Korea Betting on Car Telematics Industry
By Kim Sung-jin
Staff Reporter
South Korea will bet a total of 203.6 billion won ($173 million) on fostering its automotive telematics system industry into a top-tier player in the world by 2008.
According to the Ministry of Commerce, Industry and Energy (MOCIE) on Monday, a task force under its auspices released a long-term plan for telematics and car ``infotainment'' systems during a meeting with private-sector executives.
Telematics systems are in-car wireless telecom services built into automobiles that combine a global positioning system (GPS), satellite tracking and wireless communications for quick and easy roadside assistance. Besides route guidance, it is also used for vehicle-theft tracking.
A small LCD (liquid crystal display) screen on an electronic device gives the driver real-time updates on the traffic situation in the area by showing the geographical position of the vehicle as a blinking dot. It enables the driver to make smart navigation choices to roads that are less congested.
``The government will create a business environment that will facilitate private firms to operate telematics-related businesses. It will because telematics is a business area that is difficult for a private firm to single-handedly jump into since it involves diverse technological expertise related to car parts, automobiles and telecommunications,'' Deputy Commerce-Industry-Energy Minister Kim Jong-kap said.
Kim said MOCIE hopes the nascent local telematics market will help spur growth in the car industry and give a boost to wireless telecoms and software companies as well. He added that telematics would grow into a key export for South Korea in the future.
Telematics is one of the 10 core next-generation technologies that South Korea is seeking to develop into the nation's future growth engine industries.
Of the long-term investment, 112.3 billion won will be spent in developing core telematics technologies, including driving safety information database development technology, and expand the sales of telematics terminals at home and abroad.
Another 91.3 billion won will be invested in building relevant industry infrastructure and industrial clusters, including building a telematics database center, establishment of a test bed, construction of research and licensing centers and fostering of manpower.
The government will account for 155 billion won of the aggregate investment.
Lee Soo-young, chief of the task force, said MOCIE would revise and ease related laws to furnish a favorable business environment for telematics-related businesses.
South Korea plans to play catch-up with Japan, Europe and the United States. Currently, Japan accounts for 67 percent of the global telematics market, with Europe and the U.S. making up 29 percent and 4 percent, respectively, according to MOCIE. South Korea only accounted for 1.1 percent of global telematics-related production and 0.5 percent of global exports.
However, MOCIE predicts that if the government's blueprint to expand the local telematics industry is carried out as planned, South Korea will capture around 5.6 percent of the $26.5 billion global telematics market by 2007 in combined sales of cars equipped with telematics and in sales of telematics kits and technology to global carmakers.
By 2012, it expects South Korea's market share will reach 27 percent of the $99.4 billion world market.
Considering that South Korea now boasts one of the world's highest penetration rates in both broadband Internet and cell phones and that it has been aggressively investing in wireless Internet infrastructure, there is a high chance that the country will also lead the global telematics market in a not-so-distant future.
Further brightening the future prospect is global computer giant IBM's decision to invest $16 million in a software lab that will develop applications for mobile communications devices, including telematics. The Ministry of Information and Communication (MIC) is investing another $16 million into the project.
The MIC is also planning additional investments for building a traffic information center together with the Ministry of Construction and Transportation in Seoul to store up-to-the minute information on traffic across the country, major roadwork, maps and other aids for use by telematics service providers.
Hyundai Mobis, one of the country's frontrunners in the local telematics industry, a leading auto parts supplier and an affiliate of Hyundai Motor, estimates that, based on the market growth forecast by MOCIE, the company's telematics device-related sales will reach 250 billion won in 2005, grabbing the largest market share, at 30 percent, of the Korean market.
``Our annual telematics-related sales projection includes combined sales of cars made by Hyundai Motor and Kia Motors that are equipped with telematics and telematics kits to other carmakers,'' a Hyundai Mobis spokesman said.
``It is difficult to roll out local telematics market projections at the moment as the market has just started to form in the beginning of last year. But in our view, the local market is forecast to grow to 850 billion won in 2005, about eightfold the current market size,'' he said.
Hyundai Mobis rolled out its first terminal, Exride, for telematics services last September. Exride, a voice-operated telematics system device, goes for 2.4 million won ($2,000) when including the installation fee and the value-added tax.
The Exride terminal, which can be operated by voice command, offers more than 20 features including radio, television, navigation, telematics, a CD player, an MP3 player and voice mail.
The high-tech gadget, which can fit any type of vehicle, can provide services including route-guidance and tracking of stolen vehicles as well as fuel and engine maintenance alerts. Users only need to pay for the wireless Internet access available through their mobile handsets.
Other carmakers have teamed up with wireless-telecom companies to offer telematics services. Renault Samsung Motors and SK Telecom began a service that provides real-time traffic situations and tells the driver which is the quickest route to take last September. The information is transmitted through the driver's mobile phone, which is connected to the telematics terminal.
LG Telecom has joined hands with Hyundai Motor and Kia Motors.
Meanwhile, LG Electronics last Thursday said it will provide handset systems to allow telematics services in two General Motors (GM) car models. They are the Buick Regal and Pontiac Grand Prix models. LG's products will be installed in GM cars as early as 2005.
sjkim@koreatimes.co.kr
11-17-2003 19:48
