Construction Machinery Telematics Market Size, Share & Trends Analysis Report By Machinery Type (Crane, Excavator, Telescopic Handling, Loader and Backhoe, Other Machinery Types), By Sales Channel Type (OEM, Aftermarket), By Telematic Feature (Tracking, Diagnostic, Other Telematics Features) and By Region(North America, Europe, APAC, Middle East and Africa, LATAM) Forecasts, 2023-2031

Market Overview

The global construction machinery telematics market was valued at USD 1,221.71 million in 2022. It is estimated to reach USD 3,344.58 million by 2031, growing at a CAGR of 11.84% during the forecast period (2023–2031). Consumers' flourishing demand for machinery efficiency drives the construction machinery telematics market. The surge in the usage of portable technology in construction machinery has pushed the adoption of telematics in construction machinery.

The telematics system of a piece of equipment facilitates the transmission of data pertaining to said equipment through a communication network. Telematics systems integrate GPS technology, sensors, and onboard diagnostics to monitor the performance and operation of construction equipment. Construction machinery telematics enables monitoring, full tracking, and control of assets in remote parts of the world.

Telematics has several benefits, including asset location, which uses data to track equipment activities on-site. Construction equipment equipped with telematics helps prevent unauthorized use and theft. Real-time access to machines is also useful for tracking engine hours, idle rattling, and fuel consumption.

Market Dynamics

Global construction machinery telematics market drivers

Rising construction and infrastructure activities 

With growing construction and infrastructure activities worldwide, construction companies focus on embedding new technology into their machinery. They prefer vehicles with telematics to obtain a competitive edge over other market players. Currently, telematics technology adoption in construction machinery is witnessing a notable revolution as telematics software helps monitor fuel usage, driver behavior, asset location, engine hours, predict maintenance schedules, etc., to provide real-time monitoring.

The construction industry's demand for machinery and equipment has increased significantly over the past few years due to increased infrastructure spending by governments and industry participants. In July 2020, Indonesia announced its plans to invest around USD 430 billion in infrastructure from 2020 to 2024, a 20% increase compared with the USD 359.2 billion invested from 2015 to 2019. Such active projects and notable government investments in improving infrastructure are expected to drive demand for these telematics solutions for construction machinery over the forecast period.

Global construction machinery telematics market restraint

Uncertainty of the pandemic

Like most industries worldwide, the COVID-19 pandemic significantly impacted the construction machinery sector, which is sensitive to economic cycles. Therefore, this phenomenon impeded the expansion of the construction machinery telematics industry. The supply chain was disrupted in several ways in distinct parts of the world. As construction is sensitive to economic cycles, construction enterprises are particularly vulnerable to the drastic decline in economic activity resulting from the pandemic.

Global construction machinery telematics market opportunities

Connected technology 

The face of the industry is changing fast as engineering firms, contractors, and other value chain participants discover the benefits of new technologies like machinery telematics and progressively adopt them. Coagulating data, analytics, and user-based skills insights might be crucial as the construction sector evolves toward new technology, including connected and telematics for construction machinery. This will also assist companies in shifting their problem-solving approach from reactive to predictive. Hence, connected construction is projected to provide various benefits for the growth of the market in the future.

In 2022, connected construction will likely serve as a catch-all for significant digital investments to connect, integrate, and automate operations and to bring the entire value chain under a secure, intelligent infrastructure. The commercial building industry's growing demand for digital and technological capabilities is anticipated to create opportunities for the construction machinery telematics market.

Regional Analysis

Asia-Pacific Dominates the Global Market

Based on region, the global construction machinery telematics market is bifurcated into North America, Europe, Asia-Pacific, and the Rest of the World.

Asia-Pacific is the most significant global construction machinery telematics market shareholder and is anticipated to exhibit a CAGR of 12.47% during the forecast period. The Asia-Pacific region holds significant opportunities for the growth in demand for construction machinery telematics. Demand for construction equipment will increase during the forecast period due to the likelihood of large infrastructure projects and changing labor dynamics. In ASEAN countries, the construction sector is expected to grow by more than 6% post-2021. It is estimated that over the next five years, the combined value of all the mega-projects in the ASEAN region is expected to be valued at USD 2.9 trillion. Approximately USD 1.5 trillion is allocated towards the planning and pre-planning phases.

