Ituran Location and Control Stock

Ituran Location and Control Ltd. provides telematics services, including stolen vehicle recovery, fleet management, and other tracking services, as well as connected car and

The company also provides telematics products used in connection with its Telematics services and various other applications. The company primarily provides its services and sells and leases its products in Israel, Brazil, Argentina, Mexico, Ecuador, Colombia, the United States, Canada, and other regions through its distributers. The company utilizes technologies that enable precise and secure high-speed data transmission and analysis.

The company generates its revenues from subscription fees paid for its telematics services and from the sale and lease of its telematics products.

The company operates in two segments, Telematics Services and Telematics Products.

Services and Products

Telematics Services

Following RTH Transaction (in September 2018, the company closed the acquisition of 81.3% of the shares of Road Track Holding S.L (following transaction name was changed to Ituran Spain Holdings S.L), a telematics company operating primarily in the Latin American region (RTH Transaction)), the company has direct agreements with 2 major car manufacturers and its products developed by RTH subsidiary are embedded in the cars or otherwise approved by the car manufacturer. This connection requires the company to stand up for the highest car manufacturer automotive standards.

Stolen Vehicle Recovery Services: The company’s stolen vehicle recovery and tracking services, which it refers to as SVR services, enable it to locate, track and recover stolen vehicles for its subscribers. The company’s customers include individual vehicle owners who subscribe to its services directly, car manufacturers and insurance companies that either require their customers to install a security system or offer their customers financial incentives to subscribe to SVR services, such as its. In certain countries, insurance companies directly subscribe to the company’s SVR services on behalf of their customers.

The company’s stolen vehicle recovery system is based on three main components: a telematics end-unit that is installed in the vehicle, a network of base stations and a 24-hour manned control center. Once the control center receives indication of an unauthorized entry into a vehicle equipped with the company’s telematics end-unit, its operators decide whether it is a false alarm or an actual unauthorized entry. If it is determined to be an unauthorized entry, or if a notification of the vehicle’s theft is received directly from the vehicle operator, the company’s operators transmit a signal that activates the transmitter installed in the vehicle. The company then pinpoints the location of the transmitter with terrestrial network triangulation technology or GPRS technology and notify the relevant law enforcement agency. In Israel, Brazil, Mexico, Colombia, Ecuador, and Argentina, the company also maintains private enforcement units, which work together with local police to recover the vehicle. In addition, the company has the capability to immobilize vehicles remotely from its control centers.

Fleet Management Services: The company’s fleet management services enable corporate and individual customers to track and manage their vehicles in real time. The company’s services improve appointment scheduling, route management and fleet usage tracking, thereby increasing efficiency and reducing operating costs for its customers. The company markets and sells its services to a broad range of vehicle fleet operators and individual vehicle owners in different geographic locations and industries. As of December 31, 2022, the company provided its services to approximately 504,000 end-users through corporate customers in countries where it operates directly and through 24,000 distributers.

The company offers its customers the ability to use a comprehensive application for fleet management both by using an Internet site and workstations. The company’s system allows its customers 24-hour access to information on their fleets through its active control center and it is able to tailor its system to its customers’ specific needs. The company’s solutions allow its subscribers to manage and control their fleet, and thereby to optimize work hours and appointment scheduling and improve their services and operations.

Value-Added Services

The locator services that the company offers allow customers to protect valuable merchandise and equipment. The company provides locator services in Israel, Brazil, Mexico, Colombia, Ecuador, and Argentina. In addition, through a call center, the company provides 24-hour on-demand navigation guidance, information and assistance to its customers. Such services include the provision of traffic reports, help with directions and information on the location gas stations, car repair shops, post offices, hospitals, and other facilities. The company offers its concierge services to its subscribers in Israel, Argentina, Ecuador, Colombia, and Brazil.

Connected Car - The service platform includes a back office application, a telematics device installed in the vehicle, mobile apps for both IOS and Android and an interface using the car infotainment screen. Such services include information on car service history, information on some car systems, remote communication with the car in order to detect malfunctions, and to provide pre-emptive car maintenance alerts for both mechanical failures and operational issues, such as a low tire pressure alert. The system also enables booking service appointments, both from the infotainment system interface in the system and from the user's mobile app and additional related operational, and marketing services, as well as information analysis. Connected Car is operating in Israel, Brazil, Colombia, Mexico, Argentina, and Ecuador.

