The Essential European Fleet & Asset Management Update
1. The Essential European Fleet Management Update
Anil Valsan
Global Director of Research, Automotive &
Transportation
Feb 23rd 2010
2. Agenda for the Workshop
European Fleet Management Market Overview and Trends
Green Telematics Market Overview and Trends
Snapshot of Electric and Hybrid Commercial Vehicles
Summary and Conclusions
2
4. Erratic Fuel Cost, Duty of Care and Congestion are expectedly the Major
Challenges Facing Transport Industry – Opportunities for Telematics
Providers
Market for Commercial Vehicles Telematics: Challenging Affecting Transport Industry (Europe), 2008-2015
High attrition rate haunts fleet Unavailability of
operators information adding to
overall operational cost
Road charges like toll collection
system would mandate
installation of telematics box
Driver Recruitment Communication at
and Retention Speeding and
Parking Fines optimum cost
Information related to Road Charging
congestion needed at critical
Driver
time Communication
Continuous Monitoring
Congestion Needed
Fleet Operation- Hijacking and
Industry Challenges Theft
Environment
Work Time
Directive Need for Integrated Driver
Management
Promotion of ‘Green Image’ & need Speculative
for optimal driving to minimize Duty of Care Fuel Cost
pollution
Since fuel cost is the major component of the operation cost,
companies focus on frugal consumption. Moreover, the erratic
Continuous and critical driver nature of fuel cost warrants deployment of monitoring system for
monitoring required for comprehensive optimal consumption
training
4
5. In the Current Market Conditions Telematics is considered as a Reality
Check tool for Many Fleets to Remain Profitable and Stay in Business
Greater
Service Increasing Cost Benefits
Capability
High Demand for
high
Customer operational Competitive
levels of service
Satisfaction efficacy Advantage and information
Desire for
transparency
greater
Customer operation
Retention optimisation
Improving Market
Duty of Care Drivers
and other
intangible
High Emission
Benefits
Reduction and
Market Driver Impact
Desire to
promote
Green Image
Introduction
Low of Digital
Key Market Restraints:
Tachograph
• Economic slowdown delaying potential
investment
• Cost of telematics still perceived to be
high. Small fleets are difficult to address
• Yet to reach critical mass to provide
customization
5
6. ROI is Strongest Factor for CV Telematics – Savings of 233
Euros/Month/Truck
Benefits of Effective Deployment of FMS
Effective Driver Vehicle Regulation Improved Other Benefits
Management Management Compliance Consumer
Savings
Service Customer and
Effective time Employee
15% Bi monthly
Fuel Cost management. Satisfaction and
Productivity Digital Tacho
Reduction Reduction of Regulatory
increase Read out
idle time Compliance
Typical Cost Savings per truck per month
Payback Period on a Typical Investment
126 € 233 €
Investment: per truck
Hardware Cost : 2,000 € (net amount)
Service Cost : 40 € / month (Comprehensive)
35 €
25 € Payback period per truck with 233 € monthly saving
23 € would be 11 months (approx)
23 €
After 11 months the initial investment would start
Reduced waiting Digital Tacho – Increased Fuel Consumption Effective Route Total
paying back
time = increased Mass Data Read Productivity Regulation Planning and
Savings
billable hours out lesser km wasted (233 * 11) – (2000 + 40 * 11) = 123 €
Source: ING
6
7. FMS Installed Base to Grow at 13% CAGR while that of Track
Trace at 2.4%
Total Installed Base
1,200,000
FMS Track and Trace
CAGR 9.0%
Installed Base
600,000
0
2008 2009 2010 2011 2012 2013 2014 2015 Market Penetration
Year Low High
• FMS Penetration would Grow Significantly • Navigation as a feature with FMS would find
Across Europe – Benelux, Germany, France increasing adoption among fleet operators.
would Continue to be Major Markets
• With increasing partnership between navigation
• Penetration of FMS to reach 14.5 % by 2015 companies and telematics vendors like Garmin
from 6.39% in 2008 + Mix Telematix, the penetration of navigation
would gain momentum.
