Cross Country Acquires ATX; OEM Deal Announcement Imminent

Expect an announcement within the next six months of a new North American-market telematics application from an Asia-based auto maker.

The news comes on the heels of Cross Country Automotives Services’ acquisition of ATX Group.

Cross Country is a member of The Cross Country Group, a leading provider of technology-enabled vehicle and driver programs, while ATX is the world’s largest provider of customized telematics services to the automotive industry.

The new enterprise is expected to generate annual revenue of $400 million. Terms of the deal have not been disclosed.

“ATX’s technology, talent and clients complement Cross Country’s business and extend our ability to deliver best-in-class products and services to our clients,” says Cross Country CEO Michael A. Saxton.

Saxton becomes CEO of the combined entity, while Steven A. Millstein, former ATX CEO and president, is named president of Cross Country Automotive Services and general manager-telematics.

Saxton views telematics as “a significant growth market,” something that will reveal itself at January’s 2009 North American International Auto Show in Detroit, if not before, he says.

During that timeframe, an OEM partnership with Cross Country will be announced.

“All of the car makers are going through the decision-making process on exactly what their telematics strategy is going to be, and they will be rolling those out over the next couple of years,” he tells Ward’s in an interview.

Enhanced driver safety and security represent “an important starter” for the proliferation of telematics systems, Saxton says. But the breakthrough will arrive when consumers are able to use telematics to integrate their vehicles into their lives.

“What really becomes important is to introduce and develop the product that really gives the consumer daily-use attributes,” Saxton says. “How (consumers) manage their relationship with their vehicles is going to be very important.

“There’s a whole information piece to it. There’s probably some entertainment piece to it. But to the extent that (the consumer says), ‘This is a product that I understand and use every day as I operate my vehicle,’ gives the car buyer a much different reason to become a subscriber.”

Saxton sees subscriptions as one model but not the only one that portends growth for telematics. “We also see it where it’s actually provided by the OEM during the warranty period, similar to a warranty,” he says. “So a 3- or 4-year warranty could include these types of services.”

There also is the prospect of upgrading vehicle software using telematics systems. “That is certainly the type of conversations that we’re having with (OEMs),” Saxton says.

ATX brings to the deal its coveted brand affiliations, including BMW, Peugeot, Citroen and Rolls-Royce. The provider recently lost its Mercedes-Benz business. Saxton says Cross Country was aware of the setback, but it had no impact on the acquisition’s conclusion.

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