ToolSense Glossary


What Is Telematics?

Imagine a car with a smart computer that can report on practically every detail. From speed and idle to fuel use and low tire pressure. This system is part of telematics, often known as GPS fleet tracking.

The information generated by GPS tracking can help you improve your fuel efficiency and save money on maintenance by helping you monitor your driving habits. This technology allows you to track and collect telematics data on a single vehicle or an entire fleet. Wireless telematics devices and “black box” technology collect and communicate vehicle usage, maintenance needs, and automobile servicing.



  • A telematics system, commonly known as a black box, depicts data such as speed, throttle, brake application, airbag deployment, seatbelt use, steering angles and a range of other factors.
  • Car insurance companies use this information to offer drivers and fleet managers the best insurance cover, and to gather crash data.
  • As of 2022, all cars in the UK will come with a telematics system automatically installed.

From Military Tool to Ubiquitous Use

Telematics is a combination of the words telecommunication – the use of technology to exchange data and informatics – the use of computers to collect, analyse, and manage data in real-world systems.

When the US Department of Defence built the Global Positioning System (GPS) in the 1960s to track the movements of US assets and improve military communication, the two fields merged.

In a report to the French government in 1978, Simon Nora and Alain Minc invented the phrase “telematics”. Since 1978, the term has evolved to refer to automotive telematics. The European Union then commissioned research into vehicle telematics in the 1980s to improve road safety.

The United States government made GPS free to everyone in 1993. Because GPS is central to how telematics works, this was a pivotal milestone in the history of this technology.

The internet, GPS, and machine-to-machine (M2M) communication are three unique technological developments that gave birth to telematics. Wireless safety communications, GPS navigation, hands-free cell phones, and automatic driving assistance systems are also part of it.

How Does the Telematics System Work?

At its most basic level, a telematics system consists of a vehicle tracking device mounted in a vehicle that transmits, receives, and stores telemetry data. The tracking device uses a SIM card to connect to the vehicle’s onboard diagnostics (ODBII) or CAN-BUS connector. Moreover, it uses a built-in modem to communicate over a wireless network.

The device captures GPS and other vehicle-specific data and sends it to a centralized server via GPRS, 4G mobile data, cellular network, or satellite connection. The server interprets the data and makes it available to you via secure websites and apps designed for smartphones and tablets.

Using the device, you can collect data on:

  • location
  • speed
  • idling time
  • harsh acceleration or braking
  • fuel consumption
  • vehicle problems and more

When you analyse this data for specific events and patterns, you can discover in-depth insights across an entire fleet.

Fleet Management

Telematics plays an important role in fleet management as it allows for the collection of data that can help with logistical planning.

Improve Service

Telematics reports on a vehicle’s location in real-time via GPS tracking. You can use the information to build safer, more efficient routes, reducing delivery times and fuel consumption. You can also use geofencing to track and compare driver performance to delivery timetables. As well as to minimize driver detention time, leading to improvement of service.

Lower Fuel and Maintenance Costs

Telematics can help you design better travel routes, saving you fuel, maintenance costs, and other expenses. For example, you can use the software to track and compare different drivers’ idle time and immediately tell which drivers need to improve. Reducing idle time lowers fuel expenditures, a fleet’s greatest expense.

Lower Administrative Costs

Telematics systems give precise information on the time and distance travelled by each vehicle in a fleet, which optimizes the employee management and payroll. Automatically generated data reduces the amount of manual administrative and clerical work and the risk of errors.

Improve Safety

Automobile accidents are bad for your business and your drivers’ health and safety. Using this technology, you can enhance your drivers’ behaviour and improve overall road safety. Fleet management software can collect telematics data on your team’s driving habits and rank them according to their safety scores. You may then teach your drivers safer driving habits and increase the overall safety of your fleet.

How Are Telematics Systems Installed in Vehicles?

Most modern commercial vehicles can benefit from this unique technology. Commercial vehicle manufacturers are already installing GPS tracking and telematics systems in fleet cars. Aftermarket GPS units powered by a car’s electrical system or internal batteries can also be mounted in most modern commercial vehicles.

Some manufacturers work with telematics companies to seamlessly integrate the systems into vehicles. Smart automobiles are already connected to the internet and have Wi-Fi capabilities, allowing two-way data exchange with current networks.

What Security Risks Do Telematics Pose?

Because the electronic system saves a lot of client information, security is a must-have element. Hackers may try to take control of your telematics system by hijacking it or exploiting security flaws.

The security of transmitting data through a telematics network sometimes is a concern. Suppose your system does not have a strong way to encrypt client information? In that case, attackers will be able to steal private information from you and vandalize your system by entering wrong information into your database system.

Customer information is available on your system when using a telematics system. Your customers, for example, may not want the system to know where they are in the vehicle. Customers cannot protect the system against attackers; therefore, attackers can sometimes manipulate the system by breaking into a customer’s vehicle and causing an accident.

While data is transferred from your system to the user and vice versa, attackers may obtain information since the system does not have a robust architecture. When different protocols are used in a telematics system, security risks can arise.

The Six Major Benefits

Telematics helps with six fundamental aspects of fleet management:


You can use real-time GPS monitoring to identify the location of your fleet. You can also use telematics trip reports, dispatching, and routing systems to keep track of your fleet movements. And also develop shorter routes for your drivers to improve customer service.


