wi-Fi networks to check real-time traffic conditions, available parking spaces, road construction, and elevated ramp closures. In the United States, the University of Michigan Transportation Research Center and the Transportation Science Research Institute are collaborating on the research of “Connected Vehicles,” connecting 3,000 vehicles in Ann Arbor city through specially designed DSRC devices for a 12-month traffic safety study. These vehicles can communicate information with each other, and traffic signal and driving status information will be sent to a central server for processing and sharing. In case of emergencies, such as vehicle collisions, wrong-way driving, or illegal overtaking, warnings will be issued to prevent traffic accidents. Currently, the Internet of Vehicles, GPS terminals, and OBU are independently developed intelligent transportation products in the automotive, electronics, and transportation industries. In the future, these functions will be integrated into on-board terminals and pedestrians’ mobile phones, allowing communication between vehicles, roads, and pedestrians, ensuring the safety of drivers, pedestrians, and vehicles.
2. Analysis of TSP Business Models
Currently, the pre-installed Internet of Vehicles market in China is mainly monopolized by three companies: OnStar, G-Book, and InkaNet/iVoka, which occupy over 98% of the market share. Other Internet of Vehicles brands are still in the early stages of commercial promotion. These three are also typical global Internet of Vehicles products, with OnStar being developed by General Motors, the largest automotive manufacturer in North America, which ranked first in global sales before 2008 and in 2011. OnStar is the world’s first provider of Internet of Vehicles products, established in 1995, and currently holds the top market share in both global and Chinese markets. By September 2011, OnStar had over 6 million users worldwide. In the Chinese market, OnStar has a cumulative total of 560,000 registered users, with 450,000 current registered users, and 130,000 users ceasing renewal after the free period. OnStar occupies 84% of the pre-installed Internet of Vehicles market in China.
G-Book is the Internet of Vehicles product developed by Toyota, Asia’s largest automotive manufacturer, whose sales ranked first globally from 2008 to 2010. G-Book is primarily sold in Japan and China, launched in Japan in October 2002, with cumulative sales exceeding 1 million sets. It was launched in China in March 2009, with cumulative sales reaching 100,000 sets. InkaNet is the Internet of Vehicles product developed by SAIC Motor Corporation, China’s largest automotive manufacturer, launched in April 2010, with cumulative sales exceeding 70,000 sets. Research shows that the commercial models of these three Internet of Vehicles have the following common patterns.
Finding partners in related industries to jointly operate TSP has advantages such as fast network construction, low investment, low risk, and good service quality.
OnStar in North America is a joint venture formed by General Motors, EDS (Electronic Data Systems), and Hughes Electronics Corporation, where General Motors is responsible for vehicle design, system integration, and product sales, EDS is responsible for system development, information management, and customer service, and Hughes is responsible for wireless communication and satellite positioning and automotive electronics technology. Additionally, OnStar’s roadside assistance service is provided by the automotive information service company Agero. In terms of wireless communication networks, OnStar’s provider in the U.S. is Verizon Wireless, in Canada is Bell Mobility, and in China is China Telecom. In the Chinese market, OnStar was established on October 28, 2009, through joint investment by General Motors, SAIC, and Shanghai General Motors, with a registered capital exceeding 300 million RMB, with share ratios of 40:40:20.
G-Book outsources its call center business in China to Beijing 95190 Information Technology Co., Ltd., with China Telecom as the wireless communication network provider. In Japan, the wireless communication network provider for G-Book is KDDI Corporation. InkaNet outsources its entire business to Shanghai Botai Yuzhen Network Technology Service Co., Ltd., with China Unicom as the wireless communication network provider.
Widely providing TSP services for other brands of vehicles, expanding market share, and reducing operating costs.
In addition to being equipped in over 30 models of Cadillac, Buick, Chevrolet, and GMC under General Motors, OnStar also provided services to Honda Acura, Volkswagen, Audi, Isuzu, and Subaru vehicles through authorized means from 2002 to 2005. Meanwhile, OnStar provides similar Internet of Vehicles services under the “ChevyStar” brand in Latin America. Starting from July 2011, OnStar began selling built-in OnStar module rearview mirror products in the aftermarket under the “OnStar FMV” brand, which can provide some OEM product security and navigation services. OnStar FMV can be installed on all vehicles launched in the U.S. after 2000, while vehicles launched before 2000 require special modifications.
G-Book offers three versions of products in Japan: G-Book mX and G-Book mX Pro, G-Book Alpha, and G-Book Alpha Pro, where G-Book Alpha Pro and mX Pro (DCM (data communications module) version products) can perform high-speed digital communication at 2.4Mbit/s. G-Book also provides Internet of Vehicles services for Mitsubishi, Subaru, Daihatsu, and Mazda vehicles in Japan. Additionally, Toyota designed a high-end Internet of Vehicles product called G-Link for Lexus in the Japanese market, launched in 2005.
InkaNet currently only provides services for two vehicles of SAIC Group: the Roewe 350 sedan, which began to be equipped with InkaNet since its launch in 2010, and the MG MG 5 sedan, which began to be equipped with InkaNet since its launch in 2012.
Design flexible TSP package charging models to attract consumers from different strata.
In North America, OnStar offers two basic packages: 1) Security and voice services, including advanced automatic collision notification, stolen vehicle assistance, roadside assistance, remote door unlocking, remote honking and flashing lights, red button emergency service, and remote vehicle diagnostics. 2) Navigation and connection services, which include all services of security and voice services, plus voice navigation services. Additionally, OnStar offers a promotional activity for one-time purchase of three years of service, totaling 9 packages (see Table 1).