• Replacement sale of Track and Trace would be
dominant in 2015. • Operation consulting to add huge value to fleets
7
8. Total Revenue – System-wise: FMS Hardware Sales and Service Market
Would Continue to be Highly Lucrative
Market for Heavy and Medium Commercial
vehicle Telematics: System-wise Total Market
Revenue (Europe), 2008
2008
Market for Heavy and Medium Commercial 67% Market for Heavy and Medium Commercial
vehicle Telematics: System-wise Total Market vehicle Telematics: System-wise Total Market
Note: All figures are rounded; the base year is 2008.
Revenue (Europe), 2015 Revenue (Europe), 2015
2015 2015
Frost & Sullivan Scenario Conservative Scenario
14%
65% 6% 7% 6%
59%
Source: Frost & Sullivan
FMS Track and Trace
Navigation RVD 10%
7% Emergency Assistance
12% 10%
7% 9% 10% 11%
Currently, revenue generated through FMS product Revenue generated through FMS sale and service
sale and service accounts to approximately 67 per would witness an year-on-year growth of 8.5 per cent
cent of the total market revenue. This would grow at a over the forecast period while that of RVD,
CAGR of 13 per cent from 2008 to 2015, and by 2015, emergency assistance and navigation would grow at
it would account for nearly 65 per cent of the total a CAGR of 19 to 20 per cent from 2008 to 2015.
revenues. Revenue share of track and trace system Under this scenario, the revenue shares of all the
would witness a dip and that of other systems would systems would grow, except FMS, which would
grow. account to 59 per cent of the total market revenues.
8
9. Third-party Logistics and Petrochemical Industry Show Highest
Adoption for Telematics, but Other Industries Gain Momentum
Increasing consumer demands Market for Heavy and Medium Commercial vehicle Telematics: Telematics
for high quality service coupled Adoption by Sector (Europe), 2008-2015 The importance of fuels to
with government legislations to maintain economic stability,
maintain high hygiene levels, and timely and safe
promote the use of telematics deliveries are a key driver
Vehicle for telematics
Transport, 11% Retail, 14%
Low demand for Food &
Beverages, 15%
navigation-based
systems, although
the construction
industry is Mining, 7%
expected to have 3PL, 23%
strong growth in
tracking Constructions, Petroleum &
9% Chemicals, 21% Note: All figures are rounded; the base
year is 2008. Source: Frost & Sullivan
• 3PL have the highest usage for telematics at 23 per cent, as 3PL are
demanding continuous improvements in the service level agreements over “..it is imperative that we have solutions based on a time
frame scenario…Telematics solutions helps us address
a period of time while being able to manage their cost (especially, fuel cost) labour and other direct cost”- A major food service
• Hot selling retail products with strong demand as well as perishable goods distribution company
in food and beverages are expected to have the highest growth rates.