Telematics will also help you improve the safety of both your fleet and your drivers by monitoring your driver’s behaviour reports. You can use in-car driver coaching to teach your drivers better driving habits. You will also get crash notifications and reconstruction reports, making it easier to monitor the safety of your fleet and driver. Moreover, the capacity to identify a stolen vehicle in all ways will help you improve safety.

Fleet Optimization

Telematics will help you optimize your fleet. You can improve streamlining vehicle maintenance by using predictive maintenance and remote diagnostics information. This information will also help you in fuel management by monitoring your driver’s idling and other fuel-guzzling habits.

Law Compliance

Telematics will help you improve on vehicle inspections. In addition, it will provide you with data on your fleet and drivers’ electronic logging and hours of service.

Software Integration

Another beneficial aspect of telematics is integration. You can combine other software systems, such as onboard camera technology or CRM software, and even create new applications to improve service delivery and the safety of your fleet.

Environmental Sustainability

The sixth beneficial aspect of telematics is sustainability. It can be used in managing electric vehicles, which reduce the fleet’s environmental effect and carbon emissions.

GPS Tracking vs Telematics

The telematics system is built around GPS tracking. Under each vehicle’s dashboard, a GPS receiver, which appears like a black box, is installed to collect real-time data about the vehicle’s location and status. The data from the GPS tracker is sent to the fleet system’s central server over a cellular network by the telematics system. The server then processes the information into valuable data and makes it available to other computers on the network.

Telematics Car Insurance

Also called usage-based insurance, pay-as-you-drive insurance, and pay-per-mile insurance, telematics insurance is a type of coverage based on data collected from your vehicle. This information can include:

  • How far your vehicle has travelled.
  • Frequently travel locations.
  • Hard-driving characteristics such as rapid acceleration, hard braking, cornering, and airbag deployment.

Insurers use this information to provide you with the best insurance cover for your vehicle or fleet. Fleets that travel shorter distances benefit more from telematics insurance than fleets that travel longer distances.

If your driving habits are safer than those of the average driver, or if you drive fewer miles, you can get a better discount on your vehicle insurance. Fleets that use safety systems like dash cams can also get better discounts than those that don’t. Many fleet owners who have already installed dash cams and other safety technologies are switching to telematics insurance to take advantage of these discounts.

Where Does Telematics Go Next?

The world of telematics is primed for exponential growth as new applications are created to make use of contemporary GPS units and the ubiquitous use of mobile devices. More fleet owners recognize the need to track fleet activity to save expenses, increase productivity, promote accountability, and comply with government laws.

Over the projection period of 2021 to 2026, the telematics industry is predicted to grow at a compound annual growth rate (CAGR) of 20.7 per cent. Telematics is now being employed across numerous sectors for adequate transportation and logistical purposes, thanks to communications and information technology capabilities. The app’s focus has recently changed away from car location and routing and toward solutions that focus on drivers and their safety. Telematics systems reduce accidents, speeding tickets, and downtime by monitoring driving behaviour, vehicle health, and maintenance intervals.

Telematics will become a vital part of all current fleet operations as owners go beyond integrating into the larger span of the enterprise, including mobile workforce management, ERP software, and equipment management software. The following are some of the most exciting areas of telematics innovation:

  • Intelligence data: Your company can collect internal data to study your operations and make better decisions in the future. Your company can also collect and use various data for data intelligence objectives, such as business performance, data mining, internet analytics, and event processing.
  • Performance benchmarking: When it comes to identifying performance gaps, most organizations start with benchmarking. This includes gathering and comparing your company’s quantitative data (i.e., measures or key performance indicators).
  • Urban analysis for smart cities: Through telematics, smart cities are made up of a network of linked devices and sensors. They are placed across a city to aid government operations such as emergency response, traffic control, utility management, and other community activities.


Telematics is becoming an increasingly important part of fleet management operations. It’s’ sheer adaptability has ensured that it will continue to play an increasingly essential role in fleet management in the future. It is already bringing significant benefits in safety, productivity, and, ultimately, profitability, and it will only grow in importance in the coming years.

Businesses that integrate telematics systems into their operations worldwide should expect to continue to reap significant benefits. As fleet owners seek integrations with their personnel management software, company management software, and ERP software, GPS tracking solutions will continue to improve their connection with other operational systems.


What Is Telematics?

Telematics is a game-changing automobile technology that collects, stores and sends data from remote vehicles. The data is delivered securely over a wireless network, and remote connectivity is established using an in-vehicle electronic device or smartphone. The systems combine GPS tracking and onboard diagnostic devices.

What Is an Example of Telematics?

The most popular example is the “black box” which is a small telematics device placed in a car. The black box, which includes an installed SIM card and modem, records all aspects of the car’s location and performance and sends the data over a network to a central user interface. Telematics devices connect to the vehicle’s Onboard Diagnostic Port (OBD-II port), found underneath the steering wheel.

What Is the Purpose of Telematics?

Car insurance firms regularly use telematics to track driver behaviour, allowing them to better evaluate risk factors and modify insurance costs accordingly. The devices can also report when a vehicle is operated outside a defined area, also called a geofence. Fleet managers also use telematics to track fleet location and monitor employee driving habits.

Do All Cars Have Telematics?

Previously, installing telematics was optional, but new EU regulations have been put in place requiring that all new cars sold in the UK be fitted with black box monitoring systems.

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