m Automotive Aftermarket DEPLOYING AFTERMARKET SOLUTIONS Challenges and

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m. Automotive Aftermarket DEPLOYING AFTERMARKET SOLUTIONS Challenges and Opportunities Presented by: Zaim Azrak CEO,

m. Automotive Aftermarket DEPLOYING AFTERMARKET SOLUTIONS Challenges and Opportunities Presented by: Zaim Azrak CEO, Location Solutions Date: 20 November 2013 © 2013, Location Solutions Your World Within Reach!

Agenda • • • Who is “Location Solutions” (LS)? Being a “m. Automotive Aftermarket”

Agenda • • • Who is “Location Solutions” (LS)? Being a “m. Automotive Aftermarket” player The Challenges in the Middle East The Opportunities in the Middle East The Stakeholders of an Emerging Eco-System of Services in the Middle East. © 2013 Location Solutions Your World Within Reach! 2

LS in brief History Since 2004 Specialty & Expertise Regional & International Presence Aftermarket

LS in brief History Since 2004 Specialty & Expertise Regional & International Presence Aftermarket Provider of: • Regional HQ: Dubai • Development HQ: Rotterdam • Fleet • Regional Offices: Management Abu Dhabi, Solutions Riyadh, Jeddah, • AVL - Vehicle Doha, Cairo, and Tracking Solutions Beirut • Telematics & • US Office: Detroit M 2 M Services © 2013 Location Solutions Your World Within Reach! Industries we serve • • • Market Position Automotive • One of the Transportation leading and Logistics fastest growing Construction Telematics Oil & Gas Service Providers in the GCC 3

© 2013 Location Solutions Your World Within Reach! ATM Tracking Student Tracking Car Lease

© 2013 Location Solutions Your World Within Reach! ATM Tracking Student Tracking Car Lease & Rental industry Container Tracking (Road Safety & Driving Behavior) Oil & Gas Construction & Contracting Industry Refrigerated Cargo Industry (Passenger / General) Transport Industry Verticals We Serve And every vertical has its own Pain points, Technical Requirements, and Business Needs 4

1. We are not a device manufacturer. 2. We procure the best of what

1. We are not a device manufacturer. 2. We procure the best of what OEMs have to offer. 3. Each model undergoes a solid QA assessment. 4. Hardware is a commodity. 1. We are not a Connectivity Provider Connectivity is Provided by MNOs. Challenge? 2. We procure Bulk SIM Cards from Local, Prices, Regional, Absence of and International M 2 M Platform, MNOs. Detailed Billing…. Provisioning Tool Billing System SIM Management Tool Account & CRM Management System Back End Data Centers Front End + Accommodate Several Hardware into a single platform + Ability to Customize The Solution is offered in Several Packages of Subscription-based Service to the client! All Under One Roof from a Single Supplier © 2013 Location Solutions Your World Within Reach! Sales, Marketing & BD Connectivity Installation Team Telematics Device DEVELOPED OUR OWN IN-HOUSE Technical & Support OUR OWN ACCOUNT SOLID PROCESSES, DEFINED OPERATIONAL WORKFLOW, AND VALUE CHAIN WHITE LABELED Management, Admin, Accounting and Collection Our Business Model Developers & Solution Engineers Being A m. Automotive Challenge? Aftermarket Player Regulatory 5

Being A m. Automotive Aftermarket Player AUTOMAKERS CONNECTED VEHICLES / TELEMATICS / Service Delivery

Being A m. Automotive Aftermarket Player AUTOMAKERS CONNECTED VEHICLES / TELEMATICS / Service Delivery is still MOBILE AUTOMOTIVE challenged! m. Automotive Provisioning of SIM… Aftermarket Regulatory Issues… Solution & Service Provider Privacy Policies… MNOS What is the Best Business Model? How are we seen? Third Party Player Aftermarket Annoyance Or maybe as: “Warranty Breachers? ” In Fact How are we seen? Promoter? Early Adopter? Niche Player? Catalyst Just another Connectivity Client “A potentially Future Competitor? ” • We consider ourselves as Industry Leaders • It is NOT important to manufacture telematics devices, equip the vehicle with telemetry devices, or just offer connectivity it is mostly important to understand what your end-customer needs are and to adapt your services and solutions rapidly. © 2013 Location Solutions Your World Within Reach! 6