In addition, the investments in infrastructure, both public and private, like the Indonesian National Medium-term Development Plan (USD 460 billion), the Philippine Development Plan ""Build, Build, and Build"" (USD 71.8 billion), and the Vietnam Socio-Economic Development Plan (USD 61.5 billion), are expected to surge the demand for construction machinery and telematics in these regions.

North America is estimated to exhibit a CAGR of 11.97% over the forecast period. The demand for telematics technology is growing as equipment users learn about these systems' value. With construction projects increasingly operating to gain profit margins, such technical assistance is widely accepted by players in the market. For instance, in Canada, Caterpillar began offering a whole-machine telematics solution in 2021 that enables original equipment manufacturers (OEMs) to provide machine owners and operators with real-time access to critical data output. The engine-integrated telematics system, equipped with remote service capabilities, can minimize downtime through remote troubleshooting, which can perform diagnostic checks and detect possible issues while the machine operates.

In addition, governments across the region started focusing on making construction machinery safer and more efficient in the wake of growing construction activities and infrastructure developments. These vehicles are now encouraged to be equipped with ELD, a closed-circuit television (CCTV)-based surveillance system, a tracking device, and one or more emergency buttons, which the manufacturer would fit to ensure the user's safety. All these factors drive market growth.

In the European market, factors influencing growth are increasing public infrastructure spending and extremely low interest rates. For instance, in April 2021, it was reported that the Federal Government in Germany is increasing its expenditure on rail and road infrastructure. This increased spending on transportation infrastructure provides EUR 270 million (USD 324 million) in funding to improve roads, rail, and waterways over the next 10 to 15 years. The region also saw a rise in the demand for telematic services for construction machinery over the past five years.

Additionally, companies have been launching new telematics technologies to mitigate the growing fear of theft of machinery and vehicles across the region, which is one of the crucial factors driving the construction machinery telematics market. For instance, in 2022, HITACHI Construction Machinery UK (HCMUK) launched a new mixed-fleet telematics system. The system utilizes the Hitachi Application Programming Interface (API) from Global E-Service and a bespoke API developed by HCMUK, allowing almost real-time data collection.

The rest of the world includes South America, the Middle East, and Africa. South America is the leading revenue contributor in the region. The growing need for vehicle security and tracking systems mainly drives the demand for telematics solutions across South America. Moreover, several fleets use basic fleet management tools, which restricts their ability to monitor the overall fleet performance. This has increased the demand for telematics solutions to a large extent. Similarly, prominent companies like ERM Advanced Telematics are expanding regional operations, offering fleet management and telematics solutions. Besides, the company plans to expand its Star Link Telematics product line in South America. The region's ongoing and future construction projects will likely propel the market's growth.

Segmental Analysis

The global construction machinery telematics market is segmented by machinery type, sales channel, and telematic feature type.

Based on machinery type, the global construction machinery telematics market is divided into cranes, excavators, telescopic handlers, loaders, backhoes, and other machinery types. 

The excavator segment owns the highest market share and is estimated to grow at a CAGR of 11.91% during the forecast period. Full-sized excavators adopted new technology and features, like telematics, making them more productive and fuel-efficient. Remote diagnostics, GPS monitoring, and even safety are all possible with telematics technology. One of the key benefits of telematics in excavators is effective active allocation. For example, the data produced after analysis reveals if an excavator is idling at a site for too long and if the idle equipment may be used at other locations.

In addition, some construction machinery manufacturers and telematics providers are developing new products with enhanced features for their customers. In 2022, Doosan displayed its mini-excavators in dealerships across the United States and Canada. Mini-excavators are equipped with a variety of features, including Doosan's telematics software (DoosanCONNECT), which aids in the monitoring and maintenance of equipment.

