On the road to adding value

John Osborne assesses the impact of telematics on asset
management for fleets and finance companies
 
 
 

Telematics is often considered a solution looking for a problem.
That is because the increased availability of electronic devices
such as satnav and voice-activated personal digital assistants
which can access a customer’s details and help a driver find that
address has prompted many people to install such devices.
Increasingly such technology is fitted as standard in many new
cars. However critics have argued that such equipment is
unnecessary and that it can even reduce the value of a hired or
leased
car.          

Go deeper with GlobalData

Data Insights

The gold standard of business intelligence.

Find out more

Access deeper industry intelligence

Experience unmatched clarity with a single platform that combines unique data, AI, and human expertise.

Find out more

Martin Phillips, head of fleet operations at ING Car Lease,
which has a UK fleet of about 46,000 vehicles, says that the lessor
would not recommend putting thousands of pounds’-worth of
telematics equipment into a car because usually it would not add
much value to the car. However he says that satnav systems can add
value to certain vehicles.

“Premium cars, for example,” says Phillips, “benefit best from a
combination of desirable options, and satnav alone will not
guarantee strong future values.” He stresses that the customer must
be able to see a demonstrable benefit and that there must be
deliverable values.

Mileage is an important consideration for a vehicle leasing
company. Phillips believes that telematics will be more popular
with leasing firms and lessors if telematics service providers can
demonstrate that this technology enables business and personal
mileage figures to be accurately obtained. If they can, then the
equipment is likely to be more helpful when producing
contracts.

 “It will also have significant benefit for the in life
management of a vehicle,” explains Phillips. “Correct and accurate
mileage allows proactive servicing. This ensures from a duty of
care perspective that vehicles are serviced in line with the
manufacturer’s recommended intervals. It also allows for analysis
and forecasting of likely wear to items such as tyres.

GlobalData Strategic Intelligence

US Tariffs are shifting - will you react or anticipate?

Don’t let policy changes catch you off guard. Stay proactive with real-time data and expert analysis.

By GlobalData

 “Proactive service and maintenance is the biggest benefit
of telematics,” continues Phillips, “because it saves time, ensures
warranty conditions are met, avoids costly bills, and identifies
possible needs. Also, it is an important part of a firm’s duty of
care policy. Furthermore, it provides company car drivers who have
to claim back fuel a simple way of logging their business
mileage.”

John Wisdom is group sales and marketing director, at telematics
provider Cybit, which has around 1,500 business to business clients
for its fleet and asset management systems, managing approximately
40,000 vehicles.

He says that Cybit’s customers are finding telematics useful in
running fleets of cars because it provides an extensive range of
management and exception reporting to help improve driver safety,
productivity and the efficient use of the vehicle. “For example,
identifying and then counselling drivers who have a propensity to
speed may equate over time to fewer accidents and an improved
insurance risk profile. Reducing speed also correlates directly
with reduced fuel bills. Some Cybit customers are achieving up to
10 per cent in fuel savings by managing speeding.”

 

Timesheet savings

Timesheet reports will detail start, arrival, departure and
finish times, enabling managers to check timekeeping and
productivity and quickly to determine whether the most appropriate
route has been taken by the driver. They can also be used to
question whether the task could have been performed by someone else
located nearer.

Fleet managers can use mileage trend reports to check
utilization and rotate assets where appropriate. Vehicle
maintenance reports can proactively notify the fleet manager when a
vehicle is due for servicing or MOT.

To improve administrative processes businesses are increasingly
turning to telematics to automate business and private mileage
reporting. Telematics are also being used to simplify expense
claims management.

Round-the-clock surveillance

Contract hire and leasing company ALD Automotive claims that
there are also many benefits to the technology. Marketing director
David Yates says that ALD’s ProFleet2 telematics product helps
fleets “to overcome both cost issues and potential employee
resentment often associated with in-car telematics products.” He
adds: “The PF2 software, which is being added to new vehicles in
ALD’s fleet, enables a lot of management and driver information to
be transmitted and then analysed online helping companies comply
with duty of care legislation.”

Yates says that the telemetry units provide a round-the-clock
audit of business and private travel for drivers and keep a vital
check on a vehicle’s service schedule. These are designed to enable
fleets and drivers to meet health and safety legislation and
protocols including the Working Time Regulations, which govern
employee hours.

According to the RAC Report on Motoring, over a 12-month period:
one in six company cars had not been serviced; one in five private
cars (a total of 5m cars) are used on work-related journeys; one in
six private cars driven on company business had not been serviced;
300,000 employees drove more than five hours every day on work
related business; one in five fleet drivers admitted to “sleep
driving”; and that only 2 per cent of companies checked private
cars used on work related journeys for technical safety and
roadworthiness.

ALD says that if an at-work motorist is involved in a serious
road accident the courts may determine ‘a sleeping driver’ caused
the incident or that a missed service constituted the vehicle not
being fit for purpose. The result will probably be a large fine or
a jail sentence for a director/fleet decision-maker as well as
punishment for the driver. Yates claims that telematics can help
prevent such an eventuality as information recorded provides a
unique vehicle and driver audit trail.

Keeping track

Accident avoidance and risk management do concern fleet
managers. “Certainly there are lots of benefits from having
telematics in our fleets”, says Patrick Nolan, fleet manager at
construction company Alfred McAlpine. “It enables us to detect and
mitigate our risks from falsified accidents, and helps us and our
local authority clients, by protecting us from prosecution. Also it
is a good way of checking timesheets.”

Nolan says that currently telematics is in use in 400 vehicles
out of a fleet of 1,650. These are mainly commercial vehicles used
on construction and highways contracts. “We have not decided yet to
roll out on the entire fleet,” explains Nolan, who adds that the
equipment has been supplied by Cybit. He said that Alfred McAlpine
is considering whether to put it in cars.

He adds that telematics has enabled the company to avoid excess
mileage charges: “There are other ways of obtaining information
about mileage, such as fuel cards, but these can be expensive in
terms of an employee’s tax and for the company.”

Although this technology can bring immediate benefits to a
business, Nolan says he has seen too many cases where the supplier
and the customer have not worked closely enough together. He thinks
it should be treated in the same way as a new IT system; it will be
more beneficial if both parties put plenty of resources into
implementation.

Telematics is helping to reduce fleet operating costs but
whether it is likely to become more popular in the asset management
business may depend on how much value it can add. Aidan Rowsome,
vice president at technology provider GreenRoad says that is how
this group of products is being treated: “Leasing has become such a
commodity service that firms are frantically looking at telematics
so they can offer value-added services and differentiate their
offerings.”

Rowsome adds: “GreenRoad is talking to a number of leasing
companies about including [GreenRoad’s web reporting product] Safety Center in their vehicles. These companies are interested in
modifying driver behaviour and reducing crashes and fuel
consumption.”
           

The debate about the effect on issues such as residual values is
likely to be ongoing.

Rowsome says that telematics has no impact on residuals because
of the short lifecycles of this kind of technology. He says this
means that the residual value deteriorates considerably. It will be
interesting to see how new products are received in this fast
changing market.