Usage Based Insurance (UBI) – The company has developed a unique product (hardware and software) that measures and analyses the driving behaviour in a verity of aspects by the driver, which enables insurance companies to offer a tailor -made and personalized insurance policy. The UBI has already been implemented and marketed by the majority of the insurance companies in Israel.

Auto Financing - A second-hand car market in many of the company’s geographies in Latin America, and new fintech start-ups, as well as the banks enter this segment to provide the financing in this market. However, they need a provider of location-based and connected-car technology, such as Ituran, to monitor the car location and driver’s behaviour and thereby to decrease the risk of the loan pledged against the car.

Telematics Products

The company’s telematics products employ short - and medium-range communication between two-way wireless modems and are used for various applications, including automatic vehicle location, which it refers to as telematics products.

The company’s telematics products enable the location and tracking of vehicles, as well as assets, and are used by it primarily to provide SVR and fleet management services to its customers. Each subscriber to the company’s services has its telematics end-unit installed in his or her vehicle. Subscribers to services for locating equipment and merchandise will use the company’s SMART and GPS/GPRS products.

The company’s key telematics products for telematics applications include Base Site: a radio receiver, which includes a processor and a data computation unit to collect and send data to and from transponders and send that data to control centers as part of the terrestrial infrastructure of the location system; Control Center: a center consisting of software used to collect data from various base sites, conduct location calculations and transmit location data to various customers and law enforcement agencies; GPS/GPRS-based products: navigation and tracking devices installed in vehicles; and SMART: a portable transmitter installed in vehicles (including motorcycles) that sends a signal to the base site, enabling the location of vehicles, equipment or an individual.

Customers, Marketing and Sales

The company markets and sells its products and services to a broad range of customers that vary in size, geographic location, and industry.

Telematics Services

Stolen Vehicle Recovery

The company’s customers in the SVR market include insurance companies, car manufactures, and individual vehicle owners.

The company’s marketing and sales efforts are principally focused on five target groups: insurance companies and agents, car manufacturers, dealers and importers, cooperative sales channels (mostly vehicle fleet operators and owners), and private subscribers.

The company maintains marketing and sales departments in each geographical market in which it operates. Each department is responsible for maintaining the company’s relationships with its principal target groups. These responsibilities also include advertising and branding, sales promotions, and sweepstakes.

In Israel, the company focuses its marketing efforts on insurance companies and agents, dealers and importers, cooperative sales channels (mostly vehicle fleet operators and owners) and private subscribers. In Brazil and Argentina, the company’s marketing and sales efforts are principally focused in all five target groups. Most of the company’s sales in the United States are made through car dealerships and dealers for new or used cars and cooperative sales channels. In Mexico, Colombia, and Ecuador the company focuses its marketing efforts on dealers and importers, cooperative sales channels (mostly vehicle fleet operators and owners), private subscribers, and car manufactures.

Fleet Management

Vehicle fleet management systems are primarily marketed through vehicle fleets’ departments, which form a part of the company’s regional marketing departments. The company participates in professional conventions and advertise in professional publications and journals designed for its target customers. The company’s customers in the fleet management market include small-, mid- and large-size enterprises and individuals. As of December 31, 2022, the company provided its services to approximately end users through 504,000 corporate customers and individuals in Israel, Brazil, Argentina, the United States, Mexico, Colombia, Ecuador, and through distributers in other regions.

Value-Added Services

Concierge Services - The company’s concierge services are provided to existing SVR customers. A few thousands SMART devices were installed in valuable merchandise and equipment.

Connected Car - The service platform includes a back-office application, a telematics device installed in the vehicle, mobile apps for both IOS and Android and an interface using the car infotainment screen. Such services include information on car service history, information on some car systems, remote communication with the car in order to detect malfunctions, and to provide pre-emptive car maintenance alerts for both mechanical failures and operational issues, such as a low tire pressure alert. The system also enables booking service appointments, both from the infotainment system interface in the system and from the user's mobile app, and additional related operational, and marketing services, as well as information analysis. Connected Car is operating in Israel, Brazil, Colombia, Mexico, Argentina, and Ecuador.

