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Ford sets ambitious targets for selling software to small business fleet operators
Ford sets ambitious targets for selling software to small business fleet operators
Ford sets ambitious targets for selling software to small business fleet operators
Ramin Vandi
Ramin Vandi
March 14, 2024
March 14, 2024
In Tulsa, Oklahoma, HomeTown Services, a reputable heating and cooling repair company, is on the verge of incorporating driver monitoring cameras into some of its fleet vehicles. The company is already leveraging streamed data to encourage drivers not to spend excessive time idling, thereby conserving fuel. Del Underwood, the company’s vice president of purchasing and fleets, shared that technicians now receive text reminders to shut down their vehicles or proceed to their next job, aiming to boost fuel efficiency despite some potential resistance from staff.
This strategic move aligns well with Ford Motor Co's Ford Pro commercial vehicle division, banking heavily on software-related services. Ford Pro is aiming to cater to small and medium-sized fleet operators with connected-vehicle services, including driver monitoring systems, hoping these offerings will contribute up to $1.8 billion in annual profit within the next couple of years.
Ford's CEO, Jim Farley, has positioned Ford Pro’s spectrum of software and vehicle sales as a pivotal future direction for the automotive industry, challenging investors to look beyond the Tesla comparison.
With companies like Geotab and Verizon’s divisions currently leading the telematics services market for large vehicle fleets, Ford Pro seeks to carve its niche among small and medium-sized business fleets in North America and Europe. Farley has communicated to investors that software and services sales could represent 20% of Ford Pro’s pre-tax profit in the near term, with the division eyeing pre-tax profits between $8 billion to $9 billion this year.
2023 witnessed Ford Pro securing 500,000 paid software service subscriptions, marking a 46% increase, with impressive profit margins surpassing 50%. Farley’s goal is to significantly increase the proportion of vehicles sold with software subscriptions; data is deployed to prompt commercial vehicle owners about timely parts replacements, enhancing service subscription rates and potentially adding $30 million of incremental EBIT to Ford Pro.
Ford isn’t just focusing on its telematics solutions but also markets vehicle data to large fleets using other telematics services, amplifying its competitive position in the market.
Despite the promising trajectory of Ford Pro and its above-average profit margins, the overarching challenge remains transitioning customers from free to paid subscriptions. An example is Fize Electrique in Quebec, which utilizes Ford Pro software on a trial basis to monitor the battery levels of its Ford EV fleet. This data has facilitated a deeper understanding of battery performance, influencing the company’s shift towards an electric fleet.
Ford Pro continues to innovate and experiment with new software service offerings, although not every project sees long-term success. A notable venture was the collaboration with Salesforce to create VIIZR, a subscription software aimed at automating work orders for contractors, which has since been discontinued.
Ford Pro's strategic focus on telematics and software services signifies a bold move towards digitizing fleet management and enhancing vehicle efficiency for small and medium-sized businesses, aiming to set new standards in the commercial vehicle industry.
In Tulsa, Oklahoma, HomeTown Services, a reputable heating and cooling repair company, is on the verge of incorporating driver monitoring cameras into some of its fleet vehicles. The company is already leveraging streamed data to encourage drivers not to spend excessive time idling, thereby conserving fuel. Del Underwood, the company’s vice president of purchasing and fleets, shared that technicians now receive text reminders to shut down their vehicles or proceed to their next job, aiming to boost fuel efficiency despite some potential resistance from staff.
This strategic move aligns well with Ford Motor Co's Ford Pro commercial vehicle division, banking heavily on software-related services. Ford Pro is aiming to cater to small and medium-sized fleet operators with connected-vehicle services, including driver monitoring systems, hoping these offerings will contribute up to $1.8 billion in annual profit within the next couple of years.
Ford's CEO, Jim Farley, has positioned Ford Pro’s spectrum of software and vehicle sales as a pivotal future direction for the automotive industry, challenging investors to look beyond the Tesla comparison.
With companies like Geotab and Verizon’s divisions currently leading the telematics services market for large vehicle fleets, Ford Pro seeks to carve its niche among small and medium-sized business fleets in North America and Europe. Farley has communicated to investors that software and services sales could represent 20% of Ford Pro’s pre-tax profit in the near term, with the division eyeing pre-tax profits between $8 billion to $9 billion this year.
