I got an interesting report from global consulting firm Frost & Sullivan last week that predicts nearly half of all medium and heavy trucks built every year in Europe will come standard with a factory-installed fleet management system or “FMS” of some sort by 2017.
Now, of course, a lot of folks can rightly say, “Big deal – that’s Europe and doesn’t affect me here in the U.S.” The thing is, most of the OEMs building trucks these days are global entities – meaning that what gets built into commercial vehicles in one part of the world may easily get transferred to another part (as in the U.S.) to help generate economies of scale to keep costs in check.
Indeed, U.S. truck makers are already incorporating parts of this “build in” strategy, as companies like Peterbilt Motors Co. and Kenworth Truck Co. are factory-installing entire “truck computer systems” into their products to provide a single platform upon which to incorporate a variety of digital services, including telematics offerings now typically installed separately with their own hardware.
[Peterbilt’s Erik Binns showed off the company’s “SmartNav” system last year at the Mid America Trucking Show; technology that allows for a whole range of capabilities to be operated from a single computing hardware platform built right into the truck.]
Frost & Sullivan Analyst Sathyanarayana Kabirdas noted in the company’s report that providing a single factory-installed “open and flexible platform” will allow vehicle manufacturers to survive long-term in the ultra-competitive telematics market.
Yet this strategy is not necessarily a “slam dunk” for OEMs, he cautioned.
“A key issue for OEMs is that hardware penetration might not necessarily equate to service penetration,” Kabirdas explained. “This is because some operators do not want to be linked to OEMs or to a particular OEM.”
Moreover, operators with mixed fleets do not favor proprietary OEM-installed telematics system for the obvious reason: they’d have several different platforms in their fleets, thus, how to get them to work together smoothly? Thus, even with the hardware in place, OEMs are unlikely to win all the associated service opportunities.
“Even if OEMs start to offer FMS as a standard, there is always a difference between hardware being in place and the service being activated – these two things are very different,” Kabirdas said. “The presence of the hardware in the truck does not necessarily mean that it is going to be used by the fleet operator.”
Still, he believes the strategy of offering a standard quality FMS “fitment” in commercial trucks – suiting all types of customers – is critical to extending the OEM-customer relationship and should help OEMs improve their “market presence” in the coming years.
“This strategy will not only help OEMs to increase their base of active subscribers but will also help them collect a large pool of real-time vehicle specific data to build better trucks for the future,” Kabirdas noted.
[The telematics system show below from Cinterion, for example, offers several reasons why OEMs want their truck products to play a more active role in the development of this technology.]
Kabirdas added that the best way for OEMs to increase the base of active subscribers for their telematics offerings is to offer an initial free subscription period of at least a few months or years – something that Volvo Trucks North America is already trying out with its new Volvo Truck Support Service program. “This will allow the truck owners to realize the benefits of FMS,” Kabirdas noted.
