More Automakers Join Trend of Factory-Installed Toll-Payment System

A growing list of new cars will no longer have to stop at toll booths or carry state-linked transponders that pay their way, as a factory-installed variety that is part of a suite of connectivity features is seeing additional uptake from the industry.

During its recent third-quarter earnings call, Gentex told analysts and investors that Mercedes-Benz had become the second OEM customer to offer its Integrated Toll Module (ITM), in the wake of a similar announcement from Audi.

The ITM is seamlessly integrated into the vehicle, works on 98% of toll roads in the U.S. and is compatible with 15 tolling brands, which eliminates the need for multiple toll tags and accounts by embedding the payment process directly into the vehicle itself.

“Tolling in North America continues to evolve, and we see the ITM technology as a great way for an OEM to take a step into the transactional vehicle of the future while helping to keep the aesthetics of the vehicle intact,” said Neil Boehm, chief technology officer and vice president of engineering at Gentex, a greater-Boston based supplier of digital vision, connected car, dimmable glass and fire protection technologies.

Mercedes-Benz will offer ITM as an optional feature for all three trim packages on its new electric sedan, the EQS.

Global Supply Concerns

At the same time, Gentex also reported during the call that global vehicle production decreased and supply chain-related costs increased during the quarter due to the ongoing industry-wide part shortages and global supply chain constraints.

Global vehicle production in the company’s primary regions of Europe, North America, Japan, Korea and China decreased 23% compared to the third quarter of 2020.

As a result, the company’s shipments of auto-dimming mirror units decreased 7% compared to the same quarter last year.

Gentex President and CEO Steve Downing said that while the part shortages and supply chain constraints have been a problem throughout the first half of 2021, the effects of the electronic component shortages worsened during the third quarter.

“Despite these challenges, our team has done a remarkable job of securing components as well as providing unique solutions for our customers that included complete re-designs of circuits in order to avoid constrained components which helped minimize the impact to OEM production schedules,” Downing said.

Increases in Freight Costs and Certain Component Costs

At the same time, the company reported there were lower-than-expected price reductions on raw materials, increases in freight and other supply chain-related costs, and increases in certain component costs.

“While the gross margin for the third quarter of 2021 was below our original forecasts, we were pleased with the overall performance of the company given the significant reduction in sales versus our forecast coming into the quarter,” Downing said.

“Since the beginning of the pandemic, we have worked hard as an organization to reduce overhead costs which helped stabilize our profitability in the third quarter despite this unpredictably large change in revenue.”