Concise Summary 2014 United States Fleet Managers Voice of Customer Research


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Concise Summary 2014 United States Fleet Managers Voice of Customer Research

  1. 1. 2014 United States Fleet Managers Desirability and Willingness to Pay for Advanced Truck Technologies Market Pull for Fuel-Efficient, Safe, and Smart Trucks Rising Steadily May, 2014 Concise Summary
  2. 2. 2 Source: Frost & Sullivan Contents Section Slide No. Objectives and Methodology and Respondent Profile 5 Executive Summary 18 US HD Fleet Managers 2014- Top of Mind Issues Voice of Customer Research Insights Key Implications Analysis of Powertrain Technologies 25 Powertrain Technologies Summary 26 Engine Technologies 31 Transmission Technologies 42 Hybrid Truck/Alternative Fuel Technologies 46 Natural Gas Fuel Options Summary 51 Lubricants Overview 59 Key Insights-Powertrain Technologies 64 Analysis of Advanced Safety Technologies 65 Brake Systems Summary 66
  3. 3. 3 Source: Frost & Sullivan Contents Section Slide No. Advanced Safety Technology Summary 72 Active Chassis Control Options Summary 81 Other Advanced Safety Technology Components 87 Key Insights-Advanced Safety Technologies 95 Analysis of Telematics Technologies 96 Telematics Technology Summary 97 Prognostics Technology Summary 103 Other Telematics Technology Components 110 Key Insights- Telematics Technologies 121 Regulatory Compliance Technologies 122 CSA Rating Compliance 123 Stopping Distance Regulations 124 Anti-idling Regulations 126 Key Insights- Regulation Compliance Technologies 127
  4. 4. 4 Source: Frost & Sullivan Contents Section Slide No. Brand Perceptions 128 Overall Best Engine Supplier 129 Overall Best Advanced Safety System Suppliers 130 Overall Best Advanced Telematics Supplier 131 Appendices 132 Powertrain Technologies (Influential Factors, Relative Importance of Options, Price Sensitivity Analysis, etc.) 133 Advanced Safety Technologies (Influential Factors, Relative Importance of Options, Price Sensitivity Analysis, etc.) 150 Telematics Technologies (Influential Factors, Relative Importance of Options, Price Sensitivity Analysis, etc.) 169 The Frost & Sullivan Story 184
  5. 5. 5 Objectives and Methodology
  6. 6. 6 Source: Frost & Sullivan Objectives The following are the objectives of this research: • Understand the importance of advanced truck technologies (i.e., powertrain, safety, and telematics) features in the overall purchase decision process • Assess which powertrain, safety, and telematics advance technologies are currently being utilized and are planning to be utilized in 2015 • Ascertain which advanced truck technologiesare most preferred by fleet managers • Measure the desirability and willingness to pay for advanced truck technologies • Determine the impact that regulatory compliance has on fleet managers’ decisions • Evaluate fleet managers’ perceptions of advanced truck technology brands
  7. 7. 7 Source: Frost & Sullivan Methodology Methodology A telephone interview survey methodology was utilized. Data collection was during in March and April 2014. Sample In total, 101 United States (U.S.) heavy duty fleet managers were surveyed.Specifically, we targeted heavy duty fleet managerswho: • Are part of the vehicle (for heavy duty trucks) purchase making process • Are expecting to purchase additional vehicles for their fleet within the next two years • Have at least class 6, 7, and 8 vehicles in their fleet Reporting Note Due to rounding, percentages in charts and tables may not sum to 100.
  8. 8. 8 Source: Frost & Sullivan Current Title of Respondent 53% 13% 33% 1% Current Title of Respondent Fleet manager Safety manager with influence on the purchase decision process of vehicles for use in your fleet Maintenance or service manager General Manager Q1. Which of the following best describes your current title? The largest proportion of surveyed respondents are fleet managers (53%). Base: All respondents (n=101).
