Despite the challenges, Asia should be a priority for any fleet management company looking to expand their business.
With the increased advantages that modern connected devices offer, fleet management solutions are growing at a rapid rate. According to a recent Frost and Sullivan report, the North American telematics market grew by 14.1 percent between 2018 and 2019. The EU saw similar growth at 14.8 percent and continues to be a major focus for new telematics users. The markets of Australia and New Zealand grew by a slightly lower margin of 13 percent.
But the real growth lies in some of the fast-growing emerging economies of Asia. Speaking to
a&s,
pointed out that strong growth here is expected to continue, driven by markets like India where off-road vehicles will push year-on-year demand upwards. India posted a growth of 16.4 percent in this sector last year.
But dealing with the APAC fleet management market outside Japan, Australia, and New Zealand is not simple for many global solution providers. The main reason is the diversity in the region, including everything from language to government regulations and even business culture. And yet, APAC offers a major opportunity for global players who, quite often, tend to exclude the region from their operations.
What is needed for market survival
According to a report from the Global Fleet Executive Network (GF), an organization tracking developments in the segment, there are certain tips and tricks to ensure survival in the APAC market. In a nutshell, these are about effectively navigating the
complex nature of business operations here.
- Need for transparency: When it comes to most emerging markets in the region, the reported costs seldom reflect the real costs. Due to the fragmented and limited nature of repairs and other service providers, and a general preference for informal transactions, payments are claimed through expense notes. According to GFEN, this could be up to 30 percent more than the actual costs. “The first task is to surface all the costs and establish processes to capture hidden costs, such as expense notes,” GFEN notes.
- Study each country separately: As mentioned before, diversity is the biggest challenge in Asia. There is a radical difference in the rules, vehicle costs, maintenance requirements, etc., across the region. “An average lease car in Japan will cost around $400, but each registration in Japan requires a parking space, the cost of which might exceed the lease rate,” GFEN says. “Each country in Asia has specific specs that come across as unusual for the western fleet manager. Understanding them is necessary to build a regional fleet strategy.”
- Consider eligibility: The GFEN report points out that policies in Asia often provide cars to management and sales. However, such policies are not always written and controlled centrally. This needs to be reevaluated to ensure the bottom line stays in the black.
- Service level standards: Working across the region, a company is bound to end up with multiple suppliers. Having strict service-level standards agreements will ensure expected quality is delivered while providing equal treatment.
- Relationship building: Informal relationships mean a lot in Asia. Connect with local dealers and suppliers, and communicate what you are looking for and what you can offer them. To your advantage, most local suppliers would be eager to build up relationships with a foreign partner that would be of mutual benefit.
- Don’t go in with a global strategy: GFEN calls this the “PowerPoint strategy,” wherein a global company goes into a regional market with their plans charted out in presentation slides without taking local conditions into account. “Except for Australia and New Zealand, the understanding of strategies and the role that local stakeholders are expected to play, will be entirely different in Asia,” GFEN said. “Understand how local business culture works and adapt.”
Clearly, despite the challenges, Asia should be a priority for any fleet management company
looking to expand their business. Several emerging nations in this region require solutions to manage their increasing requirements. With a clear customized strategy, vendors can find a win-win situation.
Product Adopted:Transportation