Is PAYG telematics the industry’s way forward?

Regarding your story “Telematics firms fight for survival” (Fleet News, July 16), the telematics industry must adapt to its changed environment by evolving, and yet critics of our new ‘pay-as-you-go’ (PAYG) payment system seem intent on resisting the tide of change.

They say non-committal PAYG models are high-risk for both supplier and customer, whereas a fixed-term, fixed-price contract provides security for both supplier and customer.

A five-year lease contract through a third-party finance house or bank provides a large amount of cash – immediately – for the telematics supplier, and a  five-year financial obligation for the customer, which survives even if the supplier faces extinction.

The customer bears all the risk. Nor is there a benefit to the customer in fixing prices for five years: vehicle tracking system prices will only go one way as technology evolves – downwards.

PAYG is a natural progression of the service business that we have been operating for the past eight years.

It allows customers greater flexibility and it is what they want.

But companies that have relied on advance payment for service and support contracts in the past will struggle to support existing customers unless enough new customers also sign up to the lease model.

Our advice to fleet operators is not to sign a lease agreement which provides immediate payment to the supplier for service and support charges as well as the cost of the equipment.

If you must, don’t rely on published financial information on the supplier to judge its viability. In today’s market that’s positively prehistoric.

Andy Walters, managing director, Quartix

There has been much debate on the emergence of PAYG as a valid business model for telematics providers.

Many of the cases put forward from the industry appear to be less focused on the customer and more on the internal profitability of each telematics business.

That has to be wrong.

The benefits to the customer are unmistakable; they have no large capital outflow and can more or less terminate if they have business cash flow issues, are unhappy with the service or the benefits that were envisaged.

However, paying a higher monthly service cost over long periods can prove more expensive for customers.

By moving to a PAYG model, risk moves from the customer to the provider.

The challenge is how to price the service, given this transfer of risk, and there is a danger that the industry will mis-price, putting more pressure on an already fragile market.

Bill Raynal, managing director, Tracker

Fatal accident cases throw up inconsistencies

There are some interesting aspects to the case of the businessman convicted of causing death by driving while unlicensed and uninsured (fleetnews.co.uk, July 27).

The most surprising thing is how short the prison sentence was – Lunn had never held a driving licence, had previously had a conviction for drink- driving (so must have been warned about driving unlicensed and uninsured), failed to stop or try to aid the victim, and then attempted to get the car repaired and resprayed to conceal his part in a fatality. All that is only worth 22 months?

Compare this with the woman who was speeding and talking on a mobile phone and killled a cyclist who jumped a red light and cycled into her path.

She got four years.

There does not seem to be much consistency in sentencing.

I also cannot see that who the car is registered to is in any way relevant if a prosecution is being considered under corporate manslaughter or health and safety legislation if the vehicle was being used for business purposes at the time.

If it was, the legislation should apply – if not, all employers have to do is to ensure that all company vehicles are registered to their employees’ spouses (the registered user is not, after all, necessarily the owner).

Edward Handley, WRRS Consultancy