  9. 9. 9 Source: Frost & Sullivan Prevalence of Private Versus For Hire Fleets 41% 59% 55% 45% 24% 76% 33% 67% Private For hire Prevalence of Private Versus For Hire Fleets Total sample Small Medium Large Approximately six out of ten surveyed fleets are for hire (59%). Q6. Is your fleet primarily…? Base: All respondents (n=101).
  10. 10. 10 Source: Frost & Sullivan Prevalence of Vehicle Classes within Fleets 9% 4% 12% 75% 14% 6% 11% 69% 7% 4% 6% 83% 5% 3% 15% 77% Class 1 to 3 vehicles Class 4 to 5 vehicles Class 6 to 7 vehicles Class 8 vehicles Prevalence of Vehicle Classes within Fleets (Mean Percent) Total sample Small Medium Large Q4. What percentage of the following classes of vehicles do you currently have in use in your fleet? - Mean scores Given the criteria to focus on fleet managers within heavy duty truck fleets, a greater proportion of fleets are composed of class 8 vehicles. Base: All respondents (n=101).
  11. 11. 11 Source: Frost & Sullivan Prevalence of Straight Versus Tractor Trucks within Fleets 20% 77% 3% 27% 71% 2% 8% 92% 0% 19% 77% 4% Straight trucks Tractor trucks Other Prevalence of Straight Versus Tractor Trucks within Fleets (Mean Percent) Total sample Small Medium Large Q47. What percentage of trucks in your fleet are…? - Mean scores Base: All respondents (n=101). Overall, tractor trucks are most prevalent in fleets.
  12. 12. 12 Source: Frost & Sullivan Prevalence of Trailer Types within Fleets 46% 13% 10% 6% 14% 8% 3% 40% 21% 14% 7% 9% 9% 0% 53% 7% 13% 8% 10% 8% 0% 48% 8% 5% 4% 20% 7% 8% Dryvan trailers Tanker trailers Flatbed trailers Utility trailers Refrigerated trailers Specialty trailers Other Prevalence of Trailer Types within Fleets (Mean Percent) Total sample Small Medium Large Q48. What percentage of trailers in your fleet are…? - Mean scores Base: All respondents (n=101). Overall, dry van trailiers are most prevalent in fleets.
  13. 13. 13 Source: Frost & Sullivan Prevalence of Vocational Versus On-highway within Fleets 30% 70% 33% 67% 21% 79% 29% 71% Vocational On-highway Prevalence of Vocational Versus On-highway within Fleets (Mean Percent) Total sample Small Medium Large Q7a. What percentage of your fleet is…? - Mean scores Q7b. For those trucks in your fleet that are on-highway, what percent are: - Mean scores Base: All respondents (n=101). 24% 35% 27% Short/local haul Long haul Regional haul Routes of On-highway Use (Mean Percent)
  14. 14. 14 Source: Frost & Sullivan Years of Experience in Role 14 14 11 15 Total sample Fleet manager Safety manager Maintenance manager Years of Experience in Role (Mean) Q53. How long have you been a (RESPONSE Q1)? Base: All respondents (n=101).
