Telematics companies are going on the offensive in an attempt to drum up fleet business.

Suppliers going bust and fears about the viability of remaining providers have hindered uptake by fleets.

However, the business case for installing telematics is convincing, provided the supplier keeps its head above water.

Fuel savings of 10% are not uncommon and returns on investment of up to 500% have been reported.

There is also the bonus that you are 95% more likely to get your vehicle back if it is equipped with telematics and is stolen.

Despite this, the majority of car fleet managers remain reluctant to invest, according to Cybit. 

“Organisations have focused on the engineering and service elements of their businesses,” says John Wisdom, Cybit sales and marketing director.

“However, we expect the management of work-related road safety to play an increasing role to drive uptake.

"Many of the benefits seen in the LCV market around driver behaviour and safety are immediately transferable.”

Despite this, more than two-thirds of fleet managers don’t have tracking installed on any of their vehicles and just one-in-10 has tracking across their entire fleet.

“There is a lack of belief in that they can get the benefits,” says Bill Raynal, managing director of Tracker. “And when they have these doubts they are not going to commit to capital outlay upfront.”

According to a Road Angel Fleet survey at this year’s Fleet News Company Car in Action, only 11% of more than 200 fleet managers surveyed had tracking across their entire fleet, while 68% did not use it at all.

Graham Mackie, managing director of Road Angel Fleet, indicated that this was down to a lack of awareness of the benefits of telematics.

“It’s understandable that fleet managers, and their finance departments, are hesitant when it comes to investing in a tracking system – it can involve a substantial capital outlay and the tangible, monetary benefits are often hard to measure,” he said.

“Measuring how much fuel you save by reducing idle times or private mileage is very difficult, as are the productivity gains from more efficient vehicle use.”

Road Angel has now tried to quantify the benefits of telematics.

“On average each continues to save in excess of £1,000 of fuel per vehicle, per year – and that’s not taking into account any insurance or maintenance savings. That equates to a return on investment of more than 500% in some cases,” Mackie says.

But, even when educated to the benefits, fleet managers remain reluctant to pay upfront for hardware and installation as well as for the services.

As a result, telematics companies are adapting their business models. The arrival of pay-as-you-go (PAYG) earlier this year exemplifies this process.

“We have had to do something different,” explains Raynal. “There is still much debate about PAYG, but it removes the barriers by moving risk away from the buyer and on to the seller. For the consumer that is a very good answer.”

Quartix, which was one of the first to offer PAYG, has just teamed up with Google Maps but it is its PAYG offering that continues to attract most attention from fleets.

However, not everyone favours PAYG. Thomas Schmidt, managing director of TomTom Work warns that companies offering PAYG must fund the hardware upfront, which could adversely affect their cashflow and ability to invest in future technologies and customer services.

“The customer needs to weigh up the short-term gain against the potential pain,” said Schmidt.

“What happens when the supplier is no longer able to sustain the model or even worse can no longer provide the basic service?”

But the tough times are bringing opportunities for those companies that have weathered the storm.

Trimble, one of the world’s biggest telematics suppliers, is expecting to put 30,000 new vehicles onto its books this year - most of which will come from fleets that are experiecing problems with current suppliers.

It has also indicated that it is on the acquisition trail, with an eye on telematics suppliers currently struggling to stay above water.

“We are the biggest and the fastest growing company in this market,” says Andrew Yeoman, managing director of Trimble.

“We are attractive to fleets because we are the cheapest and the simplest to deal with. We never ask for money upfront and never involve a lease company.”

Other telematics companies are using ever more ingenious ways of attracting new customers. Trafficmaster has created a successful partnership with Citroën, which allows it to offer its navigation and telematics service to new Citroën van buyers at the point of sale.

This has proved successful. Trafficmaster now plans similar partnerships with other vehicle manufacturers.

“We believe that OEM partnerships will provide a significant source of growth in the future, and are involved in a number of ongoing discussions with potential partners,” says marketing director John Lawrence.

