Brief survey of telematics industry Russia june 11

Brief survey of automotive and
telematics industry, Russia

© 2011 AutoLocator, Moscow
1

Project Environment, Russia

Territory: 17,075,400 km2
Citizens: 141.9 m
11 large cities
1,140 medium-sized towns Cars: 33.8 m
240,000 villages
Trucks: 5.3 m
1,140,000 km of local roads
45,000 km of main roads Buses: 0.9 m

Russia is the second largest market in Europe... and
it demonstrates huge potential for further growth!
2

Automotive market: Statistics
25 best sold models
Sales of new cars
221,224
250,000

200,000
162,596
150,000 119,880

100,000
67,013
50,000

0

Source: Association of European Businesses

April continued to show growth on the market of new cars and light
commercial vehicles in Russia
‣  Among the top 10 bestselling models so far, nine are locally produced.
‣  In comparison to the same period in 2010, January to April 2011 saw the sales of
new cars and light commercial vehicles in Russia increase by 64%. Car sales
exceeded those within the same period in 2010 by 295,646 units, according to the
AEB Automobile Manufacturers Committee (AEB AMC).
‣  Car sales in April 2011 exceeded those in April 2010 by 42% or 70,146 units.
‣  Sales Forecast 2011 – 2.35 mln.

The amount of stolen cars in Russia has increased to even
greater degree in direct proportion to Sales Growth.

3

Car theft statistics

In Moscow an estimated ﬁfty cars were stolen per day, with the Car thefts by brand Jan - June 2010
estimated yearly total for Russia between 100,000 and 150,000.
Analyzing the Theft statistics and comparing it with year 2010, it is AvtoVAZ
obvious that car theft is in growth. In accordance with the media Toyota
statement, crisis in Russia is over , which generated negative theft VW
statistics in Moscow and Moscow region in year 2011. Number of stolen BMW
cars increased. Analytics are explaining that by the increasing demand Audi
for new and used cars in the market. In Q1,Q2 in year 2011 in Moscow
Mercedes
and Moscow region, stolen vehicles: Toyota - 574, VW - 372 , Lexus -
115, BMW - 327 , Mercedes - 245, Opel - 62, Audi - 251, Nissan - Nissan
190 ,Toyota Land Cruiser - 102 , Mitsubishi Pajero - 30 , BMW Х3 и X5 – GAZ
50 and local brands LADA - 1587 , GAZ - 132. Within the increasing Lexus
demand there is an appropriateness for the “Japanese”, which is Opel
equipped with very basic security systems (both alarm and immobilizer).
0 200 400 600 800 1000 1200 1400 1600

# Model Jan - June 2010 Jan - June 2011 %
1 Toyta Camry 128 230 80%
2 VW Passat 115 225 96%
3 BMW 5 series 93 164 76%
4 Chevrolet Niva 67 111 66%
5 Toyota Avensis 56 128 129%
6 Lexus (all models) 51 115 125%
7 Nissan Primera 46 54 17%
8 Nissan Almera 44 55 25%
9 Mazda 6 42 38 -10%
10 Toyota Land Cruiser 40 84 110%
11 Mercedes Benz E-class 39 54 38%
12 Toyota Corolla 38 58 53%

4

Situation on Russian roads

By the statement of the Russian State Traffic Inspection, overall automotive fleet has increased by 4% in year ’10 and that is
notwithstanding with the financial crisis and the drop in automotive sales. Daily, almost 350 vehicles is newly registered in
Moscow. Fleet increased by 12% in the Moscow region.
Fleet increase also drives the increase in crash accidents, as low driving culture is worsening already tensed situation. Road
accident statistics is not good at all; in December 2009 in only Moscow accidents registered from 350 to 400 daily. Overall
accidents in year 2009 – 16 000 in Moscow and more than 200 000 in whole Russia resulting in 26 000 fatalities.

