China's 'local', Europe's slow, and US users unhappy — Challenges for the future of fleet telematics, part II

Fleet of trucks Fleet of trucks

BLOG — In the second of a two-part article Jan Stojaspal reports* on the growth of the fleet telematics market in Asia, Europe and the US.

In Asia, China is shaping up as a vast new market for commercial vehicle telematics. Setting up shop in the country can take time, but the rewards can be worth it. It took Navman Wireless, a Glenview, Illinois-based provider of online fleet management services, nine months just to establish a fully owned subsidiary in China and almost two years to get any traction in the market. But a single contract with one of China’s largest logistics fleets has brought Navman around 5,000 vehicles. (For more on China, see Emerging telematics opportunities in China and Telematics in China: ‘Reverse innovating’ for success.)

On the OEM side, Daimler launched FleetBoard, its proprietary fleet management system, and as of this spring includes it on every Mercedes-Benz Actros tractor truck sold in China. The hardware comes as a standard feature, and the service, which includes a full range of vehicle and driver behaviour diagnostics, is free for the first four months. It then costs around US$60 a month.

According to Robert Veit, executive vice president of Daimler Trucks China, launching FleetBoard was a strategic decision: “The question for us was, ‘What will drive somebody to buy an imported product in the future?’ … ‘How can we prove that we are really better?’ The answer was FleetBoard.”

Last year, Daimler sold 5,800 Mercedes-Benz trucks in China, of which around 700 were Actros tractor trucks. That’s not a bad number in this highly price-sensitive market. But local truck manufacturers outsell foreign importers of trucks 99 to one.

For this reason, foreign providers of fleet management solutions have been making entreaties to local producers, but no one has yet managed to close a deal. “Anybody who has spent a little bit of time researching that market is going to know it’s a big market, it’s a fast growing market, it’s a local market,” says Werner Du Plessis, business development manager, international, with MiX Telematics. (For more on fleets, see Fleet telematics: Where the growth is, part I and Fleet telematics: Where the growth is, part II.)

The government’s role

Price is a key factor in China’s buying decisions. But it is equally important that the government continues to have a decisive say in the adoption of commercial vehicle telematics, says Michael Liu, senior market analyst with the automotive and transport group of IMS Research. “Commercial fleet management will [follow] government policies,” he says. “If there is a policy saying that something must happen or must not happen, it is very very important for this market.”

The Chinese government already requires most taxi and public bus fleets in a number of large cities to be tracked; also tracked are trucks transporting explosives and dangerous materials. And the number of tracked vehicles is expected to continue to grow as the government uses fleet telematics to manage traffic congestion and air quality in its overpopulated cities and to keep the fast-growing economy stocked and moving.

Motorcycle delivery fleets are another huge market waiting to be tapped, not only in China but across Asia. (For more on Asian markets, see Telematics in Southeast Asia, part I, Telematics in Southeast Asia, part II and Telematics in India.)

eCall and Europe

In Europe, eCall — a European Union-wide initiative to reduce response time of rescue services by as much as 60% — is still in development. From 2015, all new passenger cars and light commercial vehicles sold in the EU will need to be fitted with an in-band modem capable of automatically dialing the nearest emergency center. (For more on eCall, see The impact of eCall on fleet telematics.)

Although the project appears to be on track, voluntary deployment of the technology has been disappointingly low, with only 0.4% of cars and light commercial vehicles equipped thus far, according to the European Parliament.

The fleet specialist Masternaut expected the recession in Europe to hit the business badly, but it has not been the case, as the need to cut costs keeps bringing in new customers. “It’s all about how they can save costs in their business,” says Wayne Gilbert, an advisor to the Masternaut board, “and this can cover the obvious original reasons for using telematics, like efficiency of service. But increasingly, it’s about maintaining the lowest possible costs in the way that the vehicles are operated.”

Masternaut sees growth potential in expanding the range of applications, particularly in the areas of driver behaviour and green issues, to be able to provide a “bigger picture view” and tailor its solutions to the user’s individual needs. “Once you’ve got the black box in there, the range of services you can provide need to be progressive,” Gilbert says. “It’s no longer a one-size-fits-all market.”

The US market

In the United States, two regulatory measures are of particular interest to the commercial vehicle telematics industry.

One is the Federal Motor Carrier Safety Administration’s Compliance, Safety, Accountability (CSA) programme, introduced in 2010 to improve truck and bus safety. Under the programme, drivers and carriers are assigned safety scores based on seven distinct criteria, including driver fitness, unsafe driving and vehicle maintenance.

The other measure is a new highway-funding bill passed by Congress this summer. A provision in the bill requires anyone who keeps a record of duty status to have an electronic onboard recorder to track driver hours of service within two years of implementation of the provision. At the moment, the Federal Motor Carrier Safety Administration estimates this will impact about 3.1 million trucks and 3.4 million drivers, according to Kabirdas Sathyanarayana, industry analyst telematics and ITS, automotive and transportation, with Frost & Sullivan.

Still, Mark Licht, president of Licht & Associates, is not convinced the CSA has had a major impact on the adoption of commercial vehicle telematics in the country. At least the numbers, particularly those for big trucking companies, do not bear it out, he says: “I am not sure if somebody [who] was not ready to buy into a commercial telematics solution beforehand will make that decision because these CSA guidelines exist.”

Regulatory impact?

The same is true, he argues, for other parts of the world, where major regulatory action is expected. “We talk about all this regulatory stuff in different markets,” he says. “Maybe it will have an impact. But Brazil hasn’t had any impact yet. Russia still hasn’t had an impact. eCall is still far away, and even when it happens, it’s still not going to impact the trucking space. It may impact only a portion of the local fleet space, and even there I am not sure it will have an impact. I think we overstate the regulatory.”

According to Licht, falling price points for commercial telematics are much more important in the evolution of fleet management systems. There were between 15 and 20 companies in the business in the US 10 years ago, of which only four or five were really serious, he says. Today there are hundreds, and their number continues to grow.

But quantity doesn’t always mean quality. Frost & Sullivan’s Sathyanarayana says that a customer satisfaction survey his company has been working on shows most buyers of fleet management solutions to be deeply unhappy with after-sales support: “For any fleet management system vendor to be successful going forward, he has to have a very good after-sales support. That will not only gain them new customers but will also help them retain existing customers.”

This article first appeared on Jan Stojaspal is a regular contributor to Telematics Update.

Read The future of fleet telematics, part I.

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