“We have undertaken the major capital investment in the
• Construction and mining companies are mainly interested not only in technology and further investment will be incremental, either
tracking solutions to optimise their operations but also to track their assets through the addition of one or two pieces of software for the fleet,
or the installation of the full hardware and software to each new
if they get stolen. truck” – A international transport and logistics company
9
10. Setting Telematics as Standard as well as Leveraging the Existing Sales
Infrastructure and Strategic Partnerships will Increase the OEMs’ Share
Unit Shipments per year – OEM vs. Third-party suppliers
OEM OEM
15% 30%
•Increasing collaborations between
truck manufacturers and aftermarket
telematics vendors to drive OEMs
share. The product offering through
such alliance to combine truck
manufacturer's vehicle expertise and
telematics vendor’s transport Third-party Suppliers
Third-party Suppliers
business expertise 70%
85%
•Line fitted telematics proportion to
increase
2008 2015
Source: Frost & Sullivan
Similar trend is seen in North America – Volvo, International, Paccar are the current OE solutions
10
12. Fuel Cost Reduction and Green Image are Key Benefits to Commercial
Vehicle Fleets Installing Green Telematics
Fuel Cost Reduced Carbon
Reduction Footprint
Higher Demand
Better Efficiency
Benefits for KPIs
of Green
Fleet Telematics
Meet Duty of Care Other Intangible
Obligations Benefits
Green Telematics Package
As an optional / standard service with FMS - As a part of larger service package green
telematics services could cost around € 15 per month
As Product Proposition – With track & trace device, this green service can cost additionally €
15-20/month
Dedicated CAN BUS black box with GPS+ GSM/GPRS – Hardware cost €500 and green service
cost an additional € 15-20/month
12
13. Key Product Offerings – Green Telematics can be Offered through a Dedicated
New System or Using Existing FMS or Navigation Systems
Connected Navigation with green routing feature
could be a value addition
PAYD Insurance
• One time investment for
hardware - € 220-250
Green Telematics Products
Dedicated CANbus integrated hardware, with
• Monthly fixed cost including comprehensive vehicle and driver management functionality
communication - € 25-30 Hardware cost - €450-500 Service cost - € 15 -20 per month
As an add on to track & trace real time routing,
speeding and idling reports, basic vehicle and driver
Navigation with Green management.
Service cost - € 15 per month
Routing
• Feature Cost : € 250-300
• In case of connected As an add on service to fleet
navigation, the monthly management system.
service cost is € 8-10 Comprehensive vehicle and driver
management.
Service cost - € 15 -20 per month
Leasing
User Group
Private users Fleet Company
Companies
13
14. Impact of Green Telematics: About 10% Fuel Cost Reduction and An Equal
Measure CO2 Emission Reduction is Possible through Green Telematics
Penetration of green routing feature in navigation is estimated to reach over 11% in
Green Navigation Europe and about 15% in North America by 2015. The adoption of green telematics in
the car parc would reach over 4% in Europe and over 4% in North America
With about 5% penetration estimated in the commercial vehicle segment both in Europe
Green Fleet Telematics and North America, the total revenue generated through new hardware sale and service
revenue is expected to reach over $1 billion
PAYD adoption would largely depend on the kind of marketing push from business
PAYD Insurance community combined with the extension of extended by the regulation environment.
PAYD penetration is expected to reach 1.5% of car parc in Europe by 2015
Impact of 20% of Green Telematics Penetration in Passenger Car Parc
North American
European Market
Market
Car Parc over 270 million over 160 million
On an average both green
navigation and PAYD
18,500 km per car Over 18,600 km per insurance could achieve
Annual Mileage
car 10% reduction in fuel and
emission in passenger cars
Emission About 15.5 million About 9.5 million
Reduction tonnes tonnes
M3FA-18 14
15. ROI Analysis for Commercial Vehicle: Up to 10% Cost Saving from Fuel
Consumption Reduction Achievable through Green Fleet Telematics
Incremental ROI
Direct Cost Reduction Further Benefits
Green Telematics Service
Vehicle & Driver Management
Fuel Consumption
Driver Productivity Maintenance Improved Management
Reduction
• Data to control • Key performance • Optimum maintenance Better Corporate Image
fuel consumption indicators for management. Remote
weakness vehicle diagnostics Customer and Employee
• Cost saving and identification and rating • Reduced wear and tear, Satisfaction
emission reduction • Accurate analysis of higher residual value Fleet Structure
through report driver behavior • Reduced down time and Optimization
analysis • Peer to peer evaluation repair time
• Incentive calculation
Add on Green Services
Contract Maintenance
• Route optimization and reduced
Pay How You Drive / Pay As you pollute Insurance unauthorized driving
• Improved driver behavior
• Fuel consumption reduction
Green Navigation
• Further cost saving possible through
add on services
M3FA-18 15
16. ROI Case Study 1 – Investment on FMS Add on Green Telematics Service can be
Realized within 5 Months Based on Just Fuel Cost Savings
Typical Cost Saving and Emission Reduction for a 40 Tonne (GCW) Long Haul Vehicle clocking annual mileage
of 160,000 km
Case 1
Hardware : Mid tier FMS costing - Cost: €1500
Service : Basic Logistics Management + Driver/Fuel/Vehicle management - Cost €35
Cost Saving: Realistic fuel cost saving of 8% achievable through green fleet telematics service
Before After Saving/Reduction
Fuel Consumption 51,200 L 47,104 L 4096 L
Fuel Cost € 58,368 € 53698.56 € 4669.44
CO2 Emission tones 133.1 122.4 10.7
€4670
€420 €1920
€1500
Facts:
Hardware Cost Total Cost Incurred Fuel Consumption of 40 Tonne Truck – 32 L / 100km
Diesel Cost (UK Average) – € 1.14 per liter
Annual Service Cost Annual Fuel Cost Saving CO2 Emission per liter diesel burnt – 2.6 kg
16
17. Green Telematics Truck Parc Penetration to Reach about 4% in Europe
LCV Market
Green Telematics Market: Green Fleet Light Commercial Truck Parc
Penetration (Europe), 2008-2015 • With around 23 million light commercial vehicles in Europe,
12% Telematics Fleet Penetration the penetration of telematics is just over 4 per cent and this
is expected to reach over 12 per cent by 2015.