2023 witnessed Ford Pro securing 500,000 paid software service subscriptions, marking a 46% increase, with impressive profit margins surpassing 50%. Farley’s goal is to significantly increase the proportion of vehicles sold with software subscriptions; data is deployed to prompt commercial vehicle owners about timely parts replacements, enhancing service subscription rates and potentially adding $30 million of incremental EBIT to Ford Pro.
Ford isn’t just focusing on its telematics solutions but also markets vehicle data to large fleets using other telematics services, amplifying its competitive position in the market.
Despite the promising trajectory of Ford Pro and its above-average profit margins, the overarching challenge remains transitioning customers from free to paid subscriptions. An example is Fize Electrique in Quebec, which utilizes Ford Pro software on a trial basis to monitor the battery levels of its Ford EV fleet. This data has facilitated a deeper understanding of battery performance, influencing the company’s shift towards an electric fleet.
Ford Pro continues to innovate and experiment with new software service offerings, although not every project sees long-term success. A notable venture was the collaboration with Salesforce to create VIIZR, a subscription software aimed at automating work orders for contractors, which has since been discontinued.
Ford Pro's strategic focus on telematics and software services signifies a bold move towards digitizing fleet management and enhancing vehicle efficiency for small and medium-sized businesses, aiming to set new standards in the commercial vehicle industry.
In Tulsa, Oklahoma, HomeTown Services, a reputable heating and cooling repair company, is on the verge of incorporating driver monitoring cameras into some of its fleet vehicles. The company is already leveraging streamed data to encourage drivers not to spend excessive time idling, thereby conserving fuel. Del Underwood, the company’s vice president of purchasing and fleets, shared that technicians now receive text reminders to shut down their vehicles or proceed to their next job, aiming to boost fuel efficiency despite some potential resistance from staff.
This strategic move aligns well with Ford Motor Co's Ford Pro commercial vehicle division, banking heavily on software-related services. Ford Pro is aiming to cater to small and medium-sized fleet operators with connected-vehicle services, including driver monitoring systems, hoping these offerings will contribute up to $1.8 billion in annual profit within the next couple of years.
Ford's CEO, Jim Farley, has positioned Ford Pro’s spectrum of software and vehicle sales as a pivotal future direction for the automotive industry, challenging investors to look beyond the Tesla comparison.
With companies like Geotab and Verizon’s divisions currently leading the telematics services market for large vehicle fleets, Ford Pro seeks to carve its niche among small and medium-sized business fleets in North America and Europe. Farley has communicated to investors that software and services sales could represent 20% of Ford Pro’s pre-tax profit in the near term, with the division eyeing pre-tax profits between $8 billion to $9 billion this year.
2023 witnessed Ford Pro securing 500,000 paid software service subscriptions, marking a 46% increase, with impressive profit margins surpassing 50%. Farley’s goal is to significantly increase the proportion of vehicles sold with software subscriptions; data is deployed to prompt commercial vehicle owners about timely parts replacements, enhancing service subscription rates and potentially adding $30 million of incremental EBIT to Ford Pro.
Ford isn’t just focusing on its telematics solutions but also markets vehicle data to large fleets using other telematics services, amplifying its competitive position in the market.
Despite the promising trajectory of Ford Pro and its above-average profit margins, the overarching challenge remains transitioning customers from free to paid subscriptions. An example is Fize Electrique in Quebec, which utilizes Ford Pro software on a trial basis to monitor the battery levels of its Ford EV fleet. This data has facilitated a deeper understanding of battery performance, influencing the company’s shift towards an electric fleet.
Ford Pro continues to innovate and experiment with new software service offerings, although not every project sees long-term success. A notable venture was the collaboration with Salesforce to create VIIZR, a subscription software aimed at automating work orders for contractors, which has since been discontinued.
Ford Pro's strategic focus on telematics and software services signifies a bold move towards digitizing fleet management and enhancing vehicle efficiency for small and medium-sized businesses, aiming to set new standards in the commercial vehicle industry.
