Commercial vehicle telematics is forecast to be incorporated in 1.3 million new vehicles per annum, with the total market expected to have crossed the billion Euro mark in 2005. By 2009, the installed base of telematics-enabled vehicles is set to touch 5.4 million commercial vehicles. With the market poised for take-off, Frost & Sullivan's recently conducted pan-European study of nearly 240 fleet and transport managers from across a range of industries offers a view of evolving customer attitudes and perceptions towards telematics systems and services in commercial vehicles. The research revealed that about 70 percent of respondents in Europe were aware of the term 'telematics' with awareness levels highest in Italy and Germany. Managers of larger fleets were more aware of telematics and were twice as likely to have some telematics equipment installed onboard the vehicles. Moreover, almost three-quarters of the respondents with international fleet operations were aware of telematics. The current optimism about the telematics industry's growth prospects may be dampened by the fact that many fleet managers questioned during the survey exhibited limited familiarity with the full potential of telematics. "Companies with telematics perceived the main benefits to be routing, security features and productivity increase," notes Franck Leveque, transportation program manager at Frost & Sullivan. "However, they did not seem to be aware of potential gains in other areas such as business development, delivery information and insurance. More than half the respondents were uninformed about telematics' ability to improve customer relationship management (CRM) and reduce the insurance premium," he adds. Commercial fleet managers identified safety and security aspects as the most desirable features. The vehicle/logistics/transport management and navigation features category closely followed as the second most desirable feature. This was in keeping with the high significance they accorded to assets that improved fleet productivity. In this category, vehicle and driver performance monitoring features were found to have considerable appeal, as they provided new management tools for business managers. Customers bestowed the highest value association on vehicle/transport/logistics management systems — features they perceived as directly affecting the company's productivity and cost management. While most customers did attach value to safety and security features provided by telematics, it remained uncertain whether they would be willing to pay a premium for what most of them considered to be a 'standard' offering. Infotainment systems were viewed as a 'nice to have', but of limited value. Providing an insight into purchasing patterns, over a third of the respondents in the survey indicated their preference for a one-off charge system. "A telematics package with a one-off payment plan is advantageous to the fleet company as it can be accounted for as a fixed cost," explains Leveque. "It does not impact the tight margins and volatile variable costs of fleets." For larger fleets, subscription emerged as the most feasible payment method. Its popularity stemmed from the fact that it offered greater flexibility and low initial investment. In a boost to specialist suppliers, respondents overwhelmingly favored using specialist providers as their telematics suppliers. Fleet managers asserted that specialist suppliers were regarded as capable of offering more extensive services than that provided by vehicle manufacturers. Basic navigation systems were given top ratings by respondents, with traffic information in particular being regarded as a value enhancer. However, a continuing lack of product knowledge appeared to be hampering the customers' ability to assess the benefits provided by advanced navigation systems.