North American Light Commercial Vehicle Telematics Market

1. Strategic Update of North American Light
Commercial Vehicles Telematics Market
Exploring Opportunities in the Light Commercial Vehicle Telematics Industry
North America
Brief Summary
N949-18
June 2012

2. Table of Contents
Section
Executive Summary
Slide Numbers
9-24
Key Findings
10
Market Engineering Measurements
11
Top Level Strategic Factsheet
Total Market Embedded Subscription
Summary-Key Conclusions and Future outlook
12-13
14
15-16
Overview of LCV Telematics Market
17
Telematics Life Cycle Analysis
18
Evolution of LCV Telematics
19
Key Market Trends
20
Market Segment Overview
21
Key Industry Challenges
22
Key Benefits of Fleet Management Systems
23
Fleet Operators Purchase Decision Criteria
24
N949-18
2

3. Table of Contents
Section
Research Scope, Objectives, Methodology and Background
Slide Numbers
25-31
Research Scope
26
Research Aims and Objectives
27
Key questions this study will answer
28
Research Background
29
Research Methodology
30
Key Participants Compared in this Study
31
Definitions and Segmentation
32-34
Types of Telematics Solutions – Definition
33
Vehicle Segmentation
34
Market Overview
35-37
Fleet Management Solutions service roadmap for LCV market
36
Traditional Fleet Management eco system
37
External Challenges: Drivers and Restraints – Total Market
Driver and Restraints
N949-18
38-41
39
3

4. Table of Contents
Section
Slide Numbers
Light Commercial Vehicles Telematics Market Drivers
40
Light Commercial Vehicles Telematics Market Restraints
41
Forecast and Trends – Total Market
42-52
Market Engineering Measurements
43
Light Commercial Vehicles in Operation Forecast 2011-2018
44
NA LCV Embedded Telematics Market Forecast by Scenarios
45
Forecast Scenario Assumptions for Embedded Solutions
46
Telematics Hardware and Services Revenue Forecasts
47
LCV Embedded Telematics Pricing Forecast
48
Individual Telematics Services Penetration Forecasts
49
Telematics Original v/s Replacement Demand Forecast
50
Penetration by fleet size
51
Penetration by industry
52
Market share and competitive analysis – Total Market
Competitive Environment
N949-18
53-55
54
4

5. Table of Contents
Section
Competitive analysis-Market share
Total LCV Telematics Market
Slide Numbers
55
56-66
PEST outlook
57
Market overview by vendors
58
Embedded, portables and smartphone solutions
59-60
Different business models
61-62
Products and services packages
63
Competitive force analysis
64
SWOT analysis
65
Overview of fuel ROI for FMS
66
Key Trends
67-87
Key light commercial vehicles regulatory trends
68
Driver distraction
69
Evolution of smart phones into independent solutions
New business channels for wireless providers
N949-18
70-71
72
5

6. Table of Contents
Section
Wireless providers
Slide Numbers
73-74
Spectrum crunch
75
Prognostics
76
Insurance and telematics
77-79
Expanding value chain
80-81
Integration of navigation
82
Goal to integrate real-time
83
Integration with back office application
84
Market consolidation
85
Recent acquisitions in the LCV telematics market
86
Verizon profile
87
Market Participants profile
88-117
Challenges faced by OEMs
89
FORD
90-91
Telogis
92-95
Teletrac
96-99
N949-18
6

7. Table of Contents
Section
Slide Numbers
Trimble
100-103
FleetMatics
104-107
Networkfleet
108-110
Navman Wireless
111-112
NexTraq
113-114
Conclusions and Future Outlook
115-117
The last word – Three big predictions
116
Legal disclaimer
117
Appendix
N949-18
118-128
7

