Indian telematics: Fledgling optimism and stiff challenges, part III

Jan

Jan Stojaspal

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2nd April 2014

The fly-by-night syndrome

An emphasis on low price has had another withering effect on the market besides simply restraining the development of telematics solutions. It gave rise to many “fly-by-night” companies founded by entrepreneurs eager to make a fast buck. They imported the cheapest possible products, often from China, that did not work well and often simply broke down. “Customers were happy with the deal if the price was right,” says Pranshu Gupta, CEO of Trak N Tell. “But they got no value out of it.”

This had the corollary effect of making legitimate solutions uncompetitive. “We don’t have economies of scale as the Chinese do,” Puri says. It also left consumers wary of all telematics offerings. Says Ashok Yerneni, CEO and founder of AssetTrackr: “A lot of the solutions out there were hardware from China with Windows slapped on. Customers experienced failure rates of 30 to 40%. So we faced a lot of skepticism when we launched our solution.”

According to Gupta, this resistance is still an important factor and has been aggravated by the economic turndown. “This is a cost/benefit issue,” he says. “We have been talking to some people for two years [about our solutions]. They are still not ready to move. It definitely depends on an increase in car sales.”

This fly-by-night culture also infected the most developed segment of the Indian telematics market: commercial vehicles.  “There was always a clear market for [asset] tracking,” says Vikram Puri, CEO of Transworld Technologies. ”But there were a lot of fly-by-night operators who sold bad material and solutions. A dot on the map representing the truck was called fleet management. Fleet owners made big investments, and they are now dead.”

To counter the lingering effects of these experiences, everyone agrees, it is important for players in the market to show that they are committed for the long term. This means showing business endurance. “Once people realize that telematics providers are in for the long haul, they will regain confidence in the solutions,” Gupta says. ”In another year or two, the change will happen. Customers will be picking partners who are there for the long haul. What’s required is a change from the buyer’s side and from the seller’s side.”

Commercial vehicles on the cheap

The emphasis on price has also had a deep influence on commercial vehicles and fleets.

When Transworld began offering its solutions to Indian fleets, “the first thing we had to do is tell the customer to get seats and seatbelts in the truck cabin,” Puri says. “Because 60 out of 100 trucks in India don’t have proper seats.”

According to him, most trucks manufactured in India come out of the factory in “cowl” form, consisting basically of a chassis and engine. They then go to the so-called body builder, who adds the body, which is often made of wood, and seats. To save money, the seats are often slipshod, and seatbelts are simply not included. But that’s not all. “Only 0.1% of Indian trucks are air-conditioned,” Puri says. “And we can have temperatures up to 50 degrees centigrade here.”

This means that telematics solution providers in India must present strong arguments to convince fleet owners to invest in their products. Puri emphasizes that solutions offered must provide clear value to all members of the value chain – from the end user to the fleet owner and even the tire manufacturer. “Tires are sold in installments in India,” he says. “Solutions are far too often driven by savings, not safety.”

As part of its fleet management system, Transworld offers a driver-behavior monitoring and risk-rating system based on technology the company developed on its own. “In India, 98% of vehicles do not have OBD2 on board, so we needed to develop our own sensor network,” Puri says.

The system includes engine, RPM, accelerator and braking sensors and needs to be carefully fitted to existing wiring so as not to jeopardize the vehicle’s warranty. “We couple the information from the sensors with a risk-rating system based on our own benchmark,” he says, adding that the system is being used by companies such as British Petroleum and Castrol.

As with other executives who have successful telematics offerings on the Indian market, Puri emphasizes that Transworld’s solution is “completely Indian.” “A very expensive European system was launched here, but it did not work very well,” he says. “It’s very difficult to import European solutions to India. The Indian market is very unique.”

At the moment – and until further notice – aftermarket solutions are the sensible strategy here, primarily because of the structure of the country’s fleets. About three-quarters of the Indian commercial fleet market consist of what Gupta calls “informal collaborations of small fleet companies of between five and 20 trucks pretending to be a larger fleet.”

The reason, he says, is, again, cost. “The cost of owning a large fleet is just too high,” he explains. “And the owners of the smaller fleets don’t want to spend too much money on their trucks.”

That structure has another consequence for the market, according to Puri. “Since a fleet owner does not buy his trucks from a single OEM and since so many large fleets are made up of small fleets, it makes it difficult for a truck OEM to sell embedded telematics solutions,” he says. “And Volvo, Tata and Leyland don’t share data. This makes fleet management very difficult.”

In-car telematics

Because of the uniqueness of the Indian telematics market, Transworld’s fleet-focused, risk-rating system may soon also be used in private vehicles. The company is currently in discussions with VW, Toyota and Suzuki.

Puri says that the solution will provide telematics data related to driver behavior and engine health to the OEM, for the purpose of protecting OEM warranties. “In India, almost all cars have manual transmissions,” he says. “And most Indian drivers learned to shift gears by listening to the engine because most cars were not equipped with tachometers. So, when car engines were made quieter, Indian drivers often over-revved, straining the engine.”

He goes on to say that Indian drivers have such a reputation for car abuse that when someone buys a Mercedes E- or S-Class, the buyer’s chauffeur is obliged to undergo training at the Mercedes dealership on how to drive the car. “It makes sense for the OEMs to know how the car is being used,” Puri says.

Very little else appears to be shaking the Indian telematics market currently, but Sirish Batchu, head of infotronics technology at Mahindra & Mahindra, says his company is planning to introduce a number of new telematics features in 2015. “We are looking into various approaches using the smartphone,” he says. “We will be launching new vehicles and new platforms.”

Batchu says that there is reason to be bullish about the future of telematics in India. “There is now more commitment from [telematics] providers,” he explains. “I am optimistic about connected platforms in cars. More and more customers are now demanding it.”

But, in view of the Indian consumer’s obsession with price, the problem remains how to provide a meaningful cost/benefit proposition. Or, as Batchu puts it, “How do we bring in more value that customers will appreciate?”

In-car telematics has such a long way to go in India that the two words – car and telematics – still are not used in the same breath. “If you use the word telematics here, it is immediately associated with commercial vehicles,” Batchu says. “The customer will think that it is just track-and-trace. So please don’t say car telematics. Call it connected vehicle features.”

(For the first two parts of the series, see Indian telematics: Fledgling optimism and stiff challenges, part I and Indian Telematics: Fledgling optimism and stiff challenges, part II.)

Siegfried Mortkowitz is a regular contributor to Telematics Update.

For all the latest telematics trends, check out Content and Apps for Automotive Europe 2014 on April 8-9 in Munich, Germany, Insurance Telematics Europe 2014 on May 6-7 in London, Telematics India and South Asia 2014 on May 28-29 in Bangalore, India, Insurance Telematics Canada 2014 on May 28-29 in Toronto, Telematics Detroit 2014 on June 4-5 in Novi, Michigan, Advanced Automotive Safety USA 2014 on July 8-9 in Novi, Michigan, Insurance Telematics USA 2014 on Sept. 3-4 in Chicago, and Telematics Munich 2014 on Nov. 10-11 in Munich, Germany.

For exclusive telematics business analysis and insight, check out TU’s reports: Insurance Telematics Report 2014, Connected Fleet Report 2014, The Automotive HMI Report 2013 and Telematics Connectivity Strategies Report 2013.