Telematics is well known for being used to calculate insurance premiums. But as the technology develops and demand for connectivity in the car market rises, telematics is increasingly being used in different ways, particularly by fleet operators.
According to online statistics provider Statista, the global telematics market was predicted to reach $40bn (£32.3bn) in 2016, up from $15bn from 2011.

“By the end of 2015 we saw 12m telematics policies globally, and by the end of 2020, it will be 93m. It’s growing very fast,” Jonathan Hewett, group chief marketing officer at Octo Telematics, tells Leasing Life.

Though traditionally most known for the ‘black box’, telematics technology increasingly involves a suite of devices, such as windscreen-mounted devices and mobile phone apps designed to monitor a vehicle’s driving data.  
Benefits to fleets

Telematics is increasingly being used by companies which run vehicle fleets to drive efficiency and manage costs. Jonathan Hewett, group chief marketing officer at Octo Telematics says data provided by telematics allows businesses to reduce expenditure.

“The bottom line is that it reduces the total cost of ownership from a fleet provider’s perspective. In simple terms, the more data and information that a fleet operator has about the fleet of vehicles, how, where, and when they are being used, the better they can optimise the cost,” Hewett says.

Jeremy Gould, vice-president sales Europe at TomTom Telematics, says operating a fleet often represents large expenditure. By using telematics data, Gould argues, costs can be reduced through greater efficiency of use.

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“Telematics can have an impact on 40% of the total cost of ownership of a vehicle, from fuel to insurance and maintenance costs, there are significant savings to be had by adopting telematics,” Gould explains.

Graeme Banister of Frost & Sullivan agrees, citing fuel costs as a key factor.

“A large chunk of the cost of a vehicle is the fuel. You can identify if a driver modifies their behaviour they’ll use 10% less fuel. This equals a saving for the business,” he says.

Financial considerations are not necessarily the sole reason companies with fleets may decide to use telematics.
Hewett says monitoring and recording driver behaviour is not the only way that fleet operators can reduce costs and promote safety. He argues that a car’s health can be recorded through the systems.

“For fleets, depending on the type of technology you’re using, being able not to just see driving data, but vehicle health and preventative diagnostics [provides] beneficial information,” Hewett says.

Sam Chapman, chief innovator, co-founder and director of Sheffield-based telematics company The Floow, argues that safety is also a key concern for its fleet customers.

“You have a duty of care. You have a legal duty to ensure, in a fleet, that you understand the risks,” Chapman says. “Many fleets want [telematics] for that, many [choose it] for cost optimisation of fuel costs, but increasingly safety is becoming a prime concern.”

Whose data is it anyway?

“There is data spewing out of vehicles right now,” Graeme Banister, consulting director at Frost & Sullivan tells Leasing Life. “Therein lies discussions about who owns the data. Hopefully at one point everyone will just get together and sort this out.”

In the automotive space, a battle between driver privacy and convenience for fleet operators will play out in the field of telematics.  

Banister says use of telematics for fleets is spreading beyond HGVs. “It’s making its way into the light commercial vehicle space.”

A central question is who owns the data, who uses it, and for what purpose. The answer seemed to rest on a vehicle’s ownership structure. If vehicles are part of commercial fleets, either used as business vehicles or leased to consumers on personal contract hire, the impression is that the company is in possession of the data, but Gould suggests that free reign over its use is not assured.

“The [fleet] companies own the data, and they have to also seek the authority of the employees to be able to utilise that data in different ways,” Gould says.

However, Hewett says original equipment manufacturers (OEMs) are increasingly using telematics for CRM and maintenance programmes.

While the issue of data ownership is far from settled – and this goes beyond telematics into technology in general – the issue of data-sharing consent is the most relevant.

Unlike with private cars, individual drivers do not own the vehicles or, crucially, the telematics devices. Data is therefore submitted to fleet operators, which may be a cause of alarm. For fleet drivers, the idea of monitoring and repercussions from the employer as a result of driving practices may be of concern.

The potential for driver profiles to be developed has been explored. Hewett mentions the OctoU programme, where users download an app that records their driving behaviour; the score, he says, is used for insurance purposes. There remains the possibility that fleet operators could employ this technology in company cars, and monitor the behaviour of drivers as a result.

