Cartrack backs growth in US
• Vehicle-tracking firm’s upgraded platform will help it take advantage of opportunities in underserviced country
Vehicle-tracking and fleet- management specialist Cartrack is upbeat about its foray into the US market.
Vehicle tracking and fleet management specialist Cartrack is upbeat about its recent foray into the competitive US market.
Cartrack’s main operating base is SA and Africa, with markets in selected countries in the Asia-Pacific region and Europe.
The company established an operational foothold in California in 2016 and — according to an annual report released this week — has to date incurred start-up and initial operating costs of R4m.
Cartrack CEO Zak Calisto said in-field testing of hardware and related software functionality on a new upgraded platform would start shortly.
He said Cartrack’s strong product offering — coupled with competitive pricing as well as a developing distribution and operating infrastructure — would provide the platform for market penetration in 2018.
Calisto pointed out that despite being one of the most advanced economies in the world, the US’s telematics penetration was relatively low at between 15% and 30%.
But he noted that the Federal Highway Traffic Safety Administration recently ruled that commercial vehicles must have electronic devices capable of recording service hours. Commercial vehicles must meet the new rule by December.
He estimated that 3-million vehicles would implement the changes in the next 18 months.
“Gartner believes that the use of commercial fleet management or telematics systems in North America is expected to increase at a 15% compound annual growth rate over the next four years, as trucking regulations tighten in the US.”
Calisto said that in 2016 there were 7-million vehicles in the US with these solutions installed and that by 2020, the number was expected to double.
“The focus of this operation will be primarily on fleet, combining all key metrics for electronic driver-logging devices required by law to be installed in long-haul vehicles in the US.”
Calisto conceded the US was a demanding market with healthy competition. “Cartrack USA will receive support and investment in operating capacity over the next 18 months.”
He predicted subscriber growth would be gradual as the brand became established. “However, we are confident that Cartrack’s value proposition will be quickly accepted, resulting in positive operating margin contribution in the medium term.”
Overall, Calisto believed Cartrack’s operations would deliver growth in the new financial year that was consistent with or better than the performance achieved in financial 2016.
He said that despite the global economic and foreign exchange headwinds, Cartrack expected good growth, although at a slower pace in the African operations. He said opportunities in Europe, where the company operates in Poland, Portugal and Spain, were being pursued.
Growth was expected in SA even though there was already a relatively high market penetration. Asian markets — including Hong Kong, Indonesia, Thailand, Philippines, Singapore and New Zealand — should achieve good growth off a low base.