Industry Insights
The global Commercial telematics market size was estimated to be worth USD 17.54 billion in 2016. Technological advancements such as real-time engine diagnostics, GPS tracking, fatigue alert, and drive lane assist are changing the current driving experience, and penetration of such features in mid-range vehicles is expected to boost the market.
U.S. Commercial telematics market, by solution, 2014 - 2025 (USD Billion)
Rising fuel prices coupled with growing number of vehicles has resulted in frequent traffic congestions where telematics comes into the picture, which provide alternate routes to prevent congestions thereby improving the fuel economy of the vehicle. These factors are expected to result in an increasing adoption rate of telematics in developed as well as developing nations.
Automobile manufacturers are implementing smart driving systems to minimize human interaction with vehicles to reduce the number of accidents. Over the recent few years, several insurance companies are utilizing telematics to comprehend the driver’s driving style to issue a premium, and claim benefits to the owner also called as the usage-based car insurance (UBI).
By combining on-board diagnostics with GPS, the exact location and speed of the vehicle can be determined. This information can also be utilized to determine the internal performance of the vehicle. This is has resulted in changing insurance policies from pay as you drive (PAYD) to pay how you drive (PHYD). In addition, business models such as manage how you drive (MHYD) are likely to gain momentum over the next decade.
Companies such as Ctrack, DirectLine, and Insure The Box Limited, and Octo Telematics are some of the key participants that now integrate telematics with insurance. Over the next few years, the number of vendors entering this space is expected to increase substantially on account of the lucrative potential in this space.
Despite the introduction of telematics 15 years ago, the adoption rate still is minimal in regions such as Middle East & Africa and countries such as India. The high cost of telematics units and lack of availability in countries such as India and other emerging economies is expected to hamper the growth.
Segmentation By Solution
Fleet/asset management system segment was estimated to be worth USD 4.99 billion in 2016 and is expected to grow on account of its ability to monitor location, status and performance within the fleet. Fleet- based organizations, are benefited by the technology to reduce fuel consumption, mitigate overtime payouts, decrease in working hours and to become eco-friendly by performing more service calls is one of the growing trends which leads fleet management system to become a potential segment over the forecast period.
The infotainment system segment is anticipated to grow at a CAGR of 24.2% on account of the advantages it offers, includes- traffic safety, traffic efficiency, connected information and convenience & interaction, machine efficiency, and time duration and frequency for which the machine is used. Connectivity of the user to the vehicle via Bluetooth, Wi-Fi, cloud data and data storage and USB ports which enables handsfree operations is expected to result in the tremendous growth of the segment over the projected period.
Segmentation By Service
Consulting and design services dominated the market accounting for 45.5% of the share in 2016. Cost-effectiveness of this service and low-cost vehicle tracking have been the primary reasons for the services to boom in the market.
Integration and deployment services market witnessed growth owing to the standardized boxes which are installed in the vehicles and the one-time installation. Maximize fuel efficiency and increase vehicle uptime can be tracked by the fleet managers on a real-time dynamic basis.
Segmentation By Vehicle Type
Growing demand for Electronic logging device (ELD) in commercial vehicles in the region such as North America is the key driving factor for the growth of the commercial telematics market. Heavy commercial vehicles (HCV) is expected to be the fastest growing segment followed by light commercial vehicles (LCV).
Segmentation By Product
Hardware segment emerged as the dominant product segment in 2016 and accounted for 92% of the overall market revenue share. The hardware consists of connection devices, tracking, sensors and user interface. The benefits provided by telematics such as higher work productivity, less vehicle maintenance, greater security, safer operations, less time consumption through proper monitor and surveillance offers abundant opportunities for the growth of the market over the forecast period.
Software segment is the fastest growing segment over the forecast period owing to the rise in the use of an operating system that controls the system hardware devices. The telematics software includes GPS tracking, the mobile application for fleet management and tracing, business intelligence module, live productivity dashboard, API (Application Programming Interface) and others. API is integrated with a wide range of services comprising of applications such as work management, transport management, ERP, routing & scheduling, tracking & tracing, and others.
Segmentation By Source
The aftermarket segment was valued at USD 12.08 billion in 2016. It has been witnessed recently that the companies are taking the initiative for the integrated telematics systems and the aftermarket responsibility for the same. Consumers, on the other hand, prefer going for an integrated telematics system with after sales services as well.
Global commercial telematics market, by source, 2016 (%)
Segmentation By Region
In North America, there are more than 13 million commercial vehicles on the road, and commercial automobile fleets are a crucial part of the North America economy. The fleet management market in North American market is expected to linger on a development track, fueled by the implementation of regulatory norms such as the ELD (electronic logging device) mandate 101 by the government body, Federal Motor Carrier Safety Administration (FMCSA) in the U.S. The population owning non-private commercial vehicles is projected to escalate during the forecast period which will drive the fleet management market.
Asia Pacific is anticipated to be the fastest region at a CAGR of 25.5% over the forecast period owing to increasing investment in transportation infrastructure and information technology, increasing trade and logistics and development in connectivity technologies such as Wi-Fi, Bluetooth, cellular networks and satellite communications. Lack of awareness of telematics solutions, high prices of telematics equipment and low average purchasing power is anticipated to hinder the growth of the telematics industry.
Two of the biggest market in this region is India and China. Rising vehicle production and increasing car theft are projected to boost the Asia Pacific telematics market over the forecast period.
Competitive Landscape
The market is consolidated in nature and highly competitive. Many existing players in the market are focusing on developing and innovating their product portfolio. Fleetmatics is known to be one of the largest sellers in the Americas with about 600,000 functional units present in the region. Other significant international players include PTC, Inc., TomTom Telematics, Zonar Systems, Inc., OCTO Telematics Ltd, Trimble Inc., Verizon Telematics, Inc., Mix Telematics International (PTY) Ltd, Koito Manufacturing, Omnitracs, LLC, Masternaut Limited, Inseego Corporation and Volkswagen Commercial Vehicles.
