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8 Jan 18

Fleet and mobility market evolution in Latin America in 2018

Last December, in Estoril – Portugal, Global Fleet organised a Latin American Expert Meeting to present the expected fleet market trends for 2018. Lessors and manufacturers are expecting growth in registrations in the corporate market (fleets). Fleet managers are expecting quality improvements and new mobility services.

Manufacturers expect sustained growth in the Fleet market

In 2017, the car market grew steadily in Latin America, in particular in Argentina and Brazil - two countries recovering from 2 years of depression.

Chevrolet (16% market share) and WV (14%) have a strong presence in all markets, FCA (15%, mostly in Brazil), Renault/Nissan (12%, strong in Mexico and Colombia), Toyota, Ford and Hyundai (9% each) and PSA (6%) represent altogether 81% of the total market and most have plans to reinforce their fleet sales organisations in 2018. Manufacturers are also investing in car offers to improve quality and safety requirements. Some models are of inferior quality in Latin America in order to enable lower prices but fleet buyers in international corporations are increasingly looking for ways to standardise safety programmes and fleet policies around the world.

As in most markets around the world, SUVs were the most successful segment. They represent over 10%, although they are less represented in the fleet market. Small cars represent 40% of new contracts and commercial vehicles 20%. The total fleet market (corporate market) still represents a small portion of new registrations (as is the case in the US) and varies between a low 12% in Argentina to 30% in Brazil according to Dataforce (20% in Colombia) in comparison to around 55% in Europe.

Lessors expect to provide service improvements and more efficiencies

Global Fleet estimates that the total market in South America is approximately 600.000 units, with around 250.000 new contracts per year (4% of total registrations). These numbers will likely evolve quickly as fleet managers seek global solutions for which they were unable to find adequate offerings in the region until very recently. Meanwhile, in the last two or three years, international lessors have been very dynamic. Arval/Element has a fleet of 70,000 cars, ALD/Wheels 55,000 cars, Leaseplan 31,000 cars and ARI Global Fleet 31,000. They already represent 30% of the market and have a strong interest in expanding their operations, either directly or through their partnerships. They are setting up regional coordination structures and trying to harmonise their products as much as possible, while adapting to local regulations and culture.

Brazil is the most mature market and represents approximately half of the existing portfolio due to local heroes. Localiza or Locamerica have been operating for around 40 years and manage a fleet of 45,000 cars each. Competition with international operators will certainly lead to rapid improvements. By the end of 2017, some leasing companies were already offering medium-term lease and private lease. Start-ups and VTC companies are also flourishing and will complement existing services.

Fleet managers are expecting TCO reductions and improved quality

International fleet managers have many objectives. Among these, TCO reductions and safety improvements were mentioned in Lisbon, together with better qualifications and training for local managers. Interest rates and fuel costs are not expected to go up next year. Hence, detailed reporting and improved car technology should generate immediate cost savings on maintenance and fuel consumption.

Overall, globalisation and competition will contribute to fleet market growth and cost reductions in key markets of the region: Mexico, Colombia, Peru, Chile, Brazil and Argentina. We will certainly see an acceleration of mobility innovation throughout the year and its progressive integration in the products on offer.

With that in mind, please mark in your agenda the 2018 Global Fleet Conference from 28 to 30 May in Rome. There, industry leaders will discuss the important topics in global and regional fleet and mobility management today and share their analysis with you.

Photo: traffic in Buenos Aires, Argentina

Authored by: Pascal Serres