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Intelematics pushes into the US

Get appy: Intelematics general manager of business development Matt Hansford says the company's reach is growing in a number of markets.

RACV connected car subsidiary kicking goals in the United States

10 Feb 2016

AUSTRALIA'S leading supplier of connected mobility systems, Intelematics, is now distributing its applications through one of the largest automobile clubs in the United States and has formed a joint-venture with three national motoring clubs in Europe.

The company, owned by the Royal Automobile Club of Victoria (RACV), has generated interest among motoring clubs in Australia and overseas with its Connected Membership suite of applications.

While the suite is available as an aftermarket product through motoring clubs, Intelematics has also developed a number of applications for car-makers, including Holden Assist and Toyota Link.

Ford in the US recently demonstrated the Intelematics member services app, Club Connect, as part of its new Sync3 platform at the Consumer Electronics Show in Las Vegas and is expected to release it jointly with the American Automobile Association later this year.

In 2015, the RACV reached a deal with most of the other Australian motoring clubs to distribute the same service, called Connected Membership in Australia, to their members, giving Intelematics access to around seven million Australian motorists.

In return, the RACV sold small equity stakes in Intelematics to the other clubs while retaining a 90 per cent holding.

Connected Membership apps help drivers with navigation, finding a petrol station and comparing petrol prices and summoning roadside assistance.

“In Australia, the motoring clubs have seven million members. In North America, the joint-venture will take that up to about 60 million people,” the company’s general manager of business development Matt Hansford told a meeting of Intelligent Transport Systems Australia in Melbourne last week.

“In terms of an audience for this technology, particularly in partnership with the OEMs, it’s has quite a reach.”

Mr Hansford said the roadside assistance application was made available through most of the American Automobile Association clubs last year.

“That was our first product deliverable to the AAA … there have been about 3 million downloads so far. So that’s a had a great take-up rate for us,” Mr Hansford said.

Intelematics has formed a joint-venture with Auto Club Enterprises, a subsidiary of the Automobile Club of Southern California (SoCal), to distribute Connected Membership through the various state clubs owned by SoCal. SoCal is the largest member of the American Automobile Association and has a strong presence on the AAA board.

SoCal owns the clubs in Texas, Hawaii, New Mexico and Alabama and is affiliated with clubs in New England, Missouri and on the central east coast, bringing the total number of states covered to 20.

Mr Hansford said the expansion into the US would give Intelematics much better economies of scale as it could now spread its software investment over much larger markets. And its market is about to grow further, with a leap into Europe.

Intelematics has also completed a joint-venture in Europe with the Automobile Association of the United Kingdom and the motoring clubs in Austria and the Netherlands. That will add a further 10 million drivers to the potential market for Connected Membership.

“We have about 150 people writing applications in Melbourne and we have about 30 in North America. We are about to open our office in London, which will have around eight to 10 people initially.”“Because we have so many members, the cost of development and operation becomes infinitesimally small when you amortise those costs across the membership base.”

As in the US, Intelematics will install its Telematics Services Hub in the UK and the clubs will be able to choose which of the applications to make available to their members.

Mr Hansford said Intelematics received another boost recently when Toyota decided to fit the Smart Device Link platform in all its vehicles. Ford uses the Smart Device Link system behind its Sync3 products, which means Intelematics will have to do only minor adjustments to make Connected Membership available to Toyota drivers.

“At the CES electronics show about three weeks ago, Toyota Japan announced that they are starting to roll out Smart Device Link head units as a result of a collaboration agreement that they have had with Ford for a number of years.

“This is the first emergence of a platform that is cross-OEM (usable by more than one car-maker), and that simply means the club member or subscriber steps into a Ford, pairs up and can use his applications. Then he can step into a Corolla and he can do the same thing.

“Smart Device Link is a standard and has been adopted by Ford and Toyota and others that I can’t mention at this time,” he said.

The RACV started Intelematics in 1999 and since then, under the leadership of chief executive Adam Game, it has become the leading provider of services to vehicles, its main product being the Suna traffic alert system.

It took more than 10 years to become profitable, however, and by July 1, 2013 Intelematics had run up accumulated losses of $19.3 million, almost double its issued capital of $10 million.

But the long wait has paid off. In the financial year to June 30, 2015, Intelematics’ revenue rose 27 per cent to $23.3 million and profit after tax rose 44 per cent from $3.44 million to $4.95 million.

The strong growth in profits over the last two financial years has almost halved accumulated losses to $10.9 million. Directors made no comments about the immediate future, but the US distribution agreement is likely to produce further revenue growth.

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