The global juggernaut that is the rising age of the internet of things (IoT) could give this country a boost in its bid to diversify.
Over the next five years, the Middle East is likely to see strong and consistent car sales growth, according to a recent PwC report. Along with this growth, car maker factory activity in the region will increase significantly. By 2021, nearly 3 million cars will be built yearly in the Middle East and Africa, an output increase of about 50 per cent, according to the PwC Autofacts study.
In addition there will be a rapid rise in connected car production, according to a report by the tech researcher Gartner. This market is growing fast in both mature and emerging economies, Gartner says.
The global production of new cars equipped with data connectivity, either through a built-in communications module or by a virtual tether to a mobile device, is forecast to reach 12.4 million in 2016 and increase to 61 million in 2020, it adds.
This region, and the UAE in particular, is well placed to take advantage of the revolution as its technology sector develops.
Indeed, the country has already made inroads into the connected car sector. Etisalat and Nissan last year teamed up for the region’s first connected car deployment. Starting with the 2016 models of the Nissan Maxima and the Nissan Patrol MY16, Nissan pre-installs a small device within the car, connected via an Etisalat M2M SIM card.
Available on Android or iOS platforms, the Nissan SmartCar app allows users to gain remote control of locks, the horn, headlights, the windows and perhaps most importantly in this region, the vehicle’s air conditioning – to cool down the car in advance of their drive. Among other features, as the application is compatible with GPS, GLONASS, and GSM M2M Technology, users can easily locate their vehicle with a simple touch of a button – an ideal theft deterrent and security feature.
“Keeping with the evolution of the IoT era, it underpins Etisalat’s commitment to support the nation’s long-term strategy in promoting digitisation initiatives and developing the connected ecosystem of the UAE, including transportation,” the chief business officer at Etisalat Salvador Anglada said at the time.
Connected car penetration in the Middle East and Africa is at 2.8 this year, the researcher Statista says, and is expected to hit 14 per cent in 2020. Revenue amounted to US$940m in 2016, Statista adds, and is expected to show an annual growth rate of 35.8 per cent resulting in a market volume of $3.19 billion in 2020.
The UAE’s long-term economic plans include a heavy focus on diversification, whereby the Government and investors in the country are increasingly investing in a variety of sectors – including technology, according to Naseba, a “business facilitation expert in growth markets”.
The automotive tech sector is attracting a great deal of attention throughout the Middle East following Saudi Arabia’s US$3.5 billion investment in Uber Technologies in June.
Saudi Arabia and the UAE are not alone in making this move, with governments and investors from around the GCC – including Qatar, Oman, Kuwait and Bahrain – actively hunting for innovative, high-potential tech projects to invest into, says Naseba.
Gartner predicts that future connected car applications will drive a 150 per cent global increase in demand for contextual information, from 2016 through 2020.
“The connected vehicle is the foundation for fundamental opportunities and disruptions in the automotive industry and many other vertical industries,” said James Hines, the research director at Gartner. “Connected vehicles will continue to generate new product and service innovations, create new companies, enable new value propositions and business models, and introduce the new era of smart mobility, in which the focus of the automotive industry shifts from individual car ownership to a more service-centric view of personal mobility.”
The automotive sector is facing a far different future than could have been imagined a decade or so ago, PwC says. Two separate worlds are melding in order to design and develop these cars: the traditional automotive company and software outfits. The industries bring with them conflicting cultures, product development models, and business operations. For example, the main car companies design their products once, in a painstaking five-year-long development cycle. Software companies like to fail and fix in a rapid product development process.
Gartner defines the connected car as one that is capable of bi-directional wireless communication with an external network for the purpose of delivering digital content and services, transmitting telemetry data from the vehicle, enabling remote monitoring and control, or managing in-vehicle systems.
Connected car technology will create opportunities for car makers to generate post-sale profits through sales of additional services and feature upgrades, it says as well as enhance brand loyalty through a more personalised customer experience. It will also enable innovations in adjacent businesses, such as insurance, car rentals, car and ride-sharing services, and electric vehicle charging.
“As cars become more automated, they are being equipped with an increasing array of sensing technologies, including cameras and radar systems,” said Mr Hines.
To become more automated, and also cleaner, cars will require 5 per cent more embedded processing functions, year over year, from 2016 through 2020, says Gartner. Automated driving functions necessitate real-time camera and sensor data processing and pattern recognition. Improving fuel efficiency and reducing emissions require sophisticated engine and transmission control systems.
“Many automobiles will use image detection as the primary means to identify and classify objects in the vicinity of the vehicle so they can provide more sophisticated responses and even have autonomous control,” said Mr Hines.
chnelson@thenational.ae
Follow The National's Business section on Twitter
