A growing number of commercial fleets are enlisting telematics and software platforms to help them manage the maintenance and operation of their vehicles.
In the latest example, Ford Motor Co. reported Wednesday (July 27) that Ford Pro’s paid telematics subscriptions increased 40% sequentially in both the first quarter and the second. Ford Pro is a segment of the company devoted to the commercial vehicle market, providing vehicles as well as services that help companies manage their operations.
The telematics offering for fleets is part of Ford’s efforts to use Software-as-a-Service (SaaS) to build an always-on relationship with customers and deliver an ever-improving experience to the user throughout the time they own the vehicle.
“Over time, much of the SaaS revenue will be deferred on our balance sheet, providing an annuity-like revenue stream that is highly accretive, something this company and this industry has never seen,” Ford Motor Company President and CEO Jim Farley said during the Q2 2022 earnings call.
Selling Connected Services
Ford Pro telematics solutions deliver data from the vehicle to a web application that provides fleet managers with insights into vehicle health, vehicle location, fuel efficiency and driver behavior.
This is part of the company’s transition to vehicles that are often electric and that will be defined by software that the company ships to the vehicle, supported by telematics software solutions and charging solutions for electric vehicles.
“We now have real experience on the first shippable software to these cars,” Farley said. “The first is [advanced driver assistance systems], for sure, and the second one for us is Ford Pro. We’re shipping telematics to the customer — driver coaching, energy management.”
“There are a lot of services connected to these vehicles because of the software, and that’s a really big revenue opportunity for us,” Farley added.
Avoiding Vehicle Downtime
At an event held last month, Farley said commercial fleets are today’s best market for software services sold on a subscription basis. Because operators of fleets cannot afford to have their vehicles out of service, they are willing to pay for software subscriptions that help keep the vehicles maintained and on the road.
Read more: Ford CEO: Auto Industry’s Future Lies in Software, Services, Shared Mobility
“People are willing to pay for an integrated system of telematics, fleet management, energy management, charging for electric commercial vehicles, prognostics and predictive failure, because when those vehicles go down, that plumber, electrician, police, ambulance lose the revenue — can’t do their job,” Farley said June 1 at the Bernstein Strategic Decisions Conference.
Competing for Fleets’ Business
Ford is not alone in pursuing the commercial fleet market. Competitors General Motors and Stellantis recently stepped up their efforts to sell connected car data and fleet management platforms along with the commercial vehicles they build.
See also: More Automakers Make Cloud-Based Fleet Management a Standard Feature
In June, a wholly owned subsidiary of GM called BrightDrop acquired artificial intelligence (AI)-powered fleet optimization software from technology startup Marain, while the Stellantis brand Free2move partnered with Samsara to deliver data from Stellantis vehicles to Samsara’s Connected Operations Cloud.
“These advanced solutions give fleet owners the ability to drive operational efficiencies, reduce downtime and increase driver safety,” Free2move North America General Manager Benjamin Maillard said in a press release.
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