Truck Parc Penetration
10% Green Telematics Penetration
8% • More than 80% of the vehicles that are fitted with telematics
6% are track and trace system with GPS + GPRS/GSM module
with back end service functionality that provides basic work
4%
management capability.
2%
• However, there are significant number of operators who
0%
2008 2009 2010 2011 2012 2013 2014 2015 prefer to install CAN bus integrated mid tier FMS solution
Year Source: Frost & Sullivan which would give greater control over the vehicle and driver.
• Penetration of green telematics services is expected to
reach around 3.9% by 2015.
Green Telematics Market: Green Fleet Light Commercial Truck
Revenue Forecasts (Europe), 2008-2015
250
Dedicated Green Fleet Telematics Hardware Revenue
Revenues (€ Million)
200 Service Revenue
150
100
50
0
2008 2009 2010 2011 2012 2013 2014 2015
Year
Source: Frost & Sullivan
M3FA-18 17
18. Green Telematics Offers True ROI in Case of Commercial Vehicles and
Solid Savings on Fuel Cost for Passenger Vehicles
Green Telematics Market: Green Routing Feature Penetration Green Telematics Market: Green Fleet Telematics Truck Parc
on PND Unit Shipments (World), 2009-2016 Penetration (World), 2009-2016
20% 6%
Feature Penetration in Units
Euro pe No rth A merica
Europe North America
Truck Parc Penetration
15%
4%
Sold
10%
2%
5%
0%
0%
2009 2010 2011 2012 2013 2014 2015 2016 2009 2010 2011 2012 2013 2014 2015 2016
Year Year
Source: Frost & Sullivan Source: Frost & Sullivan
Typical Cost Saving and Emission Reduction for a 40 Tonne
ROI for an user in UK clocking 16,000 km per annum in a (GCW) Long Haul Vehicle clocking annual mileage of
diesel vehicle with 5.9L/100km fuel efficiency and savings of 160,000 km fitted with fleet management system with green
15% through eco navigation service subscription
€4670
€300
Savings would pay
€163 for the device in
€100 around 22 months
and the further €420 €1920
savings from the €1500
Average cost of eco navigation PND device is ROI
Cost per year considering usage for 3
years Hardware Cost Total Cost Incurred
Fuel Cost Savings per year
Annual Service Cost Annual Fuel Cost Saving
M3FA-18 18
19. Revenue Forecast: Revenue Through Green Telematics to Reach Over
€100 million by 2015 in the Heavy and Medium Commercial Vehicle
Segment
Green Telematics Market: Green Fleet Heavy and Medium Truck Revenue Forecasts (Europe), 2008-2015
150
Service Revenue Hardware Revenue
Revenues (€ Million)
100
50
0
2008 2009 2010 2011 2012 2013 2014 2015
Year
2008 2015
20 120
Revenues (€ Million)
Revenues (€ Million)
90
10 60
30
0 0
Dedicated Service Extended with FMS Dedicated Service Extended with FMS
Extended with T&T Dedicated Hardware Extended with T&T Dedicated Hardware
Source: Frost & Sullivan
19
20. Pay How You Drive is the Commercial Vehicle Version of Usage Based
Insurance
Business Segment
100% UPTO 20% 6.25%
Acceleration of the vehicle
80% Cost of the basic
telematics solution along
Braking the vehicle with the hardware
spread over a period of 3
years
PHYD Speed of the vehicle
73.75% of
Mileage traveled the premium
Traditional Discount to To goes to the
premium to costumer Insurance insurance
Time traveled be paid by based on his Company company.
