north american light commercial vehicle telematics market

Strategic Update of North American Light

Commercial Vehicles Telematics Market Exploring Opportunities in the Light Commercial Vehicle Telematics Industry

North America

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June 2012

Brief Summary

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Table of Contents

Section Slide Numbers

Executive Summary 9-24

Key Findings 10

Market Engineering Measurements 11

Top Level Strategic Factsheet 12-13

Total Market Embedded Subscription 14

Summary-Key Conclusions and Future outlook 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

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Table of Contents


Research Scope, Objectives, Methodology and Background 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 38-41

Driver and Restraints 39

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Table of Contents


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 53-55

Competitive Environment 54

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Table of Contents


Competitive analysis-Market share 55

Total LCV Telematics Market 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 70-71

New business channels for wireless providers 72

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Table of Contents


Wireless providers 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

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Table of Contents


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 118-128

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Research Scope, Objectives, Background and

Methodology

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Research Scope

Light Commercial Vehicles Vehicle Type

2011 to 2018 Forecast Period

2011 to 2018 Study Period

2011 Base Year

North America Geographical Scope

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

LCV Telematics Market: LCV in Operation North America, 2011-2018

Note: All figures are rounded. The base year is 2011. Source: Frost & Sullivan analysis.

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Research Aims and Objectives

Source: Frost & Sullivan research.

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.

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Key Questions this Study Will Answer

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?

Source: Frost & Sullivan analysis.

What is the business environment of the Light Duty Telematics Market, the dynamics and its impact?

LCV Telematics Market: Key Questions This Study Will Answer, North America, 2011

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?

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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.

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Company

Actsoft TomTom

Teletrac Xora

Xata Zoomsafer

Trimble Verizon

Hughes Telematics/ Networkfleets Webtech Wireless

Sagequest/ FleetMatics Nextraq

Telogis Navman Wireless

Wireless Matrix Ford Motor Company

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.

Source: Frost & Sullivan.

LCV Telematics Market: Key Industry Participants, North America, 2011

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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

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Definitions and Segmentation

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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.

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.

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Vehicle Classification Definition Gross Vehicle Weight

Ratings

Light Commercial Vehicles (LCV)

LCVs represent vans and light trucks. The typical

applications include pick-up and delivery, utilities,

airport operations, facilities management, and

several other vocational applications.

Class 2 3

GVWR <= 3.5T

Medium Commercial Vehicles (MCV)

MCVs represent all types of mid-size trucks, vans,

and buses. The typical application includes home

delivery, logistics, parcel delivery, utilities, waste

and recycle collection, airport operations, and

small and medium school and transit buses,

among others.

Class 4 6

GVWR >3.5T & <=16T

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

other types of vocations that demand high GVWR

trucks.

Class 7 and 8

GVWR >16T

Vehicle Segmentation

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Executive Summary

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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.


Non Automotive participants entering the market by ways of acquisitions and white labels. 1

The market growth will be least motivated by regulatory mandates but is mostly driven by risk and

liability decision 2

3 FMS is integrating with various applications and have provided versatile approach in tracking

mobile resources.

Increase in fuel prices and cost containment are driving fleets for operational efficiencies 4

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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.

2011 2018

~1209000

Units

~2898790

Units

LCV Telematics Market: Embedded solutions installed base forecast, North America, 2011-2018

0

500000

1000000

1500000

2000000

2500000

3000000

3500000

2011 2012 2013 2014 2015 2016 2017 2018

Embedded Telematics Unit shipment


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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.

0 20 40 60 80

Navigation

RVD

Navigation RVD

2011 13 27

2018 45 59

Supplier

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

LCV Telematics Market: Percent of penetration by

Individual telematics services, North America, 2011-

2018

26.64%

59.36%

13.24%

45.12%

LCV Telematics Market: Key Market Participants,

North America, 2011

Note: All figures are rounded. The base year is 2011. Source: Frost & Sullivan

analysis.

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Parameters Current Future

Market Status

• The potential size of the market is vast and

not fully penetrated (10.09% in a population of

11.09 million LCVs)

• Market is placed in the launch pad for robust

growth in subscription, unit shipments and

revenues

• Expected to have a steady

growth without any sudden

changes ( ~21.93% in a

population of ~12.77million in

2018)

Competition

• 44% of the market is consolidated by three

players

• 57% of market highly fragmented

• Aggressive competition from

current fragmented market

players and newer participants

for the bigger market pie with

competitive packages and asset

optimization services

Solutions

• Interest persists in basic track and trace

solutions along with idle asset monitoring

with geo fencing capability.

• Higher levels of awareness

among end users pushing

concentration levels towards mid

and high level solutions providing

continuous asset visibility

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.


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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 Future

Technology

• Seamless connectivity with cellular

and standard/optional satellite

coverage for high value goods and

government fleets

• 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


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Executive Summary - Overview of LCV Telematics Market Embedded, Portable and Smartphone Solutions are considered in this research.

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

TNOS

Communication Infrastructure TCU

GPS

Satellites

Satellite Communication

LCV Telematics Market: Overview of LCV Telematics market, North America, 2011


GPS

Satellites

Truck Service/Content provider

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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.

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

Development Growth Maturity Decline

2001 -2005 :

The market

volume for the

growth period

was low.