Challenges for Being An Aftermarket in ME: Several Factors to Take Into Consideration Challenge

Challenges for Being An Aftermarket in ME: Several Factors to Take Into Consideration Challenge Factors External Factors MNOs Internal Factors Regulators Beyond Controllable Self-contained, Geographically Dispatched “Smart installation Teams” Easy to overcome Time. Car consuming Installation Dealerships Management Require Proper Can impact our business Management 1. Client requirements differ (sometimes Sociodrastically) Economical 2. Pricing Factors of each 3. Penetration Rate of new Emerging GCC country Technologies varies Low-Quality Competition © 2013 Location Solutions Your World Within Reach! We try to adapt and turn some of these challenges into opportunities: • Innovative Solutions / Additional Features • Customization • Integration of new Accessories • Pricing Packages & Payment Methods • …and more 7

Challenges – MNOs: Service Limitations, Prices, and Relationship. MNOs Expensive Regulators Connectivity Rates Car

Challenges – MNOs: Service Limitations, Prices, and Relationship. MNOs Expensive Regulators Connectivity Rates Car Dealerships Low-Quality Competition No M 2 M Platform Socio. Economical Factors of each GCC country © 2013 Location Solutions Absence of Unified Roaming Rates Intermittent Technical Glitches that harmed our image No Data log per SIM Not in Control of SIM Card Services Your World Within Reach! Not seen as Technology Partners yet SIM billing starts from day 1 of delivery Intermittent Billing Problems Replenishment of SIM is a slow process 8

Challenges – Regulators: Privacy Policies, GCC-wide Standardization… MNOs Absence of Unified Approval Regulators Process

Challenges – Regulators: Privacy Policies, GCC-wide Standardization… MNOs Absence of Unified Approval Regulators Process across GCC Car Dealerships Low-Quality Competition Socio. Economical Factors of each GCC country © 2013 Location Solutions High Approval fees in some countries Privacy Policies are of high concern in some countries Should Play a significant role in unifying roaming rates in GCC Lack of Trust in Private Telematics Service Providers Your World Within Reach! Cumbersome Submission Process sometimes Better Control on illegal and unregistered competitors Regulatory Policies and mandates can vary drastically 9

Challenges - Relationship with Car Dealerships MNOs Too much worried about Regulators Warranty Breach

Challenges - Relationship with Car Dealerships MNOs Too much worried about Regulators Warranty Breach even for OBD devices Car Dealerships Low-Quality Competition Socio. Economical Factors of each GCC country © 2013 Location Solutions Fleet Sales Managers do not see the value proposition yet to promote it Cannot adopt any solution without his manufacturer approval Some dealers lack the proper technical knowledge about Telematics They come back to us only when a corporate client requires the solution Your World Within Reach! Dealers are conservative with aftermarket products: Tint Film and that’s it! They should be an active stakeholder in this ecosystem 10

Challenges - Facing Low-Quality Competition MNOs Market flooded Regulators with low-quality cheap devices Car

Challenges - Facing Low-Quality Competition MNOs Market flooded Regulators with low-quality cheap devices Car Dealerships Low-Quality Competition Low prices with barely no margins to sustain their business Socio. Economical Factors of each GCC country © 2013 Location Solutions Hardware that may affect the car electronics Outsourced installers – Higher Risk & Liability Usually a one or two-man-show company Import devices without Telecom Regulatory approvals Your World Within Reach! Very limited or zero after-sales support They sell IT Solutions and not focused on Telematics 11