5

Situation on Russian roads:

Growing Number of Cars
Number of cars (thousands)

Cars
Trucks
Buses
& 0.2
0.142
Low Safety
Fatalities / Number of accidents

0.137 0.128 0.117
40,000
0.15

30,000
0.1
20,000
0.05
10,000
For comparison: this ratio is 0.01 in Germany
-
0
2006
2007
2008
2009
2007
2008
2009
6 months 2010

Cars per 1,000 people Structure of road accident fatalities
3%
250
214
178 195
200
159
169 Death before arrival at hospital
150
41%
Death in hospital
100
56%
Instantaneous death in road accident
50

0
2005
2006
2007
2008
2009
“Golden Hour”
Source: Rosstat Source: Health and Social Development Ministry

6

Road Safety in Russia vs Other Countries

Number of deaths per 100 injured in road accidents in different countries

vs Russia
14%
7

Decision making motivation while buying an SVR System*

Key motivation factors for purchasing an SVR System Key factors to extend subscription

signi cant importance moderate importance low importance

Property and life protection needs 1204 Subscriber's fee discount 66%

Insurance policy discount 645 193 678 Discount for new equipment 61%

Friend's advice 82 132 1300 Extended guarantee 25%

Manager's advice 307 410 800 No motivating factors 16%

Equipment costs and Subscribers fee 319 472 728

Key motivating factor for installing the Telematics SVR System:
1.  Property and life protection needs
2.  Insurance policy discount

* - AutoLocator’s Consumer Research (1200 respondents)

8

TELEMATICS INDUSTRY in AFTERMARKET

9

Key Players in telematics business in Russia

We estimate the current SVR market approximately within 150 Active subscribers (SVR)
000 running active units. Key subscribers for the SVR services are
the owners of 40 000 USD and higher price cars. 21000,
14% 35000,
85% of the subscribers are located in Moscow and St. Petersburg. 23% Cobra
Regional sales still insigniﬁcant yet. Most well regionally Caesar Satellite
40000,
presented companies are AUTOLOCATOR and Cesar Satellite. 27% AutoLocator
However, AUTOLOCATOR is originally focused on Moscow Other players
market as long as it allows to keep the highest ARPU among all 55000,
36%
competitors.

“AUTOLOCATOR” is providing services for 40 000 active
subscribers at the moment, Cesar Satellite – 55 000. The rest is
distributed between small players like Arkan , Echelon and other).
Revenue 2010 (thousands dollars)
So, AUTOLOCATOR controls 27% of the market if we estimate
AUTOLOCATOR’s share in amount of active subscribers. But, if
6300,
estimate market share in revenue, AUTOLOCATOR’s share is 9% 12,250
34%. 18%
Cobra
Caesar Satellite
We see positive dynamics within the SVR market and serious 24,000
34% AutoLocator
future growth due to affordability of new products and services,
which would have more value for the consumer, like AutoLocator 27,500 Other players
39%
Assistant (SVR + E-Call and B-Call + Infotainment).

10

Current SVR Business Model

1.  Units purchasing
2 Dealer 3 2.  Unit sales to Auto Dealer
3.  Unit Sales and Installation to the consumer
1
4 4.  Tracking services. After sales.

Producer Subscriber 5.  Insurance discounts

Insurance 5
companies

Current sales model is based on distribution of the telematics units SVR systems in cars could at risk of being stolen is almost obligatory by
through automotive dealerships. Service Providers are purchasing the leading insurance companies. Most of the insurance companies are
units from the manufacturers and then supply the dealers . The Dealer providing reasonable discounts while the SVR system is installed.
is selling and installing the units when the consumer purchasing the Insurance companies sponsoring Telematics SVR, stimulating growth in
car. It is obvious that current model generates high retail price. the industry.
Therefore, this kind of services is affordable only for the owners of
expensive cars.

