The vehicle telematics industry is facing major challenges, with insiders predicting that several suppliers will not be here in 12 months.

Fleets that have paid for telematics hardware and signed a service contract could be left in a precarious position.

“There are a lot of small players in the telematics market, some have grown very quickly,” Bill Raynal, managing director of Tracker, the biggest player in the stolen vehicle recovery market and a growing player in the fleet telematics sector, told Fleet News.

He said some will struggle to survive in the coming months.

While other telematic providers will offer new contracts to the victims of their competitors’ failures, fleets will still be left out of pocket and without a service for weeks and possibly months.

The advice is to plan now, investigate how compatible your existing service is with other suppliers and, for those considering signing up to a new service, research potential suppliers.

But Raynal says fleets should consider other options.

He said it is becoming increasingly advantageous for fleets to consider either leasing or renting telematics hardware, which passes financial risk onto the provider and away from the fleet.

“Lease your units or go to low-cost rental,” advises Raynal. “It is the least damaging.”

The advice is good, especially coming from a supplier that is still months away from offering such a service.

Tracker will not launch a low-cost rental telematics service until the end of the year at the earliest. It will be the same Tracker Reporter that is already available, but will be offered on a new short-term rental payment system.

The business case for a telematics service still stacks up for most fleets says Raynall.

Tracker is predominantly still a stolen vehicle recovery (SVR) provider. Its fleet telematics offering is still playing second fiddle to the company’s primary - and most profitable – SVR service.

Despite this, its managing director’s advice is one all fleets considering telematics or already using telematics need to heed – tread very carefully and minimise your exposure to risk because not all the telematics providers will be here this time next year.

Ideally, fleets should be increasingly questioning why their lease providers are not providing the installation of the telematics hardware and offering them the service.

This would leave the fleet manager facing a minimal investment for the data that they need to run a safer and more efficient fleet.

As Raynal says: “It’s a no brainer if the hardware is paid for.”

However, while some lease companies already accept that the business model for paying for telematics black boxes, the industry is still far from reaching a critical mass, with many lease companies reluctant to go down that road.

Although this has not stopped providers such as Tracker and Eagle-i from exploring the lease provider model. Indeed Tracker is also considering other possibilities such as insurance companies or breakdown and recovery providers picking up some or all of the cost of hardware installation.

Here, the company has something of an advantage as its parent – RBS – also owns Green Flag, RBS Insurance and, of course, Lombard.