  15. 15. 15 Executive Summary
  16. 16. 16 Source: Frost & Sullivan US HD Fleet Managers: Top of Mind Issues in 2013-2014 0 1 2 3 4 5 1.Regulation Compliance 2.Total Cost of Ownership 3.Driver and Tecnician Shortage/ Retention 4.Declining Equipment Utilization 5. Fuel Price Volatility 6. Freight Rate (Spot Rate) Fluctuations 7. Economic Outlook and Margin Concerns • Regulation compliance (CSA, braking distance, anti-idling, EPS 2010, upcoming GHG regulations, etc.) is top of mind for fleet managers in North America. This is driving fleet managers’ purchase decisions toward advanced truck technologies, especially in case of safety, telematics, and powertrain technologies. • Equipment utilization is impacted by shorter hauls, CSA, availability of drivers, hours of service, and traffic congestion which all effect operating cost. Average utilization is down over 15% for the last 5 years. • Equipment purchase cost and lifecycle cost, which is related to other factors such as fuel price volatility, driver shortage, technician shortage, among others, are highly rated high top of mind issues by fleet managers, indicating the rising importance of TCO in choosing trucks and advanced truck technologies. Note: Factors 1-7 are most highly rated top-of-mind issues reported by managers of 10 largest for-hire and private fleets derived from a separate survey. Score legend: 5- Highest importance t; 3- Moderate Importance; 1- Low Importance to fleet managers North American HD Fleet Manager: Top-of-mind Issues Impacting Business Decisions, 2013-2014
  17. 17. 17 Source: Frost & Sullivan Voice of Customer Research Insights: 2014 US HD Fleet Managers • This survey, now in its fifth year, reveals a dominant narrative dictating advanced technology preferences and associated willingness to pay: Fleet managers are willing to invest in technologies that can enable operating cost saving, even if this implies paying a premium for acquiring such technologies. • Another key trend gaining momentum is need for access to data and data analysis which will enable fleet managers to make smart, mission critical decisions aimed at reducing operating cost and increasing fleet productivity, safety, and regulation compliance. • Fleet managers, safety managers, and maintenance managers are found to show varying degrees of preference for advanced technologies. Fleet managers’ decisions were found to be guided by a more diverse set of needs such as need to reduce operating cost, and also solve current operating challenges such as regulation compliance, downtime reduction and driver turnover; while safety and maintenance managers’ decisions are attributed to fewer priorities such as service and maintenance effort and cost reduction, regulation compliance, and mobile resource safety. • While it may be observed that private fleets are more likely to adopt new and advanced truck technologies, analysis of fleet manager responses indicate that for-hire fleets attach more importance to advanced powertrain, safety, and telematics technologies. Rising equipment cost and operating expenses, a factor that impacts for-hire fleets more severely than private fleets could be a reason behind lower probability of adopting advanced truck technologies despite considering these more important for their operations. • With average Class 8 truck age touching 9 years, fleet managers are choosing technologies that can prevent escalation in lifecycle cost such as advanced lubricants, natural gas engines, tire pressure related systems, prognostics, smaller sized engines. Driver shortage issues are catalyzing adoption of AMTs, telematics, collision mitigation systems, and anti-idling technologies among others. • Freightliner was found to be the most prevalent nameplate among surveyed fleets. Cummins, Bendix, and Qualcomm/Omnitracs were rated highly as suppliers of advanced truck technologies.
  18. 18. 18 Source: Frost & Sullivan Voice of Customer Research Insights: 2014 US HD Fleet Managers (Continued) • This year’s survey showed rising preference for 12-13L engines among fleet managers, especially representing small-medium sized for-hire fleets. While the majority of fleet managers report spec’ing trucks with both OEM nameplate and independent supplier engines, 34% report spec’ing trucks with only OEM nameplate engines. • Among advanced powertrain technologies, natural gas powertrain technologies and semi/fully automated transmissions, and advanced low-viscosity lubricants are experiencing rising fleet manager interest and preference. 12-14L engines are rated as most desirable, if made available and if fuel savings of at least a dollar per diesel gallon equivalent can be attained for applicable vocation(s). OEMs’ AMT nameplate strategy seems to be paying off with majority of fleet managers reporting likelihood of considering OEM nameplate and independent supplier transmissions equally. • The strong brand resonance of independent suppliers such as Cummins, Eaton, and Allison backed by advanced powertrain products, solutions, and services have ensured fleet managers’ continued interest and preference for their products, despite OEM nameplate engines and transmissions gaining increasing traction. • Among advanced safety technologies chassis control systems such as ESC, RSC, collision mitigation systems, and tire related technologies such as trailer tire inflation systems and TPMS are showing highest growth potential. Among driver information and warning systems, lane departure warning systems receive the highest ratings. Automatic collision mitigation systems and tire related safety technologies are expected to be experience rapid proliferation in new and existing trucks in the next 2 to 5 years. Among fundamental safety systems, both larger drum brakes and air disc brakes are expected to dominate the market, with air disc brake proliferation growing at a faster rate while still remaining a much smaller segment of the brakes systems market. • CSA 2010 is currently the most important regulation for fleet managers influencing both safety and telematics technology adoption. Medium-large for-hire fleets are most interested in leveraging data from safety systems in improving CSA fleet scores, while medium-sized fleets show highest interest in safety system hardware for CSA compliance.
