London: According to a new report from ABI Research the new regulations, rolled out in China, are emerging as a driving factor for boosting business of the Chinese commercial telematics market. But the only glitch that restricts the involvement of western companies is the licensing requirements that require multinational telematics service providers (TSPs) to partner with local companies.
The report indicates that the economic slowdown has not affected the Chinese economy that badly, as it continues to grow and fleet operators are striving hard to add a enough number of vehicles to keep up with the surging demand for goods. As such, telematics becomes an important tool to optimize the use of the limited available vehicle resources. With sales of commercial vehicles in China estimated at close to 4 million units in 2011, and around half of global heavy truck sales in the country, it’s clear that the opportunity for fleet management services is massive.
However, sale of advanced solutions can be challenging as it’s common for fleet managers to choose the lowest priced solution and this favors domestic firms offering basic, but aggressively-priced solutions. More expensive Western brands can struggle to gain traction and this is compounded by restrictive licensing regulations. That said, it is expected that as familiarity with applying data analytics to improve efficiency grows, we will soon see a shift from basic to more advanced solutions. Furthermore, regulations currently mandate that public city buses and taxis be fitted with tracking devices, as well as vehicles carrying hazardous goods in some regions. Further mandates are likely to be announced in the next 1-2 years and thus boost the overall market for commercial telematics solutions in China, which is good news for current incumbents such as Trimble and Navman Wireless.
Report author, Craig Foster, said: “Safety of vehicle and their cargo is of paramount importance as many commercial vehicles in China are leased. As a result, there is strong interest in being able to locate vehicles in the event that lease payments are missed. Because of this, TSPs are able to sell based on the security aspect, but also have upgrades to more sophisticated services ready and available,” continued Foster.
The report gives a brief insight at the drivers and inhibitors of growth in the emerging Chinese market for commercial telematics. Mandates, licenses, and road infrastructure constraints are reviewed, alongside a discussion of those players poised to tap into this market’s huge potential.