Chapman ties this to the financial impact that certain forms of driving may have on the vehicles, causing a knock-on financial impact due to maintenance costs.

“If you get large numbers of high-mileage drivers, you get different wear on the vehicles. If you prioritise the maintenance around the type of usage data, it allows you to mitigate against the lost costs,” he says.

However, Banister says monitoring such data may not automatically lead to repercussions for drivers: “It would need to be done in a way that is basically helping the person to get better. You’re pointing these things out to people, but you’re not prejudicing them.”

The issue of access to data links also to safety. Hackers may seek to capture location data, which could compromise driver safety or cargo integrity, or physically control aspects of the vehicle itself through accessing connected technology. Fleet operators may be concerned that remote access to telematics devices and data by hackers could result in theft of delivery cargo, either through forced braking or by diversion.

Recent examples have exposed vulnerabilities in car technology,  allowing them to be remotely accessed and controlled. One case was a demonstration by researchers at the University of California, San Diego who managed to activate the brakes on a Corvette by sending a text message.

Gould seeks to assure that safety concerns are of importance, “It’s something that we’re aware of and take very seriously within telematics, and we’ve also tested our products against this,” before adding: “I wouldn’t like to comment further.”
Hewett, however, is prepared to elaborate, explaining that his company’s suite of telematics devices means vehicles are better safeguarded against attacks. “We have a suite, we only have one device that connects to the electronics of the vehicle – those are the ones that are potentially hackable,” he says.

While absolute safety is never something that can be assured, the interviewees are keen to highlight the safety of their systems, and their continuing commitment to security.

Driving forward

As technology becomes more sophisticated and the much-touted Internet of Things (IoT) continues to evolve, there are questions about how telematics could play a role. The IoT refers to a network of physical objects which interact through sharing data. On a metropolitan scale, this is manifested in the ‘smart city’.

Hewett explains that it could play a role, and telematics data as part of the IoT is central to this.

“If you think about the IoT, telematics is a business model that really works and really creates value. It is adjacent to, extensible to the smart city. Understanding where vehicles are, how they are being driven, and whether they are obeying speed limits, relies on connectivity, and [telematics data] can really deliver for the smart city agenda.”

When asked whether telematics data could help inform planning and transport decisions, Chapman explains that The Floow uses anonymised telematics data to understand the driving environment in urban spaces.

“You can reuse the information in an anonymous form. One of the things we’re involved in is looking at anonymous information after it’s been collated to inform about the condition of roads for example, or upon the environment. How much people are pressing the accelerator, where emissions are being emitted, can also be very beneficial to society,”  Chapman says.

The interviewees agree that there is potential for telematics data to assist city authorities to better plan routes, maintenance, and inform traffic management strategies.

Gould tells Leasing Life that the data could be used to “improve traffic flows and see where congestion is at certain times of the day.” Such data, if made publicly available, could help fleets operators plan routes to avoid construction and congestion areas. This could shorten company car journeys, minimise fuel use and, in the case of commercial vehicles, shorten delivery times.

According to those Leasing Life speaks to, telematics devices are becoming increasingly amalgamated.
“The portfolio includes black boxes that are professionally or self-installed windscreen-mounted devices, and smartphone-based applications,” Hewett says.

However, with cars becoming more connected, and vehicle autonomy very much a factor – with significant potential within fleets – it seems that slowly but surely telematics devices will become integrated into vehicles, which may save time for fleet operators.

Chapman says: “There will always be a need for third-party devices. However, these will diminish because it will become easier to [activate software] rather than wait for a device, plug it in, or get a professional to install it.

“When the technology is built into the vehicle it becomes a convenience factor. There are vehicles coming into the market now with five SIM cards in there, lots of different devices sending information out, and improved data.”

Gould says that in the case of fleets, physical devices will become increasingly unnecessary. A recent example of this is a partnership between TomTom and PSA Group, for the TomTom Webfleet management system.

“We’ve just announced a partnership with PSA. We’re integrating a feed from PSA into our web fleet platform, so in that case there’s no need to install an aftermarket box,” Gould says.

The future for telematics in the fleet sector seems to be increased data concerning vehicle health, increasing software integration, and the use of data to inform travel routes for fleets.