2012 US Heavy Duty Truck Fleet Managers' Desirability and Willingness to Pay for Advanced Truck...

2012 U.S. Fleet Manager’s Desirability and

Willingness to Pay for Advanced

Heavy-Duty Truck Technologies

February 2012

Table of Contents

&

Executive Summary

2

Contents

Section Slide Numbers

Research Objectives, Method Details, and Demographics 4

Executive Summary and Implications 14

Powertrain Technologies 18

Telematics Technologies 42

Advanced Safety Technologies 60

Regulatory Compliance Technologies 90

Maximum Difference Scaling (MaxDiff) 96

Brand Perceptions – Fleet Managers’ Ratings of Truck OEMs,

Safety Systems Suppliers, and Telematics Service Providers

107

The Frost & Sullivan Story 119

3

RESEARCH OBJECTIVES, METHOD DETAILS, AND

DEMOGRAPHICS

4

Source: Frost & Sullivan analysis.

Research Objectives

The overall objective of this research was to understand Heavy-Duty Fleet

Managers in terms of advanced technologies available for their fleets.

Specifically, we sought to:

– Measure the awareness of the various powertrain, safety, and telematics advanced

technologies surveyed.

– Assess which powertrain, safety, and telematics advance technologies are

currently being utilized.

– Determine what features are most important among the various powertrain, safety,

and telematics advanced technologies surveyed.

– Measure future purchase intentions of the various powertrain, safety, and

telematics advanced technologies surveyed.

– Determine the impact that pending regulations have on the adoption of various

powertrain, safety, and telematics advanced technologies.

5


Methods

Methodology: A dual methodology was utilized to contact a particularly difficult-to-reach

target respondent: First, recruitment was conducted via a telephone screening process;

secondly, a web-based survey was sent to qualified respondents for their completion.

Sample: In total, 100 U.S. Heavy-Duty Fleet Managers were surveyed (from a list of top-

100 fleets in U.S. from both private and for-hire segments). Specifically, we targeted

Heavy-Duty Fleet Managers who:

• 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.

Additional demographic details of the sample are presented in the following slides.

Fieldwork: The survey was conducted during October 2011–February 2012.

Reporting notes: Due to rounding errors, percentages in charts and tables, may not

sum to 100.

6


Demographics: Truck Detail

94%

59%

4%

95%

53%

12%

Tractor

Straight

Other

Type of Fleet Trucks (United States), 2010 and 2012

2010

2012

99%

41%

36%

100%

36%

32%

Class 6 to 8

Class 1 to 3

Class 4 to 5

Class of Trucks (United States), 2010 and 2012

2010

2012

S6. What types of trucks does your fleet currently utilize? (Multiple response)

S5. Which of the following classes of vehicles do you currently have in use in your entire fleet? (Multiple

response)

Base: All 2010 respondents (n=101), all 2012 respondents (n=100). Base: All 2010 respondents (n=101), all 2012 respondents (n=100).

7


Demographics: Types of Trailers

57%

47%

32%

28%

23%

16%

74%

42%

32%

25%

25%

35%

Dry vans

Flatbeds

Tankers

Specialty trailers

Utility trailers

Other

Types of Trailers (United States), 2010 and 2012

2010

2012

S6A. What types of trailers does your fleet currently utilize? (Multiple response)

Base: All 2010 respondents (n=101), all 2012 respondents (n=100).

8


Demographics: Types of Fleets Represented

6%

32%

62%

7%

47%

46%

Government/public

fleet

Private

For hire

Types of Fleet (Private/Hired) (United States), 2010 and 2012

2010

2012

14%

86%

39%

61%

Vocational

On highway

Type of Fleet (United States), 2010 and 2012

2010

2012

S9. Is your fleet primarily

S10. Is your fleet primarily?


9


Demographics: Respondent Titles and Years in Current

Role

4%

4%

9%

27%

56%

0%

2%

4%

25%

69%

Other

Safety manager

CEO/COO/President/Owner

Maintenance/service manager

Fleet manager

Title of Respondents (United States), 2010 and 2012

2010

2012

30%

16%

14%

16%

13%

11%

18%

12%

7%

16%

14%

33%

More than 20 years

16-20 years

11-15 years

6-10 years

3-5 years

Less than 2 years

Time in Current Role (United States), 2010 and 2012

2010

2012

S1. Which of the following best describes your current title?

D3. Approximately how long have you been a (RESTORE S1 RESPONSE)?


10


Demographics: Scope of Responsibility

3%

58%

79%

89%

2%

60%

55%

77%

Other

Purchase fleet vehicles

Specify fleet equipment

Recommend/Influence purchase

Scope of Influence on Fleet Purchase (United States), 2010 and 2012

2010

2012

7%

16%

77%

14%

19%

67%

Sole decision maker

One of many fleet purchase

decision makers

One of 2 or 3 fleet purchase

decision makers

Degree of Involvement in Fleet (United States), 2010 and 2012

2010

2012

S2. What is your role in the purchase decision process of vehicles for use in your fleet? Specifically, for which of the following are you

responsible? (Multiple response)

S3. How involved are you in the purchase decision process of vehicles for use in your fleet?


