As the telematics market struggles to contend with the downturn caused by the recession, a debate has been whipped up over the relative merits of purchase, leasing and pay-as-you-go systems as ways of funding telematics and vehicle tracking systems.

Historically, fleet operators often bought or leased their telematics hardware, obtaining finance either through the provider or independently, and paid for tracking information separately under an ongoing contract deal involving airtime and possibly access to the Web site providing the information.

Under pay-as-you-go systems, operators can obtain the whole package (including hardware) without necessarily making any up-front payment, and simply pay off the cost on monthly terms.

This approach, whilst countering any reluctance on the part of hard-pressed customers to find money for investment, means the supplier has to fund the whole cost of the equipment and service.

 

Some suppliers have heralded pay-as-you-go as the solution to the industry's ills, and a way of breaking the cycle of no-funds/no spend. Quartix, for instance, has been a strong advocate of this approach as a way to avoid problems where leasing is handled separately from service supply – though it also offers conventional funding arrangements for those who prefer this.

Other suppliers have come out against pay-as-you-go, arguing that it could reduce the perceived value in telematics systems, and prompt users to view them as commodity products.

TomTom WORK warns that any telematics supplier offering a PAYG option has to fund the hardware itself – which can have an impact on cash flow and a knock-on effect on its ability to sustain the levels of investment required.

Managing director Thomas Schmidt adds: 'TomTom believes that the best for customers is to look at whether or not their preferred supplier has a stable business model and a healthy financial background before making any purchasing decision.'

David Isom of V-Sol takes a similar line. 'With vehicle tracking currently available from as little as £0.25 per day, and a growing trend for pay-as-you go solutions, the industry is in danger of positioning itself as a low-cost business partner with no real value placed on the service and expertise it can offer.

'In most other areas business technology is charged at a premium, particularly for the latest generation solutions,' he adds.