Challenges - Different Socio-Economical Factors among GCC countries MNOs Solution Requirement differs from Regulators

Challenges - Different Socio-Economical Factors among GCC countries MNOs Solution Requirement differs from Regulators country to another Car Dealerships Low-Quality Competition Diesel monitoring is not looked after in KSA, while in UAE it is. Pricing of Subscription Packages differ from country to another due to MNO Rates, Competition, and Internal Expenses Web User. Interface must support multiple -languages Socio. Economical Factors of each GCC country © 2013 Location Solutions Detecting of Idling in UAE is a prime feature, in KSA it is not! Connectivity Coverage is limited still in some rural areas Some fleet managers are conservative and do NOT believe in technology whatsoever Your World Within Reach! 12

Opportunities for Being an Aftermarket in the ME: Sweet Spot for Emerging Technologies The

Opportunities for Being an Aftermarket in the ME: Sweet Spot for Emerging Technologies The MENA region and the GCC in particular are considered to be a Sweet Spot for the Emerging Technologies Promising Market for Automotive Telematics Solutions ing Po Internet / Smartphones and Tablets high Penetration Sustainable Economy and transformation from Oil-dependant economy to knowledge-based economy. Modern Trade & Logistics hub © 2013 Location Solutions Hi gh De m an d Bu y 3 G/4 G (LTE) and widely spread GPRS connectivity we r Backbone of Wireless Technologies Your World Within Reach! A solid road transportation infrastructure 13

Opportunities are increasing due to several factors High Dependence on Vehicles for Land Transport

Opportunities are increasing due to several factors High Dependence on Vehicles for Land Transport FLEET OPTIMIZATION, MANAGEMENT, UTILIZATION, SAFETY, SECURITY, VISIBILITY, DATA, REDUCTION IN RUNNING COSTS Technology 2 G/3 G Availability, Devices: OTA, New Features, Wide Selection of Sensors, OBD-based Devices, Faster Chipsets and GPS/GSM Components, Availability of APIs or Real-time OS inside device Environment Harsh Climate Condition, Vast Distances, Absence of Road Landmarks, Heat Government Support for New initiatives Local Authorities are rapidly adopting Telematics solutions to enhance road safety, limit accidents, increase public safety, promote sustainable transport, and optimize traffic © 2013 Location Solutions Your World Within Reach! 14

Opportunities are increasing due to several factors Huge increase in the number of commercial

Opportunities are increasing due to several factors Huge increase in the number of commercial vehicles and heavy equipment in the GCC. Requirement for electronic solution that can solve the pain points of plant hire and workshop managers. Construction & Contracting GCC countries are promoting knowledge-base economy; Service, Manufacturing, Trade, Science/R&D firms are establishing themselves in the region. Transition towards a knowledge-based economy Highly depended on Land Transportation. Road Safety is the PRIME concern for the QHSE department in government-owned Oil & Gas operators and regulators. The Oil & Gas Sector More then 8 languages are widely spoken in the GCC region. Uneducated drivers form the largest portion of the drivers in GCC: Lack of proper driving ethics and skills. Blame Culture Multicultural Society © 2013 Location Solutions Your World Within Reach! 15

The Stakeholders of an Emerging Eco-System of Services in the Middle East - The

The Stakeholders of an Emerging Eco-System of Services in the Middle East - The M 2 M Automakers & Dealerships Banking & Finance Car Lease & Rental Firms Government Consumer Insurance Vehicle Recovery Service Fleet Owners (Corporate End. Customers) The Beneficiaries Telematics Hardware Vendors MNOs Telematics Solution/Service Provider The Cloud / Repository The Technology Providers © 2013 Location Solutions Your World Within Reach! 16

 • What is the Future holding? o Connected Living o Smart Cities o

• What is the Future holding? o Connected Living o Smart Cities o Internet of Things o Big Data Thank You © 2013 Location Solutions Your World Within Reach! 17