The introduction of advanced technology under the Smart Tachograph Version 2 regulation issued by the European Commission, set to come into effect from August 2023, will inject new momentum into the European digital tachograph market. It comes at a crucial time when the market is grappling with extreme consolidation, a virtual duopoly situation, and oversaturation. Regulatory impetus, together with a focus on integrating digital tachograph systems with fleet management solutions (FMS), will allow for value addition, while offsetting a worrying trend towards commoditization.
To learn more, please see: Growth Opportunities in the European Digital Tachograph Market, 2023, Global Connected Truck Telematics Outlook, 2023, Growth Opportunities in the Global Video Telematics Market or contact sathyanarayanak@frost.com for information on a private briefing.
Tracing the Regulatory Journey
Tachographs—devices that record driving times, rest periods, periods of other work and availability of the driver of a heavy vehicle—have played a central role in EU’s commercial vehicle (CV) industry in terms of improving driver working conditions, boosting road safety, and ensuring compliance with local road transport laws and regulations.
The Smart Tachograph Version 2 regulation marks the latest development in a journey that began in the early 1950s when Germany mandated the use of a tachograph device to record drivers’ rest and driving data in vehicles above 7.5 T. Next, analog tachographs were mandated in Europe from 1986, followed by EU regulation 1360/2002 which required the use of digital tachographs in new 3.5 T CVs manufactured after August 1, 2005.
Subsequently, a new Smart Tachograph system was introduced in 2016, following the introduction of a new generation of “smart tachographs” with GNSS modules that automatically record vehicle location, time, and hours of driving. Accordingly, Smart Tachograph Version 1 regulations required digital tachographs to be installed in all new vehicles manufactured from June 2019, with Version 1 deemed mandatory in the EU and the United Kingdom.
Thereafter, the EU adopted Mobility Package I, a significant transport industry reform, on July 8, 2020.
As part of this, the Smart Tachograph Version 2 will be mandatory on all commercial trucks and buses from August 2023. Like before, the purpose is to improve drivers’ working conditions and ensure better enforcement. The roadmap is clear: by August 31, 2023, fleets and vehicle owners will have to install the second generation of smart tachographs in all newly registered vehicles with a permissible weight above 3.5 T. By December 2024, all international road transport vehicles weighing 3.5 T and above must change to the smart tachograph version 2. By August 2025, vehicles with a smart tachograph version 1 must replace it with version 2. By July 1, 2026, all new vehicles above 2.5 T in international road transport must have smart tachograph version 2.
Beyond 2026, light CVs (LCVs) along with medium CVs (MCVs) and heavy CVs (HCVs), will fall under the ambit of European tachograph regulations, ensuring compliance for all international transport drivers. Version 2 of the smart tachograph is set to have new functionalities, such as enhanced anti-tampering resistance, ability to identify vehicle location during load/unloading activities, record border crossings, and independently authenticate satellite signals.
Our Perspective
While regulatory updates are necessary, repeated changes could lead to hesitation in adopting tachograph systems, while imposing a financial burden on small and medium sized enterprises in terms of high initial setup costs for advanced versions of smart tachographs.
More positively, Frost & Sullivan expects the need for regulatory compliance to be reinforced by strong support from drivers, including in smaller fleets. Simultaneously, fleets will look to integrate advanced tachographs with existing telematics systems to bolster fleet management solutions and improve productivity.
In turn, telematics service providers (TSPs) will move to position themselves as one-stop shops by including tachograph systems in their portfolios. Indeed, traditional vendors are already offering diverse solutions such as fleet management, service maintenance, and tachograph services as an integrated package.
Over the long term, partnerships between tachograph providers and TSPs will result in new value additions for existing users. For instance, the use of tachograph software from European telematics participants like Verizon Connect and Webfleet Solutions in conjunction with outsourced tachograph hardware from key players like Continental VDO and Stoneridge.
Tier I companies that dominate the vehicle connectivity and telematics market for CVs in Europe are increasingly targeting the tachograph market. Many are turning to the inorganic route via mergers and acquisitions to get a head start. For instance, Continental’s acquisition of tachograph market leader VDO and Tier I automotive supplier ZF’s acquisition of Intellic GmbH, a key player in the digital tachograph market in Europe, in January 2023.
Despite market consolidation wherein the top five players account for over 80% market share, opportunities will continue to exist for Tier Is and TSPs looking to enter different verticals through focused product development, R&D and provision of innovative value-added services.
With inputs from Amrita Shetty, Senior Manager, Communications & Content – Mobility
