Commercial vehicle telematics is forecast to be incorporated in 1.3 million new vehicles per annum, with the total market expected to have crossed the €1 billion mark in 2005 but a survey of commercial vehicle managers has shown low awareness of what the technology can do.
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By 2009, the installed base of telematics-enabled vehicles is set to touch 5.4 million commercial vehicles with a revenue potential of €4.7 billion. Two-thirds of these revenues are projected to derive from telematics services with systems accounting for the remaining amount.
Frost & Sullivan’s recently conducted pan-European study of nearly 240 fleet and transport managers from across a range of industries (building and construction, food and beverage, transport and logistics, waste and handling and petrochemicals) revealed that about 70% of respondents in Europe were aware of the term ‘telematics’ with awareness levels the highest in Italy and Germany.
Managers of larger fleets were more aware of telematics and were twice as likely to have some telematics equipment installed on-board the vehicles. Moreover, almost three-quarters of the respondents with international fleet operations were aware of telematics.
The current mood of optimism about the telematics industry’s growth prospects may be dampened by the fact that many fleet managers questioned during the survey exhibited limited familiarity with the full potential of telematics. “Companies with telematics perceived the main benefits to be routing, security features and productivity increase,” said Franck Leveque, transportation programme manager at Frost & Sullivan.
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By GlobalData“However, they did not seem to be aware of potential gains in other areas such as business development, delivery information and insurance. More than half the respondents were uninformed about telematics’ ability to improve customer relationship management (CRM) and substantially reduce the insurance premium,” he added.
Commercial vehicle fleet managers identified safety and security aspects as the most desirable among telematics features. The vehicle/logistics/transport management and navigation features category closely followed as the second most desirable feature for fleet managers. This was in keeping with the high significance they accorded to assets that improved fleet productivity. In this category, vehicle and driver performance monitoring features were found to have considerable appeal, as they provided new management tools for business managers.
The average value association for the “perfect system” was pegged at €2,095, according to the study. Respondents already aware of telematics provided a higher average, implying that awareness promotion schemes were likely to yield revenue gains for market participants.
Not surprisingly, customers bestowed the highest euro value association on vehicle/transport/logistics management systems – features they perceived as directly affecting the company’s productivity and cost management. While most customers did attach value to safety and security features provided by telematics, it remained uncertain whether they would be willing to pay a premium for what most of them considered to be a ‘standard’ offering. Infotainment systems were viewed as a ‘nice to have’, but of limited value.
Providing an insight into purchasing patterns, over a third of the respondents surveyed indicated their preference for a one-off charge system. “A telematics package with a one-off payment plan is advantageous to the fleet company as it can be accounted for as a fixed cost,” said Leveque. “It does not impact the tight margins and volatile variable costs of fleets.” For larger fleets, subscription emerged as the most feasible payment method. Its popularity stemmed from the fact that it offered greater flexibility and low initial investment.
In a boost to specialist suppliers, respondents overwhelmingly favoured using them as their telematics suppliers. Fleet managers asserted that specialist suppliers were regarded as capable of offering more extensive services than that provided by vehicle manufacturers.
Basic navigation systems were given top ratings by respondents, with traffic information in particular being regarded as a value enhancer. However, a continuing lack of product knowledge appeared to be hampering the customers’ ability to assess the benefits provided by advanced navigation systems.
“The key for the success of telematics in the commercial vehicle environment would be to position the sale from a consultative approach by understanding the business of a fleet, and delivering a customised solution to enhance support required for meeting those business requirements,” said Leveque. “The challenge would be to leverage a mutually beneficial partnership with businesses and not to view them as passive participants in the exchange process.”