8. Research Scope, Objectives, Background and
Methodology
N949-18
8

9. Research Scope
Base Year
2011
Study Period
2011 to 2018
Forecast Period
2011 to 2018
Vehicle Type
Light Commercial Vehicles
Geographical Scope
North America
LCV Telematics Market: LCV in Operation North America, 2011-2018
Year
Class 2-3
Vans
Total
2011
5,430,000
5,660,000
11,090,000
2012
5,670,000
5,620,000
11,290,000
2013
5,960,000
5,580,000
11,540,000
2014
6,230,000
5,520,000
11,750,000
2015
6,470,000
5,470,000
11,940,000
2016
6,720,000
5,600,000
12,320,000
2017
6,730,000
5,700,000
12,430,000
2018
6,970,000
5,800,000
12,770,000
Note: All figures are rounded. The base year is 2011. Source: Frost & Sullivan analysis.
N949-18
9

10. Research Aims and Objectives
Aim
The aim of this study is to provide an overview on the Light Duty Commercial Vehicles Telematics
Market.
Objectives
1. Provide a strategic overview of the North American Light Duty Commercial Vehicle Telematics Market.
Includes key technology/regulatory trends, market drivers and restraints .
2. Provide market size and forecasts of the Light Duty Commercial Vehicles Telematics market by
services and breakdown by Vendors 2011-2018.
3. Provide forecasts of the current and future Light Duty Commercial Vehicles Telematics market (unit
shipments and revenue) – 2011 to 2018.
4. Competitor analysis: Analyse competitive factors, competitor market shares and product portfolio
analysis.
Source: Frost & Sullivan research.
N949-18
10

11. Key Questions this Study Will Answer
LCV Telematics Market: Key Questions This Study Will Answer, North America, 2011
What is the business environment of the Light Duty Telematics Market, the dynamics and its impact?
What are the adoption levels for embedded, portable and smartphones solutions?
What are the regulatory trends and what type of solutions will have high penetration in the future?
What are the adoption levels by industry served?
Who are the key players in the light duty telematics segment in North America and what is the level of
involvement of OEMs in this space?
Source: Frost & Sullivan analysis.
N949-18
11

12. Research Background
This research study is a short summary capturing contents from various of our recently published and
on-going research in the area of commercial vehicles telematics market such as
•
N838 - 2010 Strategic Analysis of North American Medium and Heavy-duty Commercial
Vehicle Telematics Market– Completed
•
M6E6 – 2010 Strategic update of European Medium and Heavy-duty Commercial Vehicle
Telematics Market – Completed
•
Strategic Analysis of European Light Commercial Vehicles Telematics Market – In
progress
•
Comparative analysis of European and North American Commercial Vehicles Telematics
Market. – In progress
This study is also supplemented by our on-going continuous interactions with vehicle
manufacturers, suppliers, service providers and software providers in the area of connected
vehicle services
Source: Frost & Sullivan research.
N949-18
12

13. Research Methodology
Research Methodology
Frost & Sullivan’s research study is based on secondary and primary research data.
Secondary Research: Extraction of information from existing reports and project material within the F&S
database, to include data and information gathered form technical papers, specialized magazines, seminars
and internet research.
Primary Research: Over 30 interviews have been conducted over the phone by senior consultants/industry
analysts with original equipment suppliers, regulation authorities and distributors. Primary research has
accounted for 80% of the total research.
LCV Telematics Market: Key Industry Participants, North America, 2011
Company
Actsoft
Teletrac
Xora
Xata
Zoomsafer
Trimble
Verizon
Hughes Telematics/ Networkfleets
Webtech Wireless
Sagequest/ FleetMatics
Nextraq
Telogis
Navman Wireless
Wireless Matrix
N949-18
TomTom
Ford Motor Company
Source: Frost & Sullivan.
13

14. Key Participants Compared in this Study
The groups compared in this study are as follows:
Aftermarket Participants
Sagequest
Trimble
Teletrac
Network Fleet
Telogis
Ford
Navman Wireless
NexTraq
Source: Frost & Sullivan analysis.
N949-18
14

