Concrete Strategies Critical to Realize the Full Market Potential of Commercial Vehicle Telematics Systems

PALO ALTO, Calif.--Aug. 1, 20040, 2004--Participants in the North American commercial vehicle telematics markets are eagerly looking forward to the acceleration of economic growth to enhance their business fortunes. Regardless of the tremendous market potential, growth has been relatively slow.

New analysis from Frost & Sullivan (http://www.transportation.frost.com), North American Commercial Vehicle Telematics Markets, reveals that this market generated revenue worth $705.0 million in 2003 and is likely to reach $6.66 billion in 2012.

If you are interested in a virtual brochure, which provides manufacturers, end-users and other industry participants an overview of the latest analysis of the North American Commercial Vehicle Telematics Markets, then send an e-mail to Melina Gonzalez - Corporate Communications at melina.gonzalez@frost.com with the following information: your full name, company name, title, telephone number, fax number and e-mail. Upon receipt of the above information, an overview will be sent to you via e-mail.

"Profitability remains elusive for many telematics service providers as the sluggish business environment of recent years has prevented them from developing large subscriber bases," says Frost & Sullivan Senior Industry Analyst Joerg Dittmer. "This situation is expected to change shortly with a brighter economic outlook on the horizon."

However, participants' struggle with business uncertainties has sown seeds of doubt about their stability among prospective users of telematics systems. Truck operators are unwilling to risk their major upfront investments becoming unproductive in case their service provider is forced to exit the business.

"The apprehensions of fleet operators are perfectly justifiable as some of the early movers withdrew their trailer tracking products and other telematics systems for a variety of reasons, ranging from performance failure to bankruptcy and economic slump," says Dittmer.

A bevy of other factors thwarts telematics systems providers from attaining critical mass. Despite expected positive return on investment (ROI), high upfront costs prevent many fleet operators -- already operating at low margins -- from adopting telematics. Additionally, smaller fleet operators are unaware of the advantages that telematics can provide, and hence may not believe the ROI projections.

Further deterrents include the reluctance to change age-old business practices by fleet operators that may have low computer literacy and an outdated perception of telematics systems being expensive. Concrete business strategies are critical to remove such misconceptions ensconced in the minds of prospective customers.

"Providing a lease option may alleviate concern over a supplier's viability, but not if the lease is provided through a third-party leasing company in which case the liability for hardware could remain even if service is no longer provided," opines Dittmer.

Not all suppliers are financially strong enough to offer lease options. A wave of consolidation is required for this strategy to be successful, which will eventually ensure profits for the beleaguered participants. Until such time, telematics service providers should focus on educating end-users -- particularly those fleet operators hauling high-value cargo or hazardous materials -- about the enhanced security and safety features offered by telematics.

This is likely to encourage market uptake, as high-value goods from computer chips to Viagra have become targets of truck hijackers. Recent mishaps involving shipment of hazardous materials such as cyanide and gasoline also underscore the importance of deploying sophisticated telematics systems.

"Commercial vehicle telematics systems are not only capable of notifying the dispatcher about the latest developments during transit (such as refrigeration failure, accidents, and hijacking, to name a few), but also can assist in recovering stolen cargos and locating empty trailers," says Dittmer.

Such overwhelming benefits make it hard for fleet operators to ignore telematics as it helps them in increasing their business volume with efficient use of their existing vehicles/equipment rather than buying additional equipment and increasing their fleet size unnecessarily.

To create a greater impact across different categories of commercial vehicles, it is imperative that participants win some big clients since many smaller fleet operators are trying to gauge the reactions of their larger counterparts.

"With more than 25 million commercial vehicles and 5 million truck trailers plying the roads of North America, there is immense market potential for telematics systems, which enable fleet operators to track and manage their trucks, trailers, and mobile workforces around the clock," concludes Dittmer.

North American Commercial Vehicle Telematics Markets is part of the "World Automotive Telematics" and "North American Advanced Automotive Technologies" subscriptions. Frost & Sullivan's recent research examines the North American market for commercial vehicle telematics hardware, services, and wireless telecommunications. The study includes demand analysis for telematics in different categories of commercial vehicles (long haul and local fleet, trailers, and other mobile assets), revenue forecasts, and pricing trends, besides providing competitive analysis and an update on the latest technological trends. Executive summaries and interviews are available to the press.

Frost & Sullivan, a global growth consulting company, has been supporting clients' expansion for more than four decades. Our market expertise covers a broad spectrum of industries, while our portfolio of advisory competencies includes custom strategic consulting, market intelligence and management training. Our mission is to forge partnerships with our clients' management teams, to deliver market insights, and to create value and drive growth through innovative approaches. Frost & Sullivan's network of consultants, industry experts, corporate trainers and support staff, spans the globe with offices in every major country.

North American Commercial Vehicle Telematics Markets

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Keywords in this release: commercial vehicle telematics systems, telematics service providers, truck operators, fleet operators, trailer tracking products, high-value cargo, dispatcher, telematics hardware, telematics services, wireless telecommunications, long-haul and local fleet, trailers, North America, research, information, market, trends, technology, service, forecast.