In China, OnStar has designed five charging packages for one-year services, with separate designs for 1-3 year packages, totaling 11 packages (see Table 1). Based on an exchange rate of 1:6.3, the annual fee for navigation and connection services for U.S. users is approximately 2,185 RMB, while the premium package price in China is 1,580 RMB. Considering that the consumption level and service costs in the U.S. market are higher than those in China, it can be concluded that the service fee levels of OnStar in both countries are roughly equivalent.
In Japan, the service fee for G-Book is approximately 600 yen/month (equivalent to 45 RMB, with an annual service fee of about 540 RMB). In China, G-Book adopts different charging policies for different vehicle models. For example, the Camry G-Book has a two-year free period, after which the service fee is 1,200 RMB/year. The Lexus RX350 G-Book has a free period of 4 years, while the hybrid RX450h with a warranty period of 6 years has a free period of 6 years. InkaNet has a one-year free period, with subsequent charges of about 1,200 RMB/year.
Future development trends of TSP: intelligent transportation, distributed call centers, mobile Internet of Vehicles, Internet of Vehicles insurance.
Currently, G-Book has intelligent transportation functions in its G-Book mX product, which can utilize the on-board terminal DCM to receive real-time information from Japan’s intelligent transportation system VICS, while also sending the vehicle’s speed and location information to the VICS system, providing feedback on traffic congestion levels and vehicle speeds on the road. This is the future development trend.
OnStar’s call centers are located in Warren, Michigan, Charlotte, North Carolina, Ontario, Canada, and Makati, Manila, Philippines. In China, OnStar’s call centers are located in Shanghai and Xiamen, with plans to establish call centers in Guangzhou and Chengdu in the future, primarily providing local dialect services.
Both OnStar and G-Book have mobile Internet of Vehicles functions. OnStar allows users to remotely unlock car doors, honk, and flash lights using their mobile phones, displaying information such as remaining fuel, tire pressure, and the charging status of electric vehicle batteries and driving range. G-Book offers services for using Internet of Vehicles functions through computers, PDAs, and mobile phones in Japan. In China, G-Book provides two services: DCM and mobile versions.
In North America, OnStar has established commercial cooperation with insurance companies, allowing users who purchase OnStar to enjoy discounts on anti-theft and low mileage insurance projects. For example, General Motors Financial Services (GMAC) offers an 11% discount on insurance premiums for OnStar users. With user permission, OnStar sends users’ vehicle mileage data to insurance companies monthly, and if users are identified as low mileage drivers, they will enjoy discounts from insurance companies. Currently, there are no such commercial cases in the Chinese market.
Analysis of TSP Profit Models
Currently, there are nearly 100 TSPs of various sizes in China, among which the TSPs for the pre-installed passenger car market, besides OnStar, G-Book, and InkaNet, include Dongfeng Nissan’s CARWINGS Smart Travel+, FAW’s D-Partner Driver Partner, Changan Automobile’s Incall vehicle system, Huatai Automobile’s TIVI system, and Luxgen’s THINK+ intelligent engine. Additionally, in the commercial vehicle pre-installed market, there are Suzhou King Long Bus’s G-BOS Smart Operation System, Yutong Bus’s “An Jie Tong” Intelligent Operation System, SAIC Maxus Commercial Vehicles’ InteCare, and Shaanxi Heavy Truck’s “Tian Xing Jian” Internet of Vehicles system. In the automotive aftermarket, companies like Hangsheng Electronics, Seg Navigation, Good Helper, Huayang, and Luchang are providing related products, but the service quality of these companies is significantly lower than that of pre-installed market products.
Due to the small number of users purchasing services, most Chinese TSPs are in a state of loss. Financial analysis of Shanghai OnStar Information Service Co., Ltd. found that the breakeven point for OnStar is 320,000 users. Since the equipment costs for Chinese independent brand Internet of Vehicles companies are lower than those of OnStar, it is estimated that the breakeven point is 240,000 users. Additionally, it can be seen that Shanghai OnStar was officially established in October 2009, began operations in October 2009, and only reached the breakeven point in May 2011 when the number of registered users exceeded 300,000. Currently, the other two major Internet of Vehicles companies in China, G-Book and InkaNet, have not exceeded 100,000 users, so they are both operating at a loss.
3. Opinions and Suggestions
Based on the development trends of intelligent transportation systems, this article proposes the following suggestions:
1. As the commercial model of the Internet of Vehicles requires TSP to have a sufficient number of users to be profitable, with a long investment return period, it is advisable to seek partners in automotive infotainment system hardware and navigation map data to jointly establish a TSP alliance, providing high-quality services for the automotive industry while also reducing investment risks;
2. Study mature commercial operation models of the Internet of Vehicles, including synchronization and sharing of Internet of Vehicles customer databases with automotive manufacturers’ DMS and 4S store CRM databases, charging models for TSP service fees and communication fees, and training and management of technical support personnel, to support TSP projects under discussion;
3. Conduct preliminary tracking of intelligent transportation technologies such as DSRC and ETC, and establish projects to research and develop feasible products that integrate intelligent transportation functions with the Internet of Vehicles, quickly developing competitive best-selling products to create new profit growth points for the company;
4. Currently, mobile interconnection is the development trend of the Internet of Vehicles, with foreign enterprises OnStar and G-Book already launching commercialized products, and local enterprises Huayang and Luchang have already introduced prototypes, so Neusoft should accelerate the research and development of this product;
5. The combination of the Internet of Vehicles and automotive insurance has already become a mature commercial model in North America and Europe, but there are currently no cases in China, the world’s largest automotive market. Therefore, there is a huge business opportunity here, and it is essential to leverage existing customer resources from the insurance industry to actively develop this new business area.
Source: Big Logistics Network