A new report from Frost and Sullivan, entitled Strategic Analysis of Commercial Vehicle Telematics Market in China, has revealed that the commercial fleet operations in the country are set to adopt telematics on a big scale in the next seven years, thanks to a big push by local government with regulations designed to encourage its usage.
Recently, the Chinese government made it mandatory that fleet vehicles come with pre-installed satellite positioning and telematics systems, in order to better improve their fuel economy and reduce vehicle wear. Previously Chinese fleets were considered some of the worst polluters in the world, with poor fuel economy. The government believes that with the initiative of forcing telematics, over the next few years we’ll see big reductions in the amount of fuel China consumes. This will not only be good for the economy and the environment, but means over the next few years the number of vehicles with telematics installed in China, is going to grow rapidly.
To date though, the uptake of telematics in China hasn’t been particularly strong, for a number of reasons:
“Apart from the high prices of telematics, which are often equivalent to a small fleet operator’s profits, the varied polices of local governments on commercial vehicles also peg back adoption rates,” said Frost & Sullivan Automotive & Transportation Research Analyst Will Wong of the report. “While changes in the regulatory framework are unlikely, varied local governments’ requirements will be a long-term challenge as they complicate the business of fleets.”
Some of the main vehicles and fleets being targeted for telematics hardware by the government are public facing businesses, like those providing bus services and taxis. Farm vehicles will also receive some focus, with tractors and much larger vehicles also needing to install tracking hardware. For those worried about the cost of implementing the technology, the government is recommending that partnerships be made among different companies so they can buy the telematics hardware in bulk, reducing its cost. Partnering with local telematics firms is also being recommended.
Auto manufacturers are likely to feel the pinch most of all however, as they are now required to install the telematics hardware in all commercially focused vehicles, like trucks and tankers. A basic telematics kit can cost several hundred pounds in some sectors, depending on its abilities. The manufacturers will either need to eat that cost themselves, or pass it along to the consumer. Neither situation is entirely desirable.
However, as much as some companies may struggle after this news, Wong noted that this was a great time to be a telematics provider in China and that offering good rates with a decent product, would see masses of businesses sent their way. It would be prudent he said, to make their prices very competitive, at least for the near future.
“The market will open up for telematics providers that have the flexibility to offer customized solutions,” he said. “In a market marked by cost consciousness, meeting the budgets of various scales of fleet operators is vital for success.”
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