Truck fleet owners are gradually embracing telematics solutions that help make their trucks smarter. As the telematics market is expanding, major OEMs are upping their game and standardising factory fitment of telematics hardware. On the other hand, startups are trying to grab market share with simplified, customer-centric solutions. However going forward, collaboration between startups and OEMs will be key to growth.
How do you make your vehicle talk?
You can either purchase a car that comes with an on-board diagnostics system, GPS, Bluetooth, TPMS, and other such things or get them retrofitted.
This makes you more aware about your vehicle, your driving quality, and perhaps, help you save on fuel — a recurring purchase.
Recurring purchases are a headache for mega businesses, such as large truck fleet owners, who want to limit them as much as possible.
This is where telematics solutions come in. Much like cars, telematics solutions for trucks are ‘productivity enhancing tools’ for logistics operations, taking care of multiple aspects — analysing driver behaviour, monitoring vehicle speed violations, route optimisation, vehicle health diagnostics, accident prevention, and much more.
Globally companies are beginning to understand the benefits and the return on investment (RoI) of these systems. In the near future, every truck operation will be supported by a telematics system.
The telematics market in India is currently split between OEM solutions like Tata Motors’ Fleet Edge, Ashok Leyland’s iAlert, BharatBenz’s Truckonnect, Mahindra’s iMAXX among others on one hand, and aftermarket solution providers including Loconav, Intangles, Arya Omnitalk, and Fleetx on the other.
So who is winning this battle? Startups or the OEMs?
Sensing the opportunity
More than a decade back, it was up to the vehicle owner to go out in the aftermarket to purchase a telematics solution and make the vehicle talk.
Soon, OEMs saw this opportunity and started putting telematics hardware right in the factory assembly-line. Now, truck OEMs in India are standardising factory fitment of telematics hardware and offer a one to three year free subscription for the software-as-a-service product, selling it as a bundled solution along with the truck.
This trend has picked up pace in the last three to four years, however, there is still a large aftermarket. There are more than a crore vehicles which OEMs have already sold but they do not have a functional telematics system.
While it is easy for OEMs to sell telematics as bundled solutions, startups have been nimble enough to grab market share.
Go-to-market strategy
Since the telematics market is in a very nascent stage it depends on who is selling what and how.
“Most important is to understand the fleet operators’ jargon and dumb it down so that the fleet owner gets a very simple one-line problem statement as to what he needs to act upon.”
— Anup Patil, CEO, Intangles
“Startups are promoting their products aloud, talking about their benefits, so people are buying into their solutions. OEMs are not selling it that way. For them, it is just a feature they have in their vehicles,” says Jasveer Singh, CEO of Gurugram-based Instant Transport Solutions.
For startups, it is a tough entry point since large OEMs already have an established base of customers as they sell the product as a free add-on along with trucks. “OEMs are definitely our competition for one simple reason that OEM solutions come for free at least initially and it takes some level of effort to convince the customer that there is nothing that comes for free,” says Anup Patil, CEO, Intangles.
Competition from OEMs may intensify going forward, as they are upping their game. OEMs are realising that telematics solutions can be their cash cow, giving them another recurring cash flow beyond vehicle sales.
Therefore, if they are able to showcase that their vehicles have better telematics solutions, they will have an edge in vehicle sales.
Fleet owners say while earlier there were no follow-ups by OEMs after the end of the free subscription period, now they are aggressively following-up for renewals.
What’s the moat?
The addressable market for advanced telematics comprises long-haul trucking operations that are time-sensitive, involve hazardous material, demand high reliability, and even involve penalties from customers in case of violations.
Fleet sizes upwards of 30 trucks are a sweet spot for startups and third-party vendors because these fleet owners are trying to move to a 50 to 100 truck fleet.
Amidst rising costs and narrowing margins, they are constantly looking at where their next savings can come from, so that they can make essential, bigger capital expenditures.
Although small fleet owners dominate the India market, their demand for technology solutions is very limited since they work by attaching their trucks with larger players or in a marketplace model.
For startups, a ‘single dashboard’ is the strongest influencer in sales conversions.
For instance, if you are a fleet operator with multiple truck brands like Ashok Leyland, Eicher, Tata Motors in your fleet, third-party vendors give you a single dashboard, where data on the performance of all brands can be compared and consumed.
Comparatively, each OEM has a different dashboard, different reports, and different style of presenting the data. This makes it fairly complex to consume data and make decisions out of it.
Another moat for startups is simplifying complex solutions. While fleet operators are now getting really sophisticated in India, their workforce is still not upskilled to consume large amounts of data, do an analysis, and draw inferences out of it. Startups are doing a good job of simplifying data consumption so the not-so-skilled service staff and technicians can make sense of it and bring about required changes.
“Most important is to understand the fleet operators’ jargon and dumb it down so that the fleet owner gets a very simple one-line problem statement as to what he needs to act upon,” says Anup Patil, CEO, Intangles.