Telematic technology for cranes is not a new norm, as it has been in operation for the last decade. Some key crane manufacturers have started adopting telematics technologies for fleet management, GPS tracking, diagnostics, etc., in their machines. In 2021, ABA Crane Hire upgraded telematics and cameras to two all-terrain mobile cranes. The new fleet management system from ABA allows it to track the cranes while boosting visibility for drivers when driving and operating on-site. Spillard Live, which simultaneously records and transmits real-time video and analytics, was installed on ABA Crane Hire's Liebherr LTM 1110-5.1 and the Demag AC 45. The system includes four live cameras, two 180-degree cameras installed on the nearside and offside, and a digital video recorder (DVR) to turn left and right alarms.

Based on the sales channel, the global construction machinery telematics market is bifurcated into OEM and aftermarket. 

The OEM segment dominates the global market and is projected to exhibit a CAGR of 11.47% over the forecast period. Most major construction equipment OEMs have begun offering telemetry services to their customers. OEM telematics systems are regularly fitted as standard equipment, at least on larger machinery. Regarding the number of CE telematics systems implemented globally, Caterpillar and Komatsu are the main construction equipment OEMs. In 2020, Caterpillar was the first company to reach the one million-connected-asset milestone across all segments. Caterpillar's telematics products are most popular in North America and Europe, while Komatsu's telematics units are most popular in Japan and China, followed by North America and Europe.

The growing use of telematics in the construction sector for real-time tracking data and optimizing logistical solutions will boost the growth of the aftermarket telematics market. Aftermarket automotive telematics systems may be used for various purposes, including stolen vehicle tracking and recovery (SVT/SVR), vehicle diagnostics, Wi-Fi hotspots, convenience applications, and usage-based insurance. Vehicle diagnostics enables service providers such as dealers and workshops to deliver better service to automobile owners.

Dealers and financial businesses can also use telematics for internal fleet and customer lifetime value management. Remote control of car features, such as door lock/unlock and discovering the last parking spot, are examples of convenience applications offered by aftermarket telematics equipment.

Based on the telematic feature type, the global construction machinery telematics market is segmented into tracking, diagnostic, and other telematic features. 

The tracking segment is the largest revenue contributor to the market and is expected to exhibit a CAGR of 8.81% throughout the forecast period. Telematics has long been utilized to locate vehicles, containers, and other assets in the logistics business. The technology performs similarly in the heavy equipment and construction industries, but with extra advantages. Asset tracking improves security and protects against vehicle and equipment theft, abuse, and misappropriation. Construction technology is developing, allowing organizations to construct structures more quickly and safely. In addition, GPS construction equipment tracking is not the only way this technology may boost productivity in the construction sector. Construction equipment tracking with GPS technology provides several economic advantages, such as preventing breakdowns, avoiding costly downtime, etc.

Vehicle telematics is the wireless transfer of data across great distances. Remote automobile telematic diagnostics use real-time data interchange from a remote location to monitor vehicle-related information. These diagnostic tools give alerts on possible vehicle faults, identify the root cause of vehicle failures, and provide recommendations for repair activities. Telematics in construction machinery is an emerging area with huge potential for expansion. In addition, remote diagnostics is a much-needed solution to the skilled technician shortage. If a top-level mechanic can remotely diagnose fleet cars, the rest of the team can focus on repairs when the vehicles arrive at the shop. This also keeps less-experienced professionals out of what might be a time-consuming diagnosis procedure in the shop.

Recent Developments

• November 2022: Doosan Infracore North America, located in Suwanee, Georgia, launched Smart X-Care, a subscription-based telematics monitoring service. A new machine monitoring center is located at the Doosan Infracore North America headquarters in Suwanee to facilitate Smart X-Care.
• March 2023: Quake Global, a leading supplier of telematics hardware and software solutions, announced that it was selected by Yanmar Holdings Co., Ltd., a global innovator of a wide range of industrial equipment with a major emphasis on designing and manufacturing advanced solutions for customers' challenges, as their exclusive supplier for telematics hardware requirements for their Spraying Robot YV01.