15. Definitions and Segmentation
N949-18
15

16. Types of Telematics Solutions Definition
The industry has moved from tracking vehicles to tracking mobile resources and better management of
business rather than just assets.
Types of
Solutions
Embedded Solutions
Portable Solutions
Smartphone Solutions
Definition
A telematics box functionally installed
into the vehicle that provides access
to fully connected world. The in vehicle interface gives access to a
range of services like, personalized
data, vehicle management, etc.
Rugged handheld PCs,
Tablets, etc. : A telematics
boxed fixed into a vehicle and
a detachable second
telematics device which
maintains a connection with
the box to exchange data.
This interface access services
like, proof of delivery, proof of
service, etc.
A GPS enabled smart phone
that provides telematics
services becomes a powerful
tool in exchanging data.
Navigation and other
Location Based services are
usually free apps.
Installation Effort
Requires installation and has a higher
cost. Catered by both OEMs and
Aftermarket
Time required for installation
is comparatively low and
hardware is supplied free of
cost by a few providers.
Catered mostly by aftermarket
No installation involved.
Open source applications
available. Catered by
aftermarket and at times
bundled with embedded
solutions
Example
Companies
Telogis, Hughes Telematics/Network
Fleet, Sagequest/ FleetMatics,
Trimble,Teletrac,etc
TomTom, Xata Turnpike,etc
Xora, Actsoft,Google,etc.
N949-18
16

17. Vehicle Segmentation
Vehicle Classification
Definition
Light Commercial Vehicles
(LCV)
Gross Vehicle Weight
Ratings
LCVs represent vans and light trucks. The typical
applications include pick-up and delivery, utilities,
airport operations, facilities management, and
Class 2 3
GVWR <= 3.5T
several other vocational applications.
Medium Commercial Vehicles MCVs represent all types of mid-size trucks, vans,
(MCV)
and buses. The typical application includes home
delivery, logistics, parcel delivery, utilities, waste
and recycle collection, airport operations, and
Class 4 6
GVWR >3.5T & <=16T
small and medium school and transit buses,
among others.
Heavy Commercial Vehicles
(HCV)
This constitutes all types of large trucks. The
typical application includes line haul freight trucks,
refuse trucks, mining and construction trucks, and
Class 7 and 8
GVWR >16T
other types of vocations that demand high GVWR
trucks.
N949-18
17

18. Executive Summary
N949-18
18

19. Executive Summary—Key Findings
The industry is moving towards integrating FMS with Enterprise Solutions to provide a business platform than
a mere track and trace functionality.
1
Non Automotive participants entering the market by ways of acquisitions and white labels.
2
The market growth will be least motivated by regulatory mandates but is mostly driven by risk and
liability decision
3
FMS is integrating with various applications and have provided versatile approach in tracking
mobile resources.
4
Increase in fuel prices and cost containment are driving fleets for operational efficiencies
Source: Frost & Sullivan analysis.
N949-18
19

20. Executive Summary - Total Market Embedded Subscriptions
The industry is geared for a steady growth with the decrease in the overall investment and the influx of various
types of solutions.
LCV Telematics Market: Embedded solutions installed base forecast, North America, 2011-2018
3500000
~2898790
Units
3000000
2500000
2000000
~1209000
Units
1500000
1000000
500000
0
2011
2011
2012
2013
2014
2015
2016
2017
2018
2018
Embedded Telematics Unit shipment
Note: All figures are rounded. The base year is 2011. Source: Frost & Sullivan analysis.
N949-18
20

21. Executive Summary – Top Level Strategic factsheet (Cont.)
Increasing penetration witnessed in the portable and smartphone type solution segment. Embedded solutions
clearly dominating the overall space today.
LCV Telematics Market: Percent of penetration by
Individual telematics services, North America, 20112018
LCV Telematics Market: Key Market Participants,
North America, 2011
Supplier
26.64%
Major Telematics
Solution Providers
Telogis,Network
Fleets/Hughes Telematics,
Sagequest/
Fleetmatics,Trimble, Teletrac,
Navman Wireless, Wireless
matrix,etx.
Key OEM Solution
Providers
Ford
Communications
Providers
AT&T, Verizon, Vodafone,
Sprint and others
RVD
59.36%
13.24%
Navigation
45.12%
0
2011
2018
N949-18
20
Navigation
13
45
40
60
RVD
27
59
80
Note: All figures are rounded. The base year is 2011. Source: Frost & Sullivan
analysis.
21

