Innovation, Optimization, and Beyond: How Telematics Is Transforming Business in Latin America

Telematics technologies bring telecommunications networks and computer systems together to collect and transmit data on vehicle use, maintenance requirements, automotive servicing, and more—to powerful effect. Global ag giant Syngenta, for example, uses telematics to gather data ranging from kilometers driven to driver behavior, to inform a single driving policy for the LATAM region.

“[Telematics] is more than just vehicle tracking,” said Eduardo Canicoba, AVP for business development for Canadian fleet management giant Geotab, which has had a presence in Latin America since 2012. “Telematics can help optimize vehicle maintenance and fuel usage, address safety issues aimed at reducing injuries, and prepare for a more electrified fleet.”

“Thanks to the use of telematics, today it’s much easier to prevent and avoid accidents on the road, breakdowns, damage to vehicles, and even protect drivers against theft and other types of threats,” notes Location World, which provides connected vehicle and fleet management solutions across Latin America.

The continued rollout of 5G connectivity and advances in data analytics, Internet of Things (IoT) networks, and vehicle-to-everything (V2X) solutions make it a dynamic area of innovation—particularly in Latin America. A study by Triton Market Research forecasts a CAGR of 7.60% for the Latin American smart fleet management market from 2021 and 2028.

Telematics’ benefits extend far beyond individual drivers and dashboards. This transformative and continually transforming area of technology is strengthening operations in established industries and shaping new business models. Read on for areas of innovation, sector and market highlights, and inspiration for your own operations and investments.

Giving last-mile delivery services a competitive edge

Latin America has seen a “food delivery revolution” in recent years, powered by apps like Colombia’s Rappi and Mercadoni, Brazil’s iFood, and Uruguay’s PedidosYa. As customers place their orders online, technology on the back end of the transaction helps ensure that drivers and their goods get where they need to go.

For Geotab, last-mile delivery services is a growing market. “Although this is something that had already been gaining popularity even before the start of the COVID-19 pandemic in 1Q20, the pandemic has pushed its popularity even more,” according to AVP Eduardo Canicoba.

In Mexico, Cargamos provides logistics solutions for online businesses in over 75 cities, promising “cheaper, greener, and faster deliveries.” Mexico Business examined this growing sector: “Logistics and delivery businesses are all about precise time estimations and correct cost calculations. Investment in telematics offers companies the opportunity to provide more accurate data related to specific operation fields and make more precise estimations when providing customers with ETAs, while keeping better track of their fleets.”

Helping drivers get vehicles—and app-based services drivers

In the evolving ecommerce and app-based delivery space, a car or truck can be a powerful revenue-generator. But purchasing and maintaining one is an expensive proposition not everyone can afford to take on. This deprives potential drivers of work opportunities and growing companies of drivers to transport their products.

Brazil-based Kovi—”a very smart company, obsessed with metrics, tech, and product innovation,” in the words of Valor Capital’s Scott Sobel—is  tackling this challenge through telematics.

The company rents vehicles to drivers who work on demand for ride-hailing companies such as Uber, Didi and Lyft and as food delivery workers. Rental operations run on fleet management technology, enabling the company to remotely monitor and manage the cars it leases out. Kovi then optimizes its operations with a variety of tech tools, including a digital wallet for drivers, verticalized maintenance centers designed to reduce idle time and costs, and IoT systems integrating the entire fleet and all of the data it generates.

Expanding access to the company car—and more—in Argentina

In Argentina, it’s believed that nearly two thirds (approximately 63%) of multinational firms in the country offer company cars to some of their employees—vehicles that are often more cost-efficient to lease or rent rather than purchase and own. This is where fleet-rental-as-a-service comes in. With fleet rental services, a client company pays a fixed fee for cars and all of the issues related to them: insurance, maintenance, and more—complex operations ripe for telematic optimization.

Car rental giant RDA is a leader in this delivery model. It rents out both individual cars and corporate fleets, with an estimated 10,000 vehicles to keep track of. The company is expanding into new business models as well.  In 2021, RDA launched carsharing service Keko. Connected vehicle and fleet management technology enables app-based rentals by the minute, hour, or day across more than 100 locations in the greater Buenos Aires area.

Car and fleet rentals are just the beginning of Argentina’s multifaceted market for telematics. The country has traditionally been Latin America’s top fleet markets and leading sectors like mining, agriculture, manufacturing, and ecommerce are tailor-made for technology-enabled optimization.

Argentina is also a nation of innovators. One example of a startup exploring telematics’ potential is SnapCar, which describes itself as the first “pay how you drive car insurance company in LATAM,” with a platform that both monitors driver behavior and offers improvements.

Lowering costs and leveraging data in Brazil

Long-haul trucking is big business in Brazil. “Over 62% of freight transport in Brazil is by road,” Frost & Sullivan Mobility Industry Analyst Ingrid Schumann noted in Network King magazine. “This highlights the importance of truck fleets in the country and the pressing need for using telematics to reduce the total cost of ownership.”