11

Pricing

RUB
Average service payment per year
Installation cost
Equipment - Average retail price

100,000
The cost of equipment and service
payment remain too high what 90,000
18,500
makes it affordable only for the 80,000 15,000
owners of luxury cars. 9,300
70,000 7,000

60,000 12,000
Price range: $ 1000 - $ 4000 7,000
50,000
40,000
67,000 65,000
30,000
48,000
20,000
10,000
0
AutoLocator Caesar Satellite Cobra Connex

12

Insurance in Telematics

TOP 5 Russian Insurance Policy Discounts (Theft Risk)
Insurance companies
20% 40% 60% 80%
•  1 protection outline •  1 protection outline •  2 protection outline •  2 communication channels
•  No sensors •  Volume sensor •  Volume sensor •  Volume sensor
•  Wired relay control •  Tow sensor •  Tow sensor •  Tow sensor
•  2 types of relay control
•  2 types of relay control •  2 types of relay control
•  Additional Mechanical protection
(hood lock, gearbox lock)

+ ADDITIONAL 5% discount for Damage Risk in case of providing the insurance company
with the 3D accelerometer reports ( drivers behavior, crash analysis, etc.)

AUTOLOCATOR is in partnership with more than 30
leading Insurance Companies offering Special Deals.

13

ERA-GLONASS

"Emergency Response to Accidents“. This system will provide location services for
emergency calls, similar to Enhanced 9-1-1, E112 and eCall.

14

ERA-GLONASS Infrastructure*

Geographical distribution of the ERA GLONASS infrastructure:
‣  Moscow: Federal Navigation Information Center (FNIC);
‣  15 Regional Navigation Information Centers (RNIC);
‣  83 service centers for technical support;
‣  Maximum coverage with cellular networks (based on MVNO – mobile virtual network operator);
‣  High-precision positioning network.

To date:
‣  70 regional dispatch centers deployed (October 2010);
‣  System architecture and functionality developed;
‣  MVNO license and communication network code 55 obtained, numbering range (940 - 949) secured - 100 million numbers;
‣  Two pilot projects in progress (in the Kaluga and Ryazan regions).

•  Saint-Petersburg
•  Arkhangelsk

• Moscow
•  Kaluga
•  Stary Oskol

•  Krasnodar •  Saratov •  Krasnoyarsk
•  Volgograd •  Ufa

•  Novosibirsk •  Khabarovsk
•  Barnaul

* - prepared by NIS-GLONASS

15

ERA GLONASS: System design milestones and activities*

2010 2011 2012 2013
Feed Start up Infrastructure development Pilot Project Full-scale Operation

2013
• Legislation enabling the creation and operation of ERA-GLONASS System
1

• Design of ERA-GLONASS SAS Infrastructure
2

3
• Integration with emergency response services
ERA-GLONASS
Full-scale operation Startup
• Equipping vehicles with ERA-GLONASS terminals
4
Installation of ERA-GLONASS terminals
• Development of value-added services based on ERA-GLONASS infrastructure will be mandatory for vehicle categories
5 M and N as of 2013.

16

Commercialization is one the most important objectives of ERA-GLONASS .
Basic services (Emergency Response on
Accidents or eCall) will be provided without
charge. If an end user would like to have
additional services (e.g. PAYD, SVR or
infotainment), he will have to:
1.  visit an ERA-GLONASS web site.
2.  choose one of the certiﬁed telematics
service providers.
3.  choose the desired services.
4.  pay the subscription fee.

17

Architecture of Russian ERA GLONASS*

18

ERA-GLONASS system: the basis for integration of navigation information systems*

Fleet Management Insurance SVR Service Location-based Location-based
Toll Road operators
Service Providers companies Providers Service Providers Content Providers

ERA-GLONASS Infrastructure

Service Delivery Platform MVNO (Mobile Virtual Network
Operator)

Data Network Precise Positioning System

Network of Navigation Information Centers

* - prepared by NIS-GLONASS END USERS
19

First results of cooperation

AUTOLOCATOR becomes one of the few companies who
1
was recognized by NIS-GLONASS as our equipment meets all
necessary technical requirements.