22. Executive Summary—Key Conclusions and Future Outlook
There has been a significant maturity in terms of technology resulting in sophistication of business models and
offerings. Telematics has become fairly mainstream.
Parameters
Current
•
The potential size of the market is vast and
not fully penetrated (10.09% in a population of
11.09 million LCVs)
•
Future
Market is placed in the launch pad for robust
growth in subscription, unit shipments and
revenues
57% of market highly fragmented
Competition
•
Solutions
Higher levels of awareness
among end users pushing
concentration levels towards mid
and high level solutions providing
continuous asset visibility
44% of the market is consolidated by three
players
•
Aggressive competition from
current fragmented market
players and newer participants
for the bigger market pie with
competitive packages and asset
optimization services
•
•
Expected to have a steady
growth without any sudden
changes ( ~21.93% in a
population of ~12.77million in
2018)
•
Market Status
•
Interest persists in basic track and trace
solutions along with idle asset monitoring
with geo fencing capability.
Source: Frost & Sullivan analysis.
N949-18
22

23. Executive Summary—Key Conclusions and Future Outlook (Cont.)
There has been a significant maturity in terms of technology resulting in sophistication of business models and
offerings. Telematics has become fairly mainstream
Parameters
Current
•
Technology
Seamless connectivity with cellular
and standard/optional satellite
coverage for high value goods and
government fleets
Future
•
Multi modal communication
platforms (Wifi+Cellular+Satellite)
•
•
Value Proposition
Fleets: Improved asset monitoring,
response time, operating cost and
machine uptime
Increase in competition vendors
looking to expand their product
portfolio
•
Prognostics and preventive
maintenance helping fleets
project a green image
•
Barriers to enter North
American Market
•
Major portion of the market is
consolidating.
•
Fairly easy to enter the market
with a smart phone solution.
Example: Google’s recent entry
Non automotive players entering
the industry
Source: Frost & Sullivan analysis.
N949-18
23

24. Executive Summary - Overview of LCV Telematics Market
Embedded, Portable and Smartphone Solutions are considered in this research.
LCV Telematics Market: Overview of LCV Telematics market, North America, 2011
GPS
Satellites
GPS
Satellites
Satellite Communication
TCU
Truck
Communication Infrastructure
TNOS
Service/Content provider
Telematics Solutions
Embedded Solution:
A Telematics box functionally
installed into the vehicle
Portable Solution :
A telematics boxed fixed into a vehicle
and a detachable second telematics
device which maintains a connection
with the box to exchange data
Smartphone Solution:
A GPS enabled smart phone
that provides telematics
services
Source: Frost & Sullivan analysis.
N949-18
24

25. Executive Summary - Telematics Life Cycle Analysis
Prognostics and Diagnostics are native to Embedded solution in addition to Navigation and Advanced Services.
Currently the industry is in it’s growth phase and largely under penetrated.
LCV Telematics Market: Product Life Cycle Anlaysis,North America, 2011
2005 onwards: Related
growth in technology and new
2025 : The
business models started to
market would
2001 -2005 :
emerge and the industry saw
slow down
The market
a rapid growth
growth and will
volume for the
gain saturation.
growth period
was low.
Development
Growth
Maturity
Decline
Prognostics
Prognostics is still in a developmental phase. The solution is not stable as the
telematics providers have to work with the OEMs to come up with a fool proof
solution
Advanced Services
Technology development and integration of back end services is rapidly moving in
the growth phase due to the demand for effective and efficient business operation.
Navigation
The growth in navigation is sustained by effective route planning and obtain more
efficient routes for a driver. Higher fuel costs has been driving the adoption.
Remote Vehicle
Diagnostics
Demand for diagnostics is slowly increasing with the fleet owners priority on
maintaining their fleets better to extend their fleet life cycle
Note: Note: All figures are rounded. The base year is 2011. Source: Frost & Sullivan analysis.
.
N949-18
25