MixTelematics, GeoTab, and Ituran, the largest supplier of OEM telematics in Latin America, are among the many established telematics providers helping fleets optimize operations across the nation’s 1.7 million kilometers of road networks. Concurrently, a number of Brazilian startups have been exploring the area of connected vehicles. Technology and data firm Tracxn noted:

  • Delfos Telematics’ Vehicle CAN System, which collects data from a vehicle and delivers an action plan to users via mobile app
  • The Justos app-based platform, which measures acceleration, braking, and speeding for auto insurers
  • NuntecAgro sensor-based diesel management systems for farming businesses

Growing needs and market growth in Mexico

According to a 2022 report on Mexico’s connected truck and telematics market, fewer than 1 in 4 (24%) of truck fleets in the country currently use telematics services. But fleet-focused regulations and interest by multinational providers could be changing this picture.

Since 2018, the government’s “NOM-087” regulation requires fleet managers to electronically log information about driver hours of service, speeds, and rest periods, similar to the Electronic Logging Device (ELD) rule in the United States. “The challenges facing fleet operators in Mexico bear a striking resemblance to the problems we solve for customers in other regions with similar characteristics,” said Stefan Joselowitz with Florida-based MixTelematics.

Monitoring driver behavior is one challenge for Mexico’s fleet managers. To operate competitively and cost-effectively, they also need to protect assets in transport and make operations like routing, dispatching, and paperwork more efficient.

Globally focused companies have been responding to this need. In 2019, MixTelematics established an office in Mexico, and Texas-based EnVue Telematics launched a wholly owned subsidiary, EnVueMex Solutions. In 2021, OnStar Mexico, General Motors’ security and connectivity service, launched its Fleet Complete service. Distributed through authorized fleet dealers, the service covers Chevrolet, Buick, GMC, and Cadillac vehicles.

How China could shape the landscape

Many of the world’s leaders in smart fleet management solutions have traditionally been from Europe or North America: Zonar Systems Inc, Continental AG, Orbcomm Inc, Robert Bosch GmbH, and Sierra Wireless Inc., as well as Japanese multinational Denso. But another national player is swiftly joining these ranks: China.

China is not only providing the infrastructure for Latin America’s telecommunications networks, including 5G rollouts, the nation is bringing some of its biggest names to advanced technologies and platforms for the connected vehicles that will run on them. Technology and entertainment conglomerate Tencent has been working with automakers Geely, Changan, Haval, Trumpchi, and Dongfeng Forthing. Internet and AI company Baidu has been developing “scenario services,” such as fragrance to refresh drivers if signs of tired driving are detected. Meanwhile, Chinese giants Alibaba and SAIC Motors have collaborated on the Banma connected car operating system.

In the next 10 years, China’s commercial vehicle (CV) fleet management system (FMS) market is forecast to enter “phase 3.0, centering on technologies for vehicle-to-vehicle (V2V), vehicle-to-everything (V2X), and Internet of Things (IoT),” according to a 2020 report by ResearchandMarkets. “The CV market is experiencing strong growth due to the booming eCommerce industry, the wave of vehicle replacement and upgrade to meet stricter emissions regulations, and subsidies issued by central and regional governments.”

We’ve recently explored the many ways China is shaping Latin American business, from retail and ecommerce to infrastructure investment and development. Given telematics’ presence at the intersection of these areas, watch for the global giant’s influence here as well.

Cyber threats escalate along with innovation

In May 2022, FleetNews reported that rental firm Sixt had been the subject of cyber attack. But cybersecurity is not a new concern with telematics solutions. As early as 2015, security researchers have pointed out vulnerabilities related to telematics networks, such as hackers taking over the vehicle management solutions of insurance companies and commercial fleets to send out rogue commands.

Security researcher Sam Curry explored the situation in late 2022, with even more troubling findings. “Nearly every automobile manufactured in the last five years had nearly identical functionality. If an attacker were able to find vulnerabilities in the API endpoints that vehicle telematics systems used, they could honk the horn, flash the lights, remotely track, lock/unlock, and start/stop vehicles, completely remotely.”

Application programming interfaces (APIs) are just the beginning. Other research uncovered vulnerabilities related to insecure communication channels and insecure network protocols, as well as attack vectors related to radio frequency signals and machine learning techniques. Meanwhile, recently discovered vulnerabilities in a popular GPS vehicle tracker leave fleets worldwide open to the possibility of bad actors not only immobilizing vehicles but collecting information and manipulating data.

“The hackers are always one step ahead. You do not want data and the control of your vehicles to be in their hands,” IBM Latam security leader Flávio Cruz said at the PARAR Global Conference 2022 in Sao Paulo. “Risk cannot be eliminated, but it can be mitigated.”

According to Security Boulevard, some tactics the users of telematics systems can take include:

  • Strengthening governance around the APIs which connect systems and devices
  • Diligently monitoring account controls
  • Understanding the data used and collected by telematics networks, to mitigate exposure in the event of a breach

Meanwhile, companies developing telematics systems will need to incorporate cybersecurity into every aspect of their solutions, from architectural design to coding, and make it an ongoing priority. “Cybersecurity will be nonnegotiable for securing market access in the future,” according to Latha Chembrakalam with Continental Automotive in India.

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