Information about the vehicles operating in Sochi for the
purpose of Olympics objects construction is transmitted to
Transport Management of Olympic Games and NIS-
GLONASS. This allows our clients to get all necessary
permissions easily.

GLONASS. The main object is to test:
2
3d Qtr. 2011 – a joint pilot project is to start with NIS-

•  basic services (Emergency Response on Accidents or eCall)
•  additional services (Infotainment, SVR, Fleet Management
and etc.)

20

Support of Value-Added Services by Different Versions of ERA-GLONASS Terminal*

ERA-GLONASS In-vehicle system requirements*
•  MSD transmission mechanism
•  ETSI in-band modem (primary method)
•  SMS (secondary method);
•  SMS can be used at the request of the PSAP operator (if voice call was established, but data could not
be transmitted in-band) or initiated by IVS if voice call could not be established;
•  Testing mode for user-initiated IVS functional test;
•  OTA conﬁguration;
•  OTA ﬁrmware update;
•  Optional functional requirements to support value-added services.

21

ERA-GLONASS Project Status*
‣  Draft amendments to Technical Regulations on Vehicle Safety were published and passed public discussion. Presently, the amendments are undergoing the state
approval process.
‣  Draft IVS requirements were circulated and discussed with project stakeholders.
‣  ERA-GLONASS infrastructure design is in progress. Infrastructure will be available to support trials from the beginning of 2011, full-scale pilot projects from the
beginning of 2012 and be ready for production by the end of 2012.
‣  NIS was licensed as the Mobile Virtual Network Operator (MVNO).
‣  The drafting of regulations for 112-call prioritization is currently in progress.
‣  Pilot projects were launched in two regions (Kaluga and Ryazan). Two more regions (the Moscow region and the Leningrad region) will join the pilot program this year.
‣  The pilot program in the Leningrad region is being designed to support the cross-border ERA-GLONASS / eCall joint pilot project with Finland.

Amendments to regulations on Vehicle Safety*
‣  Amendments are proposed to come into effect on January 1, 2013 for all vehicles manufactured after this date.
‣  Retrofit IVS configuration is allowed, as well as OEM preinstalled configuration.
‣  GLONASS should be used to locate the vehicle either alone or in combination with other systems (GPS and/or GALILEO).
‣  IVS should enable automatic and manual emergency call with MSD transmission.
‣  The regulations contain provisions for recording and transmission of the acceleration profile before, and in the course of, the accident.
‣  The IVS system shall report its status at preconfigured time intervals as part of its operability control. If it identifies an internal failure, the system reports such a failure
immediately.
‣  It should be possible to initiate IVS test from the vehicle at a service center or in course of technical inspection.

22

RESUME

1
Fact One
Russian automotive market demonstrates signiﬁcant growth

2
Fact Two
Growing consumer’s wealth, leads to negative stolen vehicle statistics.

3
Fact Three
Every Russian who purchased a car is ended up in risk group ( car theft / crash accident). Russian
consumers feel hunger for SAFE being and property protection.

4
Fact Four
Insurance companies are sponsoring the Telematics SVR industry with the discounts for the insurance,
which keeps strong demand for the SVR Systems.

5
Fact Five
Russian Government is forcing the development of GLONASS project. We are sure that the demand
will grow rapidly with the new State Technical Regulations for Automotive transport .

23

Industry forecast

Car Sales (millons) SVR systems Sales (thousands)
4.5 900
860
4 800
3.5 700
1.  Since 2011 signiﬁcant sales growth of SVR systems with
3 600 subscriber’s fee will take place.
2.5 500
435
2.  When ERA-GLONASS full-scale project is launched,
2 400
penetration of SVR systems will reach 100%.
1.5 290
300
1 66 200
0.5 30 38
100
42 17
0 0
2008 2009 2010 2011f 2012f 2013f 2014f 2015f

24

Contact Us
107140, Moscow, Russia,
Verhnyaya Krasnosel’skaya str. 3 b. 1
Tel. +7 (495) 974 25 25
www.autolocator.ru


Brief survey of telematics industry Russia june 11

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