Which Commercial Vehicle and Fleet Segments Will Lead the Way in Telematics Connectivity?

This blog post is the first of a two-part series on Escalent’s latest Fleet Advisory Hub™ Roadmap to Telematics Growth report. In part two, we outline a key strategy for how telematics service providers may differentiate their offerings’ go-to-market and value proposition for commercial vehicle and fleet businesses.

By 2030, analysts estimate the commercial vehicle telematics market will be worth $12.8 billion, reflecting a compound annual growth rate of 15.2%. Escalent’s latest Fleet Advisory Hub Roadmap to Telematics Growth study supports this outlook, revealing fleet business decision-makers expect the number of connected vehicles on the road to double within the next three years. However, this growth won’t be evenly distributed across all commercial vehicle segments.

Despite promising growth, our data suggest fleet business decision-makers still aren’t entirely sold on the potential of telematics. While one-third of professionals consider telematics to be the future of managing business vehicles, equal proportions feel the technology only has a place in certain situations or still need to see more real-world proof. As such, telematics providers will need to compete for market share by sharing success stories and ensuring trust in the reliability and value of their offerings.

Additionally, understanding where growth is concentrated by vehicle type is crucial for guiding telematics service provider product development as well as refining messaging and go-to-market strategies. For this reason, Escalent produced a Connected Vehicles in Operation (VIO) analysis as part of this year’s report. This new analysis offers a granular look at the targeted commercial vehicle segments poised for near-term growth, as well as those with elevated install rates today that may require a conquest strategy as opposed to new business pursuits.

A Market on the Move: Finding Telematics Growth Among Commercial Vehicle Segments

Which commercial vehicle segments stand to shape the next phase of growth for telematics services? According to our findings among commercial vehicle and fleet businesses actively in the market for telematics solutions, the penetration rate of telematics on a VIO basis ranges widely. On the lower end, only 16% of medium-duty commercial vehicles on the road today are equipped with telematics solutions. In contrast, around two-thirds of heavy-duty vehicles (61%) and light commercial pickup trucks (69%) and half of light commercial vans (46%) are already using these technologies.

Across the board, commercial vehicle and fleet business decision-makers anticipate this increasing to roughly 50% to 80% of vehicles in each segment within the next three years. In fact, with the exception of buses, each segment is expected to exceed 70% penetration in three years. Those that currently have lower levels of telematics use are expected to see the biggest jumps. For instance, light passenger vehicles, medium-duty trucks and buses boast estimated growth rates of approximately 100% to 400% over this period.

However, these gains should be viewed within the context of each segment’s relative vehicle-based volume. For instance, medium-duty trucks annually produce around 100,000 fewer vehicles than light commercial vans, based upon our Commercial Vehicle Competitive Landscape build plan. On the other hand, while light commercial vans have a comparatively modest 65% growth rate, their greater vehicle-based volume compounds over time to present a stronger overall opportunity for telematics growth.

Telematics Landscape Still Highly Competitive and Commoditized

The data clearly show the commercial vehicle telematics market can look forward to a strong upward trajectory. However, while the outlook is undeniably positive, the path to capturing that growth will be anything but straightforward. As our Connected VIO analysis demonstrates, connected vehicle rates will not rise evenly across all vehicles, and high-volume, underpenetrated commercial vehicle segments will be key battlegrounds.

When it comes to investing in telematics, many commercial vehicle and fleet businesses are still near the beginning of a steep learning curve. What’s more, they’re navigating against a backdrop of growing economic pressure and regulatory complexity. Telematics service providers operating in this increasingly crowded and highly commoditized marketplace must do more than offer standard solutions.

To secure a leadership position in this space, providers must zero in on the areas of greatest opportunity—those where they can deliver unique value and help fleets achieve key operational wins—and additionally differentiate the provider brand with forward-thinking telematics solutions such as features designed with the commercial vehicle driver in mind. Stay tuned for part two of this miniblog series wherein we evaluate one key strategy for telematics differentiation in more detail.

In the meantime, if you have questions for our commercial vehicle and fleet industry experts or want to learn more about our Fleet Advisory Hub research, please complete the form below.

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About the Fleet Advisory Hub™ Roadmap to Telematics Growth Study

The results reported come from Escalent’s 2024 Roadmap to Telematics Growth report, which explores the state of telematics adoption among commercial vehicle and fleet businesses with a focus on driver-centric connectivity. These results comprise a subset of commercial vehicle and fleet decision-makers drawn from the Fleet Advisory Hub audience. Participants were recruited from an opt-in online panel of business decision-makers and interviewed online. Escalent will supply the exact wording of any survey question upon request.

For fleet decision-makers in businesses operating vehicles who want to have their voices heard, you can join here to participate in our research program, developed in collaboration with Work Truck Solutions and Comvoy.com.