The telematics unit (TMU) in the vehicle uses a wireless cellular network to communicate vehicle information. If a vehicle moves out of coverage range, it can't update the system about the location. The device stores the location information and communicates it later when cellular coverage returns. The data is never lost.
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Alternatively, there could be interference to the GPS signal used to pinpoint the location. For example, the signal weakens when the vehicle is in a tunnel or within a mountain range. Heavy equipment or shielded roadworks may block a reliable GPS signal, too. As soon as the signal returns, the system will update the location.