Johannesburg - Cartrack Holdings, the global provider of fleet management, stolen vehicle recovery and insurance telematics services that listed on the JSE in December 2014, has begun operations in the United States.
The group, which now has an active subscriber base of more than 550 000 vehicles globally and a presence in 23 countries across Africa, the Middle East, Europe and Asia after embarking on a global expansion strategy, said on Wednesday that its operational base in the US would be located in Los Angeles.
This follows Cartrack in October announcing plans to launch a start-up operation in Orlando in the US by the end of the year, but it did not provide further details.
Zak Calisto, the global chief executive of Cartrack, said that the company realised a large potential market in the US for Cartrack’s telematics products, particularly with the impending electronic logging device mandate for fleets in the US.
The use of electronic logging devices (ELDs) was part of a bill enacted by the US Congress in 2012 mandating the installation of ELDs on all long-haul vehicles. These devices will be used to record a driver’s record of duty status electronically and replace the paper logbook system that some drivers use to record their compliance with hours of service requirements.
The deadline for fleets to implement ELDs is December next year.
Calisto believed the US was an established and increasingly active market for telematics. “There are gains to be made in the market, which is growing rapidly,” he said.
Calisto added that the group knew from its experience in entering markets in Europe and Asia that it would take time to penetrate the US market and this came with an associated cost.
Leveraging off
However, Calisto said they were committed to introducing Cartrack into this market carefully and selectively to ensure the group penetrated and competed effectively in this market over time.
“We will be leveraging off our existing technology base, which is centrally managed from South Africa, and the marginal cost of expansion is therefore controlled and minimised. Cartrack is a highly cash-generative business in all its established operations, thus expansion is intended to be funded from internal cash flows,” he said.
Travis Schmidt, the chief executive of Cartrack’s US business, said they had compared Cartrack’s technology with other products in the US and believed Cartrack had an offering that would find acceptance in the US, particularly as the group had a competitively priced and higher quality product than they had seen to date in the US market.
Schmidt said Cartrack had also spent time on technical development specifically for the US market to ensure requirements for International Fuel Tax Agreement (IFTA) reporting were met.
“We offer at least the same features and in several respects the product may be even more advanced because of the uniqueness of the product design and numerous features that have been developed over the years for the South African market, which is a very demanding environment in respect of both security and driving conditions,” he said.
Compete
But Schmidt said Cartrack did not intend to compete with the very expensive high-end fleet management products that were integrated into the vehicles because this was not their primary focus.
Schmidt said they saw a real opportunity in the fleet management sector and for the insurance industry, as well as in the growing market for risk management.
“Companies (that) operate fleets are looking for increased productivity, efficiency enhancements and cost reduction by being able to better manage their infrastructure and improve profitability,” he said.
Shares in Cartrack declined 0.51 percent on the JSE yesterday to close at R9.70.
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