customer previous year
claims
Business Model – Business Segment
Insurance companies buys the box at a price from the
telematics company and own them.
• RSA pays 100-120 GBP for box and for the basic
PHYD functionality and geolocalisation.
The leasing company or the end-user pays for the additional
services based on their need.
• The leasing company or the user pays 3-12 GBP for
additional services based on his needs.
Benefits to Insurance Co. Benefits to Leasing Co. Benefits to Fleet Co.
PHYD, Geolocalisation
PHYD, Geolocalisation FMS, Geolocalisation
• Monitoring driving behavior and calculation of
Monitoring driving behavior & knowledge about • Effective fleet management
annual premium based on user’s risk •
vehicle service records to assess the value of • On time eCall and SVT assistance
• Reduce claim cost of crash and theft
the vehicle at the end of the contract. • ECO Driving
• ECO Driving
20
21. Key Conclusions – Green Telematics Offers Immense Growth
Opportunities and Provides a Definite Social Incentive of Cost Effective
Emission Reduction
The low cost involved and the
ease of adoption among old and
new vehicles is the fundamental
The penetration of green fleet advantage of green telematics. A With stringent norms
teleamatics in the long-haul comprehensive and wide adoption expected in the coming years,
segment to be much higher of the same could effect companies are increasingly
than local and regional significant emission reduction incorporating environment as
segment both in Europe and a component to their overall
North America business strategy
Promotion of PAYD as an
Green Telematics Regulatory compliance and
environmental friendly
Demand to cost cutting intitiatives to drive
insurance with the needed
green telematics adoption
support from legislation to Increase within the commercial and
increse its adoption among Dramatically leasigng segment
the consumer segment
The desire to cost cutting and Car and truck manufactures to
making high value purchase An evolution of comprehensive increasingly adopt telematics
to increase adoption of green telematics solution for diagnostics and related
navigation with green routing encompasing insurance, services that combined with
feature. vehicle and driver consumer efforts could help
management is inhibited by reduce emission
the limitations inherent with
various stake holders.
21
23. What do commercial drivers think of electric vehicles?
Overall, most commercial drivers feel that using electric vehicles would be a good idea. While some doubt reliability and distance able to travel the
vast majority would be willing to use them if their capability requirements could be met. Only very few were very sceptical.
“I think they are a good idea with over 5,000 fleet “It is a good idea because we are a company that
of vans our company would benefit from this .” travels mainly of small distances within the city.”
Commercial driver for EDF Energy, UK Commercial driver for mairie de maurepas, France
“Too slow for my line of work, a bad idea. No I do “Perhaps is OK but I have not thought about it
not believe they would suit my line of work. I very much.”
need to be able to get in vehicle and go, without Commercial driver for Selbst , Germany
worrying if I have enough energy to get me where
I am going and back.” “It is a very good idea, I would definitely use one
Commercial driver for MG Green Maintenance Engineers, UK for sure if it meets my needs. We need to do
more for the environment.”
Commercial driver for Agentur, Germany
“Yes I am ready but my condition is that it can
make about 200 km without needing to be “I think they are an excellent idea and I hope to
charged and support the maximum 60 kg.” switch to one when they become more available.”
