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Telematics: Why the interest?

Date: 13 August 2015   |   Author: Jack Carfrae

With a glut of leasing companies and OEMs launching their own telematics products, Jack Carfrae asks why the technology is in vogue and whether fleets need the tide of data coming their way

Telematics companies no longer have the market to themselves. Some of the biggest vehicle manufacturers including Ford and VW Commercial Vehicles, and leasing firms, such as Arval, have launched their own offerings in the past six months, while others such as Leaseplan and ALD have had it in their stables for longer.

Granted, many of them are white label products provided by telematics specialists, so it's good for business - but why the sudden interest from other corners of the fleet industry?

"It's insight, particularly with leasing," says Nick Walker, managing director of RAC Telematics. "They lease a piece of metal and look to make money on it, but know very little about what's going on and whether it's being maintained or not."

He adds that a reduction in the cost has made the technology more palatable and it's a way for leasing companies and manufacturers to up their product offering.

"If you go back a few years you were paying £150-200 for a box, then £15 a month for the data and the service. There are still telematics companies out there in that bracket, selling predominantly to HGVs, but for car and van fleets you're talking £5-6 or less, and that should include the hardware and the install.

"Leasing firms and OEMs are looking at ways in which they can gain market share and offer more value to their end customers that either justifies a higher price or allows them to win against the competition," continues Walker. "So they're looking at differentiation and certain levels of ROI that will pay for itself within their own network."

Lower prices and leasing firms vying for your business with superior service is no bad thing, but it begs the question as to whether fleets really need and want built-in telematics, or if it's viewed as a new revenue stream or a justification for higher prices.  

"I suspect there's a little bit of that," says car fleet operators association ACFO's chairman, John Pryor. "There will be fleets that see the advantages but others that don't. Apart from a company telling a customer 'our cars are 8.1 miles away' for example, I don't know who would actually use the statistics.

Leasing companies might for a big fleet to say 'your fleet is doing this, that or the other' but there's so much data being captured that it's hard to know what to use it for."

Those that really stand to benefit are customer-facing delivery or utility fleets, adds Pryor. "Supermarket delivery fleets, for example, looking for cost-efficient methods and more efficient routes, identifying traffic jams early to avoid them with auto re-routing - those sorts of things must be godsends to a company like that because you can send text messages to households saying 'your delivery is five minutes away'.

You've got it down to Joe Public in the street at that level."

Alex Rothwell, chief operating officer at Masternaut, thinks vehicle manufacturer telematics packages are too limited for most fleets. "One of the fundamental things with most fleets is that they have mixed vehicles, so it's highly unlikely that a single OEM can provide the solution that they want."

He claims a well-tailored service is worth it for any fleet with significant overheads, but it will only work if the business uses the results.

"Whenever the costs of fuel, maintenance and insurance are material, then you should be looking at telematics. If a business spends a pound, they can save five in some combinations.

"We've often come across companies that have paid for telematics and are completely disillusioned by it because it hasn't delivered the ROI. It doesn't happen automatically. It has to change behaviours; it has to change the way you run the business. If you're not using the data then nothing will change, will it?"

The clairvoyant black box

It won't be long before telematics operators can predict common faults with vehicles before they actually happen. Nick Walker, managing director of RAC Telematics, claims the firm is about "nine to 12 months away" from predictive services, generated by overlaying telematics data with the firm's breakdown records.

"We attend about 2.5 million breakdown events a year. We've got a database going back years with tens of millions of records which, just from pure statistics, will tell you the top three things that are going to go wrong with a vehicle type, make and model of a certain year, and of a certain mileage. We're normally right because we see it all the time.

"If you layer on top of that the ability to electronically diagnose and look for fault codes, which point to certain things happening - we do that on a roadside basis with every visit we make to a broken down vehicle - we get all the fault codes associated with that breakdown and that set of fixes we have to apply. As you layer those two things together, and feed it with live telematics data and diagnostic codes, you're able to extract from that what's likely to happen to that vehicle over time."