Argentina, an almost virgin territory for long-term leasing

Argentina's fleet market is small – no more than about 10% of overall sales (i.e. 70,000 vehicles). Of that segment, leasing again represents a very small part.

Small as it is, the Argentinian fleet market is the second-largest in South America, after Brazil. But that market remains, for now, relatively immature, with leasing contracts hovering around the 10,000 mark last year. Most corporations with fleets – typically large multinationals, and/or in the mining, utilities, pharmaceutical and car rental industries – purchase rather than lease their vehicles.

One historical reason for the poor performance of leasing is shared across Latin America: the overwhelming preference for vehicle ownership over other forms of vehicle acquisition.

Another is more particular to Argentina, and explains the fact the divergence with, for example, Brazil: another growing economy, but with a thriving fleet and lease segment, at around 40% of overall automotive sales.

Over the past decades, Argentina has waged a constant, and not always successful battle against chronic high inflation, and additionally against high interest rates. One of the main effects of this combination is that it drives fleet decision makers towards ownership as the most financially secure method of vehicle acquisition.

Other drivers of both corporate and individual preference of vehicle ownership over leasing include cultural practices, an information barrier and the general ecosystem of a very large country with significant infrastructure gaps.

However, the prospect of a prolonged period of recovery and stability, coupled with a growing interest from within the corporate sector in Argentina itself, could be conducive for the country to finally joining the mainstream of economies with a mature approach to corporate mobility

Most major manufacturers have put in place dedicated, segmented fleet structures in Argentina, with significant discounts: up to 25% for company fleets, up to 30% for government-tendered fleets.

On the other hand, there are still relatively few options available on the leasing and fleet management spectrum. Most of the solutions that are available, tend to consist of fleet management offers by local players.

There are no international renting companies who have a direct presence in Argentina, although some are already positioning themselves for a future upturn in business.

The ALD Automotive -Wheels Alliance signed a partnership with Autocorp in June 2016 while the Element-Arval Alliance has teamed up with RDA Renting.

With their long-standing presence in the market and in-depth understanding of the local industry, these local heroes are vital elements of providing an increasingly better and innovative service to mirror the service in more mature markets. And they focus, for the time being, on rental options as well as more all-encompassing possibilities such as fleet management and short-term rental. Argentina has been described as 'virgin territory' for leasing solutions.

At the same time, there has been a paradigm shift in Argentines’ attitudes towards company cars. Previously, they regarded them as a major status symbol; but what drives talent today to take a job are other variables, including work-life balance and a more flexible schedule. This is an opportunity for fleet management companies to design solutions that appeal not just to the Financial and Operations departments of their prospective corporate clients, but also to HR and General Management.