  19. 19. 19 Source: Frost & Sullivan Voice of Customer Research Insights: 2014 US HD Fleet Managers (Continued) • Telematics/connectivity is now perceived as one of the most important advanced technology areas for improving overall fleet productivity and efficiency by fleet managers. TCO reduction, regulation compliance, prediction of impending truck system failure, and mobile resource safety and security are the primary drivers of telematics adoption. Prognostics is one of the fastest growing telematics service/application among fleets. This year’s survey indicates a 29 percent growth in prognostics adoption among surveyed fleets. • Engine related prognostics is the most vital prognostics data. Roughly half (55%) of surveyed fleet managers report interest in integrating prognostics data to their fleet’s maintenance systems and parts inventory management systems. • Analysis of telematics pricing models and offerings reveals an urgent need for recalibration of telematics packages. New packages featuring most important applications/services desired by fleets and priced at optimal price points will likely increase fleet manager adoption but also stoke large scale adoption by small-medium sized fleets. $19.40 was found to be the mean fee truck fleet managers are willing to pay per truck, per month for telematics services. This is lower than current industry mean of $26.90/month. The challenge for telematics service providers will be to package and offer important applications such as track and trace, prognostics, dynamic navigation, stolen vehicle tracking, and critical event/safety system intervention alert among others more strategically and within the affordability boundaries of largest section of fleet managers. • Voice of customer research insights from this survey indicates the need for technologies and services that can help reduce fleets’ operating costs, while increasing mobile resource productivity and efficiencies. This coupled with fleet ownership (private vs for-hire), fleet size (small, medium, and large), and manager title ( fleet manager, safety manager, and maintenance manager), and pricing analysis provided in this study reveal rising cognizance and familiarity towards new and emerging advanced powertrain, chassis, safety, and regulation compliance technologies. This underlines the fact that fleet managers are making informed decisions and choosing technologies that not only can benefit their fleets’ operations but also induce improvements in trucking’s productivity, safety, and efficiency.
  20. 20. 20 Source: Frost & Sullivan Key Implications Fleet Manager Research Implications • In most cases technologies are priced within fleets’ affordability limits, however in some cases such as prognostics and telematics fleet managers are demanding further price reduction for mass adoption. Price Sensitivity Diesel Powertrain Regulation Compliance Safety • There is a clear indication of rising interest in smaller displacement engines especially among small- medium sized for-hire fleets. However, 15L engines will continue to dominate the market in the short-medium term and beyond. • CSA is the most important regulation for fleet managers, influencing their safety and telematics technology purchase decisions Telematics Alternative Powertrain Implications from Voice of Customer (HD Fleet Managers) Research Findings, US, 2014 • OEMs and tier-1 suppliers must focus on systems and technologies that can help in reducing operating costs, and offer multi-dimensional benefits. • Automatic collision mitigation systems, larger drum brakes and disc brakes, critical event alerts, stability control systems, and driver and vehicle performance monitoring systems are expected to experience rising proliferation over 2014- 2015 period. • Sales and marketing efforts on the part of tier-1s should center around delivering better warranty and service support, system durability and reliability, data access for downstream analysis and training, highlighting safety systems’ multi-dimensional benefits, and CSA compliance support, all packaged with better warranty and maintenance support. • OEM nameplate engines and transmissions are gaining rising traction among fleet managers. Both OEMs and independent suppliers must take note of this trend and strategize accordingly. • 10 to 12L and higher displacement natural gas engines are expected to gain adoption among private and for-hire fleets. Fleet managers seek fuel cost savings of $1/DGE or more for switching to natural gas. • While hybrid powertrain adoption is declining, we are advising market participants in staying vested based on long term application potential of this technology. Value proposition and preference for telematics is rising among fleet managers. However, the applications that are receiving highest interest are centered more around vehicle and driver performance monitoring and downtime reduction. This is necessitating urgent focus on repackaging and re-pricing of telematics application bundles as prices are reported higher than optimal by fleet managers
