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The adoption of telematics technology is set for strong growth, with one key factor being an increased appetite from drivers for more connectivity in their cars.
That's according to a new report by management consulting firm McKinsey & Company. It states that, while telematics in cars was previously a niche market, the technology is set to become more widespread.
There is increasing driver acceptance of the technology, which is predicted to result in the development of more services with consumer appeal that use telematics. The report also cites greater interest from lawmakers in making specific telematics services mandatory; for example, a move by the EU to mandate emergency call systems, where emergency services are automatically notified in the event of an accident.
The report states, "After decades as a niche feature, telematics is merging into the automotive mainstream. While current adoption rates remain low across markets, they could grow significantly through the first part of the next decade."
According to McKinsey, car telemetry has the potential to increase road safety, improve driving behaviour, align insurance premiums with actual need via use-based insurance, and boost car insurance industry profitability, while also providing additional benefits to groups such as employers.
These include driving-style improvements to boost fuel economy, location-based services such as stolen vehicle recovery, real-time tracking, vehicle-finder services, vehicle-maintenance alerts, and fuel and routing optimisation.
Supporting the prediction of increased take-up of telematics is George de Boer, leader of connected car initiatives at TomTom Telematics.
He told BusinessCar, "We would agree with the prediction, because we now have not only the organic growth we have witnessed through the years in commercial fleet, but we are also picking up the passenger car market with connected car technology for other fleets.
"It's not necessarily track and trace, but they want to improve the service around accident management, mobility management and developing new services."
According to de Boer, one factor driving the growth of telematics in cars is a reduction in the cost of the technology, as it had previously been more difficult to make a business case for it in a company car driving for one or two hours a day, for instance, compared with a commercial fleet.
Another factor set to drive growth, according to de Boer, is a changing attitude towards mobility, driven by young people.
"For the younger generation, it's not necessarily about owning a car or company car, they just want mobility, whether it's through Uber or a leasing car or rental car, but to be able to do that, you need some kind of connectivity to that vehicle," he said.
"To do this, you need to know where it is, if it's available, if there's fuel in the tank or if the battery is charged in an electric vehicle, or, if it's for company use, you need to know how many miles you do, and you can only get that if you have connectivity."
Increasing acceptance of the sharing of data was another factor likely to help take-up of telematics, de Boer said. "I think, in general, you see that drivers, whether they are a business driver or a private driver, are accepting the fact that more of their data is being shared.
"They are using social media or a smartphone, so they know that to be able to use that you need connectivity, and that to use advanced features some data is shared."
Despite this changing attitude, privacy remains an important issue, especially with the General Data Protection Regulation coming into force later this month, and with firms such as Facebook facing negative news coverage on the subject.
"I do think, with the latest discussions of privacy, that people are getting more aware of it and also demanding more transparency, and we have always believed you can only collect data from people if you tell them you do that and why, and you give them the opportunity to opt out, if that's possible," de Boer said.
"You want to keep the data private and keep it secure, and also make sure if you start connecting to the vehicle, you keep the car safe, because no one has hacked into the system of the car, so these are things we are watching closely.
"We are GDPR-compliant, but also talking to customers. If a fleet driver is driving a business car, it may be that only data about fuel is shared with a third party."
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