26. Executive Summary - Evolution of LCV Telematics
The industry has developed at a fast pace and has matured from basic track and trace to a complex system
covering a vast breadth.
FUTURE
•
•
•
•
•
Back office Integration with data analytics
Effective low cost offerings with more features.
Stable offerings in remote vehicle diagnostics and
prognostics.
Integration of various telematics solutions offered on
single platform to optimise fleets.
Exposure of ROI leading to customer satisfaction
and retention
Addition of new partners in the value chain to
strengthen offerings (zoomsafer)
Route Optimization and better visibility
into the business
Customized low insurance
premiums
Present
Availability of engine
data to track idling and
rationalizing fuel costs
Standard Insurance
premiums
Results
•
•
Higher Operational
Efficiency
•
N949-18
Increased Route Efficiency
Optimal asset tracking and
management
Lack of efficient routing
Past
Limited business intelligence
despite data availability
Limited visibility of assets
High device cost
26

27. Executive Summary - Market Segment Overview
The market is highly fragmented with a few players dominating the market . The market still holds significant
potential.
LCV Telematics Market: Percent of
Embedded solutions penetration by
installed base, North America, 2011
~ 11.09 Million
LCV Telematics Market: Vehicles in
Operation(VIO) by percentage, North
America, 2011
LCV Telematics Market: Percent of
Market share of key players by
installed base, North America, 2011
~17.82 Million
28%
24%
4%
12%
11%
10.09%
14%
LCV VIO
62%
11%
2011
17%
2%
15%
Light Duty Vehicles
Embedded Solutions Penetration
44% of the market is consolidated by
the top 3 players: Telogis, Trimble,
Teletrac are the top 3 players
2011
LCV
MCV
HCV
Note: All figures are rounded. The base year is 2011. Source: Frost & Sullivan analysis.
N949-18
27

28. Executive Summary - Key Benefits of Fleet Management Systems
Fleet managers are moving towards indirect cost savings and are looking at retaining existing customers
through better customer service and acquire new ones.
•
•
•
•
•
Fleet monitoring
Reduce wear and
tear
Vehicle Recovery
Less down time
Fleet reduction
•
•
•
•
•
•
•
•
Direct Cost
Savings
•
More Streamlined
process
•
Route efficiency
Fuel Savings
Better workflow and
field force
management
Driver Operations
Business
Intelligence to make
informed decisions
Increase in vendor reliability and
competitive portfolio
Reduced back end support and
better intelligence
Revenue Generation
Operational Efficiency
Maintenance
•
•
•
Communication
savings
Fuel savings,
Driving distance
saved,
Driver hours
Lower insurance
premiums
Fuel efficiencies
Customer
satisfaction
Customer retention
Operational
Benefits
•
•
•
•
Employees in
Back office
Staff Turnover
Lost drivers
Late arrivals
Revenue
Generations
•
•
New customers
Customer
retention
through satisfied
services
Source: Frost & Sullivan analysis.
N949-18
28

29. Executive Summary - Fleet Operators Purchase decision criteria
A Fleet owner today is not looking for a solution but for a partner who could grow along with the business and
continue high quality support.
Service
Ubiquity
Brand Value
• Appearance
• Convenience in
Purchasing
• Ease of Use
Quick
ROI
After Sales
Support
Purchase Criteria
Solution
Cost
Value for
the money
Reliability
•
•
•
Low
Medium
Financial
Viability
Single vendor capable to provide all
telematics services to ease integration
Compelling ROI for small fleets to
adopt compare to larger fleets which
realize ROIs at a faster pace.
Vendors who could support long term
and are financially stable to sustain
business
High
• Quick ROI
• Solution Cost
• After Sales
Support
• Service Ubiquity
• Experience –
Brand Value
• Number of
Services –
Value for the
Money
• Reliability – Fail
Safe
• Financial
Viability
Source: Frost & Sullivan analysis.
N949-18
29

