New markets for fleet telematics, part II

New markets for fleet telematics, part II

Cost savings, driver safety and passenger convenience are shaping up as the main driving forces behind adoption of fleet telematics across a wide range of previously neglected market segments—urban buses, motor coaches, taxis, emergency vehicles, rental fleets and light commercial vehicles.

Emergency vehicles

Police, ambulance and fire department fleets are another area where telematics seem like a natural fit, but unlike with taxi fleets, penetration levels are surprisingly low—30 to 40 percent in the United States. According to Clem Driscoll, author of U.S. Mobile Resource Management Systems Market Study 2012-2013 Edition,most large police departments in the United States already track their fleets, but smaller outfits are far less likely to.

This is in part because patrol officers resist the idea of being monitored. “They want to go to the doughnut shop and take a break when they feel like it,” Driscoll says. “They don’t want to be tracked.” Budgets and spending priorities are also a factor. The attitude is fleet tracking “is nice to have, but we need new police cars,” Driscoll explains.

For ambulances, fragmentation of fleets among a number of different stakeholders—hospitals, insurance companies and private care, to name just a few—slows down adoption. In Europe, telematics penetration for emergency fleets varies widely from country to country.

In the United Kingdom, France and Belgium, MiX Telematics is often tasked with tracking emergency vehicles for the purpose of accident analysis. “When there is an accident with a police car, they need to prove their speed, that their lights were on, their sirens were on,” says Jaap Groot, European sales director for MiX Telematics. As a result, the penetration of GPS tracking is “pretty” high in these countries. But more advanced services like real-time dispatching are far less common.

Rental fleets

Rentals to private consumers in the United States are one area where fleet telematics are not only rare but also unwelcome, as many customers don’t want to be tracked while renting a car, Driscoll says. The opposition stems in part from past instances of rental companies using telematics to charge large fines for policy violations, such as leaving the state without authorization or speeding.

A further impediment to higher penetration rates is the fact that installing and servicing tracking hardware would only add to the already long checklist of things for car rental companies to do to keep their fleets well utilized. “What you typically get is a few hundred cars will come in all at once, and they need to get those out on the road within hours,” Driscoll says. “So there is reluctance to installing. It’s just one more thing to contribute to delays.”

Light Commercial Vehicles

For fleet telematics in the light commercial vehicle segment, fuel efficiency improvements are the biggest selling point. “The latest developments are related to ways to rein in fuel costs,” says Rémi Demerlé, global partnerships director at Telenor Connexion. “The higher the fuel price, the more telematics becomes something important.”

Daimler has, for example, found that those fuel efficiency improvements in light commercial fleets can add up to as much as 30 percent with the right kind of driver coaching and driver behavior monitoring. On heavy-duty trucks fuels savings are much lower, ranging between 10 and 15 percent, though they add up to more money saved due to the trucks’ higher average fuel needs.

According to Christoph Ludewig, marketing and communications manager for FleetBoard, Daimler’s fleet management solution, speeding on highways is the main reason for high fuel consumption of vans. “If you reduce the speed to 120 km/h [from 150, 160 km/h], you already have fuel savings of 2-3 liters per hundred kilometers,” he says. “You also have other [positive] side effects. You don’t have to brake so hard; you can better anticipate things ahead; you don’t have to accelerate so strongly; you can cruise at nearly constant speeds. All these factors influence fuel consumption.“ 

But the van market is not such an easy sell. For one thing, the segment is very price sensitive. “For a truck worth €100,000, a €1,000 telematics unit doesn’t make that much difference, whereas for a van worth €30,000, a €1,000 unit makes a [big] difference,” Ludewig says. It is also a market crowded with telematics solutions, both high- and low-end. 

According to Dominique Bonte, vice president and practice director of ABI Research's telematics, navigation and M2M practice, producers of high-end solutions are lured to light commercial vehicles  by the size of the market, which is much larger than for heavy-duty trucks. Quite often, all they need is some trimming and tucking on their existing systems to meet the segment’s lower price points. But it is also becoming a necessity, as markets for truck solutions are approaching saturation levels and companies need to tap new markets to sustain growth.

ABI Research expects more than 60 percent on long-haul trucks in the United States will have telematics by 2016.

PNDs, tablet and smartphone solutions

On the other side of the spectrum, there is a strong push from all manner of PNDs, tablet and smartphone solutions to increase market share on simplicity of solutions and price. One of the leaders in this segment is TomTom Business Solutions, which has had a great deal of success with its online fleet management system called WEBFLEET.

In May, the number of subscribed vehicles passed the 200,000 milestone, and TomTom is now well on its way to reaching 250,000 subscriptions. “The lesson is definitely of more affordable, more open, more flexible, more scalable [solutions] if you want to achieve higher penetration levels,” Bonte says.

Still Daimler is not about to start pandering to the light commercial vehicle market, and its sales pitch reflects it. 

“It all comes down to three or four points,” Ludewig says. “One is we offer it ex-factory, there is no need for retro fitment, although we offer it, too. It’s integrated into the van when the van is ordered. The solution is automotive-certified, and the customer can be sure that it really fits this van and doesn’t do any damage to it. Another is that we know our vehicles, and so if the customer is interested in optimizing his fleet efficiency on fuel, service and maintenance planning,  he should rely on a system that comes from an OEM. Also being a subsidiary of Daimler, the customer can be sure we will still exist in a couple of years, which is not always the case with some third party vendors.” 

Predictive tools

According to Ludewig, Daimler will need a couple of years just to mine sales potential in the bus/coach and light commercial vehicle market segments.

But there is no stopping the heavy-duty truck telematics industry from plunging ahead with the next generation of systems that will improve fuel economy even further by minimizing driver error.

“What the auto industry has learned is that we need to make systems that take into account the driver’s action in a better way and that make it harder and harder to be a bad driver, [that] reduce the driver’s possibility to ruin the fuel economy,” says Fredrik Callenryd, senior business analyst at Scania Fleet management.

In Scania’s case, this means a growing reliance on predictive tools that better utilize things like truck momentum for clearing slopes or opportunities to engage automatic cruise control.

This is also what Volvo Trucks is after with its new I-See transmission technology capable of reading hill profiles with GPS and sensors inside the gearbox and sharing the information with other vehicles in the fleet. The next time a truck uses the same route, I-See already knows how to adjust acceleration, gears and braking to clear the hill with maximum efficiency.

Read New markets for fleet telematics, part I.

Jan Stojaspal is a regular contributor to TU.

For more on fleets, see Industry insight: Fleet telematics.

For the latest on fleets, visit Telematics for Fleet Management Europe 2013 on March 19-20 in Amsterdam.

For all the latest telematics trends, check out V2X for Auto Safety and Mobility Europe 2013 on February 20-21 in Frankfurt, Telematics India and South Asia 2013 on April 17-18 in Bangalore, India, Telematics Detroit 2013 on June 5-6, Content & Apps for Automotive Europe 2013 on June 18-19 in Munich and Telematics Russia 2013 in September in Moscow.

For exclusive telematics business analysis and insight, check out TU’s reports: In-Vehicle Smartphone Integration Report, Human Machine Interface Technologies and Smart Vehicle Technology: The Future of Insurance Telematics.

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