11


Demographics: Timeframe of Future Vehicle Purchase

Intentions

55%

32%

13%

63%

28%

9%

Within the Next 6 Months

Next 6 to 12 Months

Next 1 to 2 Years

Timeframe of Future Vehicle Purchase Intentions (United States), 2010 and 2012

2010

2012

Base: All 2010 respondents (n=101), all 2012 respondents (n=100).

S4. When do you expect to purchase additional vehicles or replace existing vehicles in your fleet?

12

EXECUTIVE SUMMARY AND IMPLICATIONS

13


Executive Summary

• The 2012 HD fleet managers survey reveals decisive change in preference for technologies that reduce total cost of ownership of truck. As fleets are tending to keep trucks for longer periods of time, technologies that reduce lifecycle cost are being increasingly preferred by truck fleets. The choice of prognostics as the most preferred technology in an advanced technology bundle offered by truck OEMs underlines this trend.

• The high ratings obtained by technologies such as SCR, advanced engine oils and semi/full automatic transmissions reveal that fleet managers are looking at technologies that deliver more than one major value proposition. All three technologies have experienced improvements in their contribution to fuel efficiency enhancement, but also offer lifecycle/operating cost reduction potential.

• Fleet managers are anticipating rising fuel price volatility and exacerbating driver shortage issue. Fleet managers are also operating under severe financial stress and running on lower levels of human capital. Fleets managers are therefore showing preference for technologies that deliver time and mission critical information, data and analysis for facilitating decision making.

• CSA 2010 and braking distance regulation is forcing fleet managers to invest in technologies that not only induce safe driving practices but also technologies which can be used to actively intervene to enhance truck safety. Fleets are also opting for technologies that can be used to reduce maintenance and service costs, train drivers and technicians, and reduce fuel related costs.

• Price sensitivity analysis reveals results that show that fleets are willing to invest in an advanced technology, despite its higher price premium, if they are convinced that the technology can help reduce operating cost, induce safe driving practices, and maximize vehicle uptime.

• Data and information (both real-time and recorded) associated with various truck technologies can be leveraged in creating training, prognostics, and other types of revenue streams for OEMs and suppliers. Fleet managers are showing increasing hunger for effective utilization of information related to their mobile resources: drivers and vehicles.

14


Implications

• Advanced technology development and marketing must center around reducing operating expenses of fleet managers are facing challenges such as fuel price volatility, a strengthening regulatory environment, and shortage of skilled drivers and technicians.

• The higher degree of cognizance for several advanced soft technologies, especially in the safety and telematics space, implies that OEMs and suppliers must work closely with telematics service providers, information and communication service providers, data analytics providers, infrastructure planners, and government arms.

• Consistent with the 2010 study, managers of the largest private and for-hire heavy-duty fleets in U.S. are willing to pay higher price premiums for advanced technologies if they see potential in the technologies in reducing operating expenses. This implies, fleet operating expense and lifecycle cost reduction must be key focal points for R&D teams in developing new commercial vehicle industry focused technologies. Marketing teams should underline these value propositions to fleet managers to effectively market and sell these technologies.

• The proliferation of connectivity-enabled technologies, especially technologies such as prognostics which impacts all adjacent powertrain, chassis, safety, and other technologies, implies tremendous revenue growth opportunities for OEMs, suppliers, aftermarket service providers, and fleets alike. The rising interest in this technology implies that mobile resource connectivity for vehicle operations, service, and maintenance will drive growth opportunities for a wide spectrum of market participant groups.

• The highest ranking technologies in terms of perceived value and interest are offering OEMs affirmation of their vertical integration strategies and offering suppliers ideas to focus on developing virtual integration relationships with OEMs by investing in some of these technologies and developing strong expertise in developing and marketing the technologies.

15


Executive Summary: CEO Perspective

2 Fuel price volatility, driver shortage,

regulation compliance, downtime reduction,

and data analytics are driving preferences

3

4

5

Creating electronic interfaces for truck systems/components for integration with vehicle’s communication infrastructure is seen as a key strategy imperative

1

Fleet managers are showing high degree of interest in technologies that can help reduce operating expenses and total cost of ownership

Telematics is emerging as a key enabler of

several benefits and applications desired by

fleet managers

With fleets keeping trucks for longer periods

of time, technologies that improve uptime

and reduce lifecycle costs are welcome

16

Certification

We hereby certify that the views expressed in this research service accurately reflect our

views based on primary and secondary research with industry participants, industry

experts, end users, regulatory organizations, financial and investment community, and

other related sources.

In addition to the above, our robust in-house forecast and benchmarking models, along

with the Frost & Sullivan Decision Support Databases, have been instrumental in the

completion and publishing of this report.

We also certify that no part of our analyst compensation was, is or will be, directly or

indirectly, related to the specific recommendations or views expressed in this service.

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