2005 onwards: Related

growth in technology and new

business models started to

emerge and the industry saw

a rapid growth

2025 : The

market would

slow down

growth and will

gain saturation.

LCV Telematics Market: Product Life Cycle Anlaysis,North America, 2011

Note: Note: All figures are rounded. The base year is 2011. Source: Frost & Sullivan analysis.

.

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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.

High device cost

Limited visibility of assets

Limited business intelligence

despite data availability

Lack of efficient routing

Standard Insurance

premiums

Customized low insurance

premiums

Back office Integration with data analytics

Route Optimization and better visibility

into the business

Availability of engine

data to track idling and

rationalizing fuel costs

Past

Present

FUTURE

• 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)

Results

• Increased Route Efficiency

• Higher Operational

Efficiency

• Optimal asset tracking and

management

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2011

Light Duty Vehicles

Embedded Solutions Penetration

~ 11.09 Million

10.09%

2011

LCV MCV HCV

62%

14%

24%

Executive Summary - Market Segment Overview The market is highly fragmented with a few players dominating the market . The market still holds significant

potential.

12% 4%

11%

15% 2% 17%

11%

28%

~17.82 Million

44% of the market is consolidated by

the top 3 players: Telogis, Trimble,

Teletrac are the top 3 players

LCV Telematics Market: Percent of

Embedded solutions penetration by

installed base, North America, 2011

LCV Telematics Market: Vehicles in

Operation(VIO) by percentage, North

America, 2011


LCV VIO

LCV Telematics Market: Percent of

Market share of key players by

installed base, North America, 2011

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Direct Cost

Savings

Operational

Benefits

Revenue

Generations

• Communication

savings

• Fuel savings,

• Driving distance

saved,

• Driver hours

• Employees in

Back office

• Staff Turnover

• Lost drivers

• Late arrivals

• New customers

• Customer

retention

through satisfied

services

Maintenance Operational Efficiency Revenue Generation

• Fleet monitoring

• Reduce wear and

tear

• Vehicle Recovery

• Less down time

• Fleet reduction

• Route efficiency

• Fuel Savings

• Better workflow and

field force

management

• Driver Operations

• Business

Intelligence to make

informed decisions

• Lower insurance

premiums

• Fuel efficiencies

• Customer

satisfaction

• Customer retention

More Streamlined process

Reduced back end support and better intelligence

Increase in vendor reliability and competitive portfolio

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.


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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.

Purchase Criteria

Solution

Cost

Service

Ubiquity

After Sales

Support

Brand Value

Quick

ROI

Value for

the money

Financial

Viability Reliability

High

Medium

Low

•Quick ROI

• Solution Cost

•After Sales

Support

•Service Ubiquity

•Experience –

Brand Value

•Number of

Services –

Value for the

Money

•Reliability – Fail

Safe

•Financial

Viability

•Appearance

•Convenience in

Purchasing

•Ease of Use


• 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

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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

Increasing integration of mobile assets to back office

Voluntary adoption of

telematics to manage costs.

Integration of telematics with

Insurance .

Imminent market

consolidation

Addition of Non Automotive

participants in the value chain


Key

Trends

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• Powertrain

• Safety

• Telematics

• Aftermarket

• Regulations

• Chassis

• Market Overview

• Growth Opportunities

2012 Comparative Analysis of European and North American Commercial Vehicle Telematics

Market

2012 Impact of GLONASS Mandate on the Russian Fleet Management Systems Market

2012 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

2012 Roadmap of New Services and Developments in the European and North American CV

Telematics Markets

2012 Strategic Analysis of the European and North American LCV Telematics Market

2012 European Fleet Managers Desirability and Willingness to Pay for Fleet Management

Systems and Telematics Services

Forthcoming

Relevant Research Commercial Vehicles Telematics and ITS Forthcoming. Research

2011 White Paper - Educating the EU Fleet Operators on Changing Value Proposition of Fleet

Management Systems – In-progress

2011 Strategic Dashboard for Commercial Vehicle Telematics in Europe and North America -2011

Edition – In-progress

2011 Strategic Analysis of CV Telematics Market in South Korea – In-progress

2011 Strategic Analysis of European HCV MCV Telematics Market – In-progress

2011 Strategic Analysis of the European Trailer Telematics Market – In-progress

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Relevant Research Commercial Vehicles Telematics Recently Published Research.

• Powertrain

• Safety

• Telematics

• Aftermarket

• Regulations

• Chassis

• Market Overview


2011 Strategic Analysis of North American Trailer Telematics Market - Published

2010 Strategic Analysis of the North American HCV MCV Telematics Market Published

2009

Strategic Analysis of European and North American Green Telematics Market for

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

2009

An Update of European Heavy and Medium Commercial Vehicle Telematics Markets -

Published

2009 Strategic Analysis of the Commercial Vehicle Telematics Market for Korea - Published

Existing


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Relevant Research Commercial Vehicles Telematics Existing Research.

2008 North American School Bus Telematics Market

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 Japanese Commercial Vehicle Telematics Market

• Powertrain

• Safety

• Telematics

• Aftermarket

• Regulations

• Chassis

• Market Overview


Existing


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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

http://www.frost.com/prod/servlet/me-research.pag