For example, let’s say a truck has poor pickup. This is a problem statement which typically a driver will give as a statement to the service station guy. This can be by virtue of multiple systems inside the vehicle — the intercooler or turbocharger malfunctioning or the air filter system may be choked up among other things.
The analytics system will tell the operator how serious the problem is, how it is affecting the vehicle, what is the problem the driver is facing, and lastly how do you go about fixing the problem.
The fleet operator gets three bullet points as a WhatsApp or as a mobile notification — this is the problem, how it is affecting the vehicle, and how he can go about fixing the problem.
“Now fleet operators have started taking screenshots or printouts and started sending it along with the driver telling him to go to the service station and get this fixed,” says Patil.
A good number of fleet operators are buying into startups for their hands-on approach. More importantly, they can customise it to their operational requirements.
Jaipur-based KM Trans Logistics, for instance, has a fleet of 2,200-plus trucks, involved in transportation of steel, automobiles, tractors, lubricants, minerals, FMCG, and spare parts.
Every year the company adds or replaces around 200 vehicles. The company has its own control room team which comes up with specific requirements on how they want to see different sets of data and communicates the same to its third party vendor. “OEM solutions are designed with the concept of one-size-fits-all. So we have developed our telematics systems with third-party vendors as per our needs,” says Anuj Jain, director, KM Trans Logistics.
For fleet owners, these customisations are required to suit their own operating standards based on the kind of cargo they are carrying or the customer’s needs. “If you are working with Toyota, then safety comes first. They say you can’t drive more than 360 kilometres in a day. But if you are moving e-commerce products, the fastest wins the race. So, if you are working with Delhivery, you will have to drive at least 700 kilometres to 800 kilometres per day,” says Anuj Jain.
Jain wanted to develop a safety dashboard based on its own parameters — speed of the truck should not exceed 60 kilometres per hour, the vehicle must take a break of half an hour after every four hours, the truck should not be driven during night time and the truck cannot do harsh braking and harsh acceleration. The system should send alerts in case of violations.
These customisations would be difficult for an OEM unless a large number of customers ask for the same.
“Every customer is different in terms of what kind of organisational structure it has. So every customer needs reports in a different format,” says Vineet Sharma, CEO, Fleetx. Startups can also share raw data, say what was the vehicle speed at the exact moment of the accident so that the same can be analysed by a safety consultant.
Some fleet owners say there has been a lot of ambiguity in the exact mileage different trucks are giving. Startups have solved this to a good extent, enabling fleet owners to integrate mileage with driver reconciliation systems.
Let the price war begin
For fleet owners, pricing doesn’t make or break a deal. “When I am buying a vehicle for INR25 lakh to INR30 lakh, an additional investment of INR5,000 to INR6,000 for telematics [device] doesn’t make much difference. I would rather negotiate for tyres, colour or in-cabin comfort, AC, or power charger,” says a fleet owner.
Several fleet owners say startups’ solutions are very competitively priced, not cheaper than OEM solutions.
But the fact remains that the Indian market is extremely price-sensitive. Therefore, there is no price loyalty. This is the biggest challenge that telematics service providers are facing.
Leading third-party vendors are, however, venture funded and trying to capture market share by giving freebies or discounts. This has pushed down prices in the last few years. “In general, one can say that if an average fleet owner used to spend around INR1,500 per month per vehicle, now that has reduced to INR500 per month per vehicle or even lesser,” says Mugundhan Deenadayalan, senior industry analyst, Frost & Sullivan.
Looking ahead
Going forward, in the next five to seven years, OEMs are expected to dominate the telematics hardware market because most vehicles will come with factory-fitted telematics devices.
But it is unlikely for them to dominate the solutions (software) market. This is because it is difficult for them to go much beyond their expertise, which is building trucks.
As per data from Frost & Sullivan, globally OEMs have about 20% market share in the solutions segment, which largely comprises software-as-a-service solutions. The rest 80% is being controlled by aftermarket telematics service providers.
Globally, all OEMs have a vehicle-connectivity department and they are betting big on these solutions. Therefore, their share will increase but that is not to say that they will dominate the market. India may follow a similar trend.
Taking a cue from global trends, a collaborative relationship between startups and OEMs may be a dominant trend.
The collaborative/partnership model is already established in North America and Europe. In North America, Daimler Trucks recently partnered with Lytx, a dashcam/video-safety solutions provider.
There are plenty of such examples globally and in India it is beginning to happen. Consider Intangles partnering with Mahindra for its iMAXX solution.
“It will be a win-win for both sides. Telematics Service Providers get to advertise and be present on multiple OEM platforms at the same time, so they have a wider reach or audience. So, it will be like buying a smartphone with some apps already pre-installed on the mobile,” adds Mugundhan.
Therefore, for third-party vendors, it will boil down to how well they have built their relationships with OEMs, for the latter to accommodate their solutions into their platform.
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