Under contract to provide an advanced telematics system forLLC, Hughes Telematics Inc. is unfazed by the prospect of a tie-up between its customer and Corp., owner of its chief rival, OnStar.
“We have a long-term, exclusive service agreement withthat’s independent of their ownership,” Hughes President Erik Goldman tells Ward’s. “Chrysler, in some form, is going to emerge from this. It’s a little premature to speculate.”
GM is in talks to acquire Chrysler from majority stakeholder Cerberus Capital Management LP. Cash-strapped GM reportedly covets Chrysler’s cash assets, estimated to be in the $11 billion range.
Against this backdrop, Hughes is preparing to deliver on its commitment to equip Chrysler vehicles with a state-of-the-art telematics system beginning next year. Simultaneously, it is launching a system that will be featured acrossAG’s Mercedes-Benz lineup.
“We have our heads down and focused,” Goldman says.
While Hughes is confident it won’t get burned in a Chrysler takeover deal that could ostensibly benefit OnStar, Goldman is convinced there is no better time than now to be in the telematics business. By 2014, telematics will be commonplace, he says.
“We’re engaged with just about every other OEM at one level or another of discussion,” Goldman says. “The industry has concluded that vehicles being remotely connected is inevitable, whether it’s providing consumer services for the driver of the vehicle or providing diagnostic data back to the factory or to the dealer, or safety services. There are just too many value propositions (to ignore).”
Costs also have fallen, further improving the business case for telematics. Not even the current market conditions, which saw U.S. industry sales plummet to a 15-year low in September, will delay the technology’s proliferation by more than “a little,” Goldman says.
The safety benefits alone likely make telematics a must-have, he adds. Features such as automatic post-crash emergency-services notification are “becoming the cost of doing business” for auto makers.
“Customers expect, when they buy a car today, it’s safe. And safe, by definition, is beginning to move in the direction of connected safety. In the past, I might lie (in a ditch) for a day or two and bleed to death. In the future, somebody will be there within three minutes. That’s the world people are now beginning to expect because, Mercedes, GM have all set that standard.
“A number of the car companies we’re talking to today are asking us to engineer solutions for them, where something like that is part of the price of the car. It comes with the car, for the life of the car.”
Before year’s end,Motor Co. will make available a dealer-installed upgrade to its Sync multimedia system to accommodate direct calling from vehicles involved in crashes to emergency service providers. And unlike OnStar, the feature will not require a paid subscription.
Despite the cloud of uncertainty that hangs over Chrysler’s future, the auto maker’s top executive is very high on its telematics strategy. Chairman and CEO Robert Nardelli says the auto maker, which has established a dedicated cockpit-development team, is integrating telematics in a way that transforms a vehicle’s interior into “your most favorite room in the house.”
Chrysler will unveil its vision for telematics in January, Nardelli tells Ward’s, adding Hughes isn’t the only supplier involved in the project. “Nobody has this thing totally captured,” he says.
Chrysler already has announced some of its ‘09 models will be equipped with Internet capability.
The industry consensus suggests telematics will reach critical mass within six years, Goldman says. “By 2013-2014, you’ll be more apt to buy a vehicle that is connected wirelessly, than not,” he adds.