It already has a partnership with BMW, which allows drivers to locate their vehicle on demand, and provides automated business/private mileage analysis via a web-based service. 

Trafficmaster has also revised its accounting processes so that it now recognises less revenue on initial unit sales and a greater proportion of revenue over the contract duration.

Over the past six months, it has won some notable fleet accounts, including South Tyneside Council and Liebherr. Its business services division, under which Trafficmaster accounts for its fleet telematics operation, saw revenue grow by 32% to £19.4m in the first half of the year, with operating profit growing by 208% to £2.7m.

The company has also seen an increase in the number of long-term contracts that it is funding through its in-house lease provider, which it says reflects a “lower appetite for such deals in the wider credit market”.

It is this “lower appetite” by banks and other lenders to provide credit to fleets to buy telematics services that has wreaked havoc in the industry.

Telematics companies are also forging partnerships with other service providers. Navman Wireless has begun offering a 20% reduction on vehicle tracking hardware to The Fuelcard Company customers.

In return, its clients are being given the opportunity to save up to four pence-per-litre on the national average diesel price, with an exclusive fixed weekly rate. 

Cost and time savings

Many organisations have used telematics to transform the efficiency of their fleets:

May Gurney Highway Services Martin Potter, operations director, says: “We saw a 5% increase on
productivity (circa £100k per annum) and reduction in mileage saving £100k per annum. Fuel costs fell
by 10% as a result of better planning and monitoring.”

EIC Charlotte Cooke, time and attendance manager, says: “On average we see one more job per engineer, giving us £40,000 in efficiency savings as well as the natural uplift in revenue. The decrease in private mileage saved £26,611 – our total fuel usage fell by 10%”.

Kwik-fit Mobile Simon Lucas, operations director, says: “ROI is measured in terms of workforce productivity and fuel cost reduction. Our sector is increasingly competitive and our challenge is to maintain competitive advantage by reducing costs, improving efficiency and at the same time provide innovative customer service. The range of operational and management tools provided by Cybit’s system assist us in managing all of this”.

How to counter the 'big brother' accusations

Mention the words ‘vehicle tracking’ and the customary response is ‘it’s a bit big brother, isn’t it?’.

But by explaining to staff that tracking can actually help them do their job, and not simply act as a spy in the cab, is the best way to successfully implement the devices.

Navman Wireless has listed five tips to successfully implementing tracking on the fleet:

1 Keep people informed Tell staff exactly how tracking will impact on them on a day-to-day basis. You should always include an invitation to staff asking them for their questions and a clear feedback route.

2 Explain why Be as open as you can about the reasons for installing tracking, and get relevant union representatives involved as early as possible. Let drivers see the vehicle’s data sheet so they know what
information is being provided. This takes away the fear factor.

3 Support technophobes Train staff who are scared of technology. Around half-an-hour is enough to take away the fear factor and also shows you are getting them involved.

4 Focus on fairness Tracking improves the efficiency of the whole fleet without having much direct impact on drivers’ working days.

5 Do not install covertly Navman Wireless never recommends installing tracking secretly. This would simply reinforce the idea that you are snooping, and sets you up for a huge backlash if staff find out.

Case study: Wirral Partnership Housing

Wirral Partnership Housing, one of the largest registered social landlords in the north, wanted to introduce Navman Wireless tracking across its 129 vehicles.

However, the introduction initially prompted questions about trust among the strongly unionised workforce.

Transport manager Andy Brown said: “Honesty was the best policy when it came to justifying our plans. We started by clearly stating the benefits – better fuel economy, security of the vehicle and its contents and proof of attendance at a job.

“We were also able to defend our drivers – we received two complaints, once claiming our vehicle has driven into another car and failed to stop.

“On both occasions we were able to provide solid evidence that our staff were not responsible, which meant a lot to the people involved.”

Source: Navman Wireless