Commercial driver for Chefdeterroir, France Commercial driver for National Theatre, UK
“It is a good idea to have an electric vehicle. But “I think they are a good idea, assuming I can fit
all of my equipment into them and the range is
the problem is travelling in rural areas sometimes
and it is difficult to find charge points.” enough to get me from A to B.”
Commercial driver for PC30, France Commercial driver for HCE, UK
Base : Total interviews (N=170), UK n=58, France n=61, Germany n=51
23
24. Market Overview: Electric Commercial Vehicles are concentrated more towards
depot based delivery vehicles with fixed payload and work schedule cycle.
Electric Commercial Vehicles Market: Overview of suitability (Europe 2010) Electrification Attractiveness
High ( 4% ~ 10% of total CV market @ 2015)
Postal Vans
Urban Refuse Trucks
Super Market This implies immediate opportunity and target for
(< 60 miles) City Councils
Ports Usage
Transit Bus electric vehicles
Utilities
Medium (1% ~ 4 % of total CV market @ 2015)
Range
Intra Urban Parcel Vans
Logistics This signifies an expanding opportunity gained by
(<150 miles)
Distribution early adopters experience and challenges can be
overcome but require substantial investment
Highway Low (<1% of total CV market @ 2015)
(> 150 miles) Medium to Long Haul
This represents the size of opportunity and
electrification will need to overcome considerable
technical and market challenges
LCV MCV HCV
Type of Commercial Vehicle
Urban Intra-Urban Highway
Usage lies in an urban Usage lies in an urban and intra- Usage mostly lies in highway
environment with frequent stop urban distribution. May have routes long haulage with heavy
and go combined with fixed load stop and go routes loads
Source: Frost & Sullivan
24
25. Market Attractiveness of Hybrid Commercial Vehicles
Hybrid commercial vehicles deliver attractive fuel economy benefits while reducing emissions. However, these benefits are more
pronounced in certain types of vehicle categories and in certain duty-cycles.
Frost & Sullivan’s research indicates LCVs, HCVs and transit buses that operate within congested urban areas will emerge as early
adopters of hybrid powertrain systems.
The fuel saving potential is further enhanced through reliance on electric systems, in diesel-electric hybrids, which deliver the following
performance attributes:
Start/stop systems turns off the engine when the car stops
Engine can be operated at its highest point of efficiency
Cold starts are performed by electrical systems
Regenerative braking technology recovers energy while braking and stores in storage system
North American and European Hybrid Commercial North American and European Hybrid Commercial Vehicles
Vehicles Market: Early Adopters for Hybrids (North Market: Potential Fuel Saving by Hybrid Commercial Vehicles
America & Europe), 2009 and Buses (North America & Europe), 2009
45
Early Adopters for Hybrid Vehicles
40
Urban Package/Courier Delivery Trucks
LCV
Potential Fuel Saving
Urban Beverage Delivery Trucks 35
30
Utility Trucks
MCV
Fire/Rescue Trucks
(%)
25
Refuse Trucks, Heavy urban delivery trucks 20
HCV
(beverage, groceries and produce etc)
15
Bus Urban Transit buses and School buses
10
5
0
Inner City Edge of City
25
27. Key conclusions - Growth Opportunities Will Come From the
Appropriate Segmentation of the User Market
Eastern Europe growth
New Volumes Growth Still Expected Consolidation of certain national transport market to
boost demand
Under penetrated small fleets provide significant
growth opportunities
Consolidation among fleets
Impact of Economy Slowdown would Telematics vendors need to adopt strategic
Affect Market Dynamics Significantly growth steps needed to stay competitive
Matured market replacement cycle
Large vehicle fleets already have high
Replacement in More Matured Markets penetration of telematics
Focus on value proposition and differentiation
Conclusions
Demonstrate sector-specific knowledge
Industry and Sector-specific Requirements and understanding
Focus should shift towards customer
Focus on Recurring Revenue retention and value-adding services
Further push telematics integration into
business process – consulting revenue
ROI and operator satisfaction are highly correlated to
Implementation Focus
the ability to successfully sell telematics
27