30. Executive Summary - Key Market Trends
Flexibility in devices and technology evolution has benefitted the industry by far sending the market into a value
based adoption. All the value chain participants are likely to see opportunities.
Smartphones
adding device
flexibility and
supplementing
market growth
An increase in
demand for
integrated
navigation
Addition of Non
Automotive
participants in
the value chain
Voluntary
adoption of
telematics to
manage costs.
Integration of
telematics with
Insurance .
Key
Trends
Increasing
integration of
mobile assets
to back office
Imminent
market
consolidation
Source: Frost & Sullivan analysis.
N949-18
30

31. Relevant Research
Commercial Vehicles Telematics and ITS Forthcoming. Research
2012
2012
2012
• Powertrain
• Safety
• Telematics
• Aftermarket
• Regulations
• Chassis
• Market Overview
• Growth Opportunities
2012
2012
2012
2011
2011
Comparative Analysis of European and North American Commercial Vehicle Telematics
Market
Impact of GLONASS Mandate on the Russian Fleet Management Systems Market
Strategic Analysis of European and North American Markets for Prognostics in OEMs and
Independent Fleet Vendors - How Can OEMs and Aftermarket Vendors Realize the Benefits
Roadmap of New Services and Developments in the European and North American CV
Telematics Markets
Strategic Analysis of the European and North American LCV Telematics Market
European Fleet Managers Desirability and Willingness to Pay for Fleet Management
Systems and Telematics Services
White Paper - Educating the EU Fleet Operators on Changing Value Proposition of Fleet
Management Systems – In-progress
Strategic Dashboard for Commercial Vehicle Telematics in Europe and North America -2011
Edition – In-progress
2011
2011
Forthcoming
N949-18
Strategic Analysis of CV Telematics Market in South Korea – In-progress
Strategic Analysis of European HCV MCV Telematics Market – In-progress
2011
Strategic Analysis of the European Trailer Telematics Market – In-progress
31

32. Relevant Research
Commercial Vehicles Telematics Recently Published Research.
2011
Strategic Analysis of North American Trailer Telematics Market - Published
2010
Strategic Analysis of the North American HCV MCV Telematics Market Published
Strategic Analysis of European and North American Green Telematics Market for
2009
• Powertrain
• Safety
• Telematics
• Aftermarket
• Regulations
• Chassis
• Market Overview
• Growth Opportunities
Commercial Vehicles - Published
2009
Strategic Analysis of Indian Market for Commercial Vehicle Telematics Systems - Published
2009
European Commercial Vehicle Telematics – ROI & Business Case Analysis - Published
An Update of European Heavy and Medium Commercial Vehicle Telematics Markets 2009
Published
2009
Strategic Analysis of the Commercial Vehicle Telematics Market for Korea - Published
Existing
N949-18
32

33. Relevant Research
Commercial Vehicles Telematics Existing Research.
2008
2007
Malaysian Commercial Vehicle Telematics Market
2007
European Light Commercial Vehicle Telematics Market
2007
North American Commercial Vehicle Telematics Market
2006
Malaysian CV Market
2006
Australia CV Telematics Market
2006
Frost & Sullivan Presentation at the 2006 Commercial Vehicle Telematics Conference in
Chicago
2006
Commercial Vehicle Tracking in Argentina; Brazil, and Mexico
2006
EU CV Telematics Market
2006
Strategic Overview of Current CV Telematics Industry Issues in NA
2006
• Powertrain
• Safety
• Telematics
• Aftermarket
• Regulations
• Chassis
• Market Overview
• Growth Opportunities
North American School Bus Telematics Market
Japanese Commercial Vehicle Telematics Market
Existing
N949-18
33

34. Market Engineering Methodology
One of Frost & Sullivan’s core deliverables
is its Market Engineering studies. They
are based on our proprietary Market
Engineering Methodology. This approach,
developed across the 50 years of
experience assessing global markets,
applies engineering rigor to the often
nebulous art of market forecasting and
interpretation.
A detailed description of the methodology
can be found here.
Source: Frost & Sullivan research
N949-18
34