Frost & Sullivan's End-User Study On Customer Attitudes And Perceptions Towards Telematics In Commercial Vehicles
Customers Reveal Low Awareness Of Full Potential For Telematics In Commercial Vehicles 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 billion Euro mark in 2005. By 2009, the installed base of telematics-enabled vehicles is set to touch 5.4 million commercial vehicles with a revenue potential of EUR 4.7 billion. Two-thirds of these revenues are projected to derive from telematics services with systems accounting for the remaining amount. With the market poised for take-off, 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) offers a 360-degree view of evolving customer attitudes and perceptions towards telematics systems and services in commercial vehicles. The research revealed that about 70 per cent 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," notes Franck Leveque, Transportation Programme Manager at Frost & Sullivan. "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 adds. 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 EUR 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 partaking in the Frost & Sullivan's survey 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," explains Mr 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 specialist providers 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," comments Mr 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," he concludes. Meet Frost & Sullivan at Telematic Update's conference and exhibition in Stuttgart, Germany, from 22nd to 23rd June 2004. Frost & Sullivan expert Franck Leveque will be leading a panel discussion on Commercial Vehicle Telematics Customer Preference at this event. Title: Frost & Sullivan's End-User Study On Customer Attitudes And Perceptions Towards Telematics In Commercial Vehicles Code: B219 Background Frost & Sullivan, an international consultancy firm, has been supporting clients' growth for over four decades. Our market expertise covers a broad spectrum of industries, while our portfolio of advisory competencies includes strategic consultancy, market intelligence and management training. Our mission is to work with our clients' management teams to deliver market insights and to create value and drive growth through innovative approaches. Frost & Sullivan's network of more than 500 consultants, industry experts, corporate trainers and support staff spans the globe with 19 offices worldwide. For further information, please contact: Kristina Menzefricke P: +44 (0) 20 7343 8376 E: kristina.menzefricke@frost.com