Usage Based Insurance (UBI) – The company has developed a unique product (hardware and software) that measures and analyses the driving behavior in a verity of aspects by the driver, which enables insurance companies to offer a tailor -made and personalized insurance policy. The UBI has already been implemented and marketed by the majority of the insurance companies in Israel, and the company intends to accelerate its marketing and work with additional insurance companies in year 2022.

Telematics Products

The company’s telematics end-units are primarily used by it in providing its telematics services, including SVR, fleet management, Connected Car, and value-added services, at the regions it operates.

Proprietary Rights

Ituran and Mr. Big and the related logos are the company’s trademarks, the former is registered in Israel, Hong Kong and as a European Union and the latter is registered in Israel. Mapa trademark and its related logos where sold as part of the sale of Mapa to an unrelated party to the company.

Research and Development

For the year ended December 31, 2022, the company’s research and development expenses were $16.8 million.

Competition

Telematics Services

Stolen Vehicle Recovery

Israel: The company’s primary competitors in Israel are Pointer and Skylock Ltd.

Brazil: The company’s main competitors in Brazil are Sascar, Zatix, CEABS, Car Systems, Sat-Company, and 3S.

Argentina: The company’s main competitors in Argentina are LoJack Corporation, Pointer Argentina S.A., Prosegur S.A., and Megatrans S.A.

The United States: In the United States, there are several major companies offering various theft protection and recovery products that compete with the company’s product and service offerings, including LoJack Corporation, OnStar Corporation, Advantage GPS/Procon Analytics, Sarekon GPS, Calamp, Spireon (which also includes SysLocate and GoldStar), PassTime, Guide Point, Icon, and I-Metrik SVR.

Colombia: The company’s main competitors are LoJack Corporation (under Detekor Brand), Prosegur (Prosegur S.A.), and SATRACK (Local Company).

Mexico: The direct competitors are LoJack Corporation, Encontrack S.A., and Pointer Recuperación S.A.

Ecuador: The company’s main competitors are Hunter (Lojack Corporation), Tracklink, and Carsync.

Fleet Management

The company’s major competitors are Israel: Pointer, ISR, Traffilog, and Skylock Ltd. (Skylock); The United States: GPS Insight, Trimble, Network Fleet, Street Eagle, FleetMatics, Navtrack, Teletrac, Trim Track, FleetBoss, PassTime, Verizon, AT&T, Geotab, Fleet-Complete,Sprint, Zubie, and Spireon; Brazil: Sascar, Zatix, CEABS, 3S, and GolSat; Argentina: LoJack Corporation, Megatrans SA., Sitrac S.A., American Tracer, Ubicar S.A., Sky Cop., and Prosegur S.A; Mexico: LoJack Corporation, Encotrack, Easytrack, Geotab, and Tracker; Ecuador: Hunter (LoJack Corporation), Tracklink, Carsync, and Sherlock; and Colombia: Satrack, Detector, and Prosegur.

Regulation

The company is subject to the provisions of the Israeli Companies Law, 5759-1999. The telecommunication services and frequency license and general commerce licenses the company requires are granted by the applicable national agency regulating communications in the markets in which it operates, specifically, the Ministry of Communication, in Israel; Anatel. Agencia Nacional de Telecomunicatoes in Brazil; Modernization Ministry in Argentina; and the Federal Communications Commission in the United States.

The product specific licenses that the company requires are granted in Israel by the Ministry of Communication; in Brazil by IBRACE (the Instituto Brasileiro de Certificatao de Productos para Telecominicatoes); in Argentina by the Autoridad Federal de Tecnologias de la Información y las Comunicaciones; in the United States by the Federal Communications Commission; and Ministry of Information Technology and Communications and Regulatory Communications Commission in Colombia.

In Brazil the required permits for the building of the company’s base sites include a permit from Anatel (National Agency for Telecommunication); a permit from IBAMA (Environment national agency) and/or state EPAs; municipal permits; a permit from the fire department; and a permit from COMAR (Aviation authorities). Anatel permits are required only for sites where the company has transmission equipment and it has obtained all the permits required with this agency.

The company is declared a monopoly under the Israeli Antitrust Law, 1988, in the provision of systems for the location of vehicles in Israel.

History

Ituran Location and Control Ltd. was founded in 1994. The company was incorporated under the laws of the state of Israel in 1994.