2009: A Nail in the Road for Automotive Speech?

The prevailing sentiment is that 2009 will be an especially ugly year for automotive speech. Enormous problems are facing the American automotive industry, with President George W. Bush

using part of the $700 billion economic bailout package to prop up the ailing Big-Three U.S. automakers. It’s even looking bad for automobile sales in general.

Toyota, which has never posted a single yen lost since the company began reporting operating figures, is forecasting losses of $1.61 billion by year’s end. Kota Yuzawa, an analyst at Goldman Sachs, told The Yorkshire Post that global auto demand is expected to fall between 15 percent and 20 percent during the next few years.

Bill Scholz, president of the Applied Voice Input/Output Society (AVIOS), says that could have rippling effects for in-car speech technologies. “If car sales, especially luxury car sales, are being cut back and people spend less for cars, then facilities that are considered by some to be ‘high-end’ capabilities—for instance a fully speech-controlled car—will become less common and will not show nearly as great a growth in a different financial marketplace,” he says.

On the other hand, players in the industry are publicly saying the recession is a short-term problem rather than a game-changer despite economic data and forecasts like Yuzawa’s. Not too many, however, seem incredibly bright-eyed about immediate prospects. 

More than in other segments of the speech industry, many automotive speech vendors are writing off 2009 altogether and looking further ahead. Nuance Communications, for instance, admits it will be hanging tough this year and banking on the market turning around by the time long-term projects roll rubber to the streets. 

“The slowdown in the economy is noticeable for ongoing programs,” says Arnd Weil, general manager of Nuance’s Automotive Business Unit. “But if you think about the programs that are to be introduced, the technology we are building now is for model year 2010 to 2012. [There is still] optimism that by then the economy will have changed again.”

Similar attitudes pervade in telematics. Tom Schalk, vice president of voice technologies at ATX, attributes the slowdown in automotive sales to high summer gas prices and expects a bounce back with lower fuel costs.

Even if automotive sales do slow down, Schalk doesn’t see the telematics industry losing ground.

“If you wait to buy a new car, that doesn’t mean you don’t continue to subscribe to your telematics services. You’re still driving,” he says. “What influences usage of services in the car has more to do with how much people are driving than when people buy a new car.”

Schalk doesn’t forecast any long-term effects from the recession, either. Driving, he argues, is not going to stop, and the demand for increasingly connected vehicles is going to resume as soon as people begin to buy again. 

In fact, ATX on January 8 announced a big signing with Toyota to bring a new telematics platform to its Lexus car line in the U.S.