  21. 21. 21 Source: Frost & Sullivan 2 AMTs, natural gas powertrain, collision mitigation systems, air disc brakes, prognostics, real-time dynamic navigation, and tire pressure related technologies are on the fast track for fleet adoption growth. 3 4 5 Multiplexed-electronic architectures have become fundamental for OEMs, and electronic interfaces for trucks systems for tier-1s to benefit from brewing technology trends. 1 OEM nameplate systems are gaining traction among fleet managers. TCO reduction, warranty, and data analytics support need to be used by OEMs in further catalyzing this trend. Medium-sized for-hire fleets are most interested in advanced truck technologies and also require the most support and guidance. This customer group requires special attention, but can yield rich dividends. Technologies that can offer multi-dimension benefits ( e.g. TPMS reducing fuel costs in addition to safety, advanced lubricants reducing fuel costs, extending maintenance interval, prognostics for downtime reduction, peak performance of trucks, etc.) are gaining the fastest traction among fleet managers. 2014 U.S. Fleet Manager Study- Executive Summary: CEO Perspective
  22. 22. 22 The Frost & Sullivan Story
  23. 23. 23 Source: Frost & Sullivan The Frost & Sullivan Story Pioneered Emerging Market & Technology Research • Global Footprint Begins • Country Economic Research • Market & Technical Research • Best Practice Career Training • MindXChange Events Partnership Relationship with Clients • Growth Partnership Services • GIL Global Events • GIL University • Growth Team Membership™ • Growth Consulting Visionary Innovation • Mega Trends Research • CEO 360 Visionary Perspective • GIL Think Tanks • GIL Global Community • Communities of Practice
  24. 24. 24 Source: Frost & Sullivan What Makes Us Unique All services aligned on growth to help clients develop and implement innovative growth strategies Continuous monitoring of industries and their convergence, giving clients first mover advantage in emerging opportunities More than 40 global offices ensure that clients gain global perspective to mitigate risk and sustain long term growth Proprietary Team Methodology integrates 7 critical research perspectives to optimize growth investments Career research and case studies for the CEOs’ Growth Team to ensure growth strategy implementation at best practice levels Close collaboration with clients in developing their research based visionary perspective to drive GIL Focused on Growth Industry Coverage Global Footprint Career Best Practices 360 Degree Perspective Visionary Innovation Partner
  25. 25. 25 Source: Frost & Sullivan TEAM Methodology Frost & Sullivan’s proprietary TEAM Methodologyensures that clients have a complete 360 Degree PerspectiveTMfrom which to drive decision making. Technical, Econometric, Application, and Market information ensures that clients have a comprehensive view of industries, markets, and technology. Technical Real-time intelligence on technology, including emerging technologies, new R&D breakthroughs, technology forecasting, impact analysis, groundbreaking research, and licensing opportunities. Econometric In-depth qualitative and quantitative research focused on timely and critical global, regional, and country-specific trends, including the political, demographic, and socioeconomic landscapes. Application Insightful strategies, networking opportunities, and best practices that can be applied for enhanced market growth; interactions between the client, peers, and Frost & Sullivan representatives that result in added value and effectiveness. Market Global and regional market analysis, including drivers and restraints, market trends, regulatory changes, competitive insights, growth forecasts, industry challenges, strategic recommendations, and end-user perspectives.
  26. 26. 26 Source: Frost & Sullivan Our Global Footprint 40+ Offices Scanning the Globe for Opportunities and Innovation