26 Jul 17

Global fleet management comes to Colombia

The challenge for fleet management companies like ALD, Arval, AVIS and others in Colombia is changing the mindset of a nation in which vehicle ownership is entrenched.

In Colombia, purchasing vehicles directly, with bank loans or financing, has been the default for corporate purchasers for years.

What constitutes operational leasing in Europe (and elsewhere) is referred to as “renting” in Colombia. The system entered the market in the mid 1990s but has only just began to take hold in the last five years. This is primarily due to companies like ALD, Arval and the like setting up shop with their globalized offerings.

There are advantages for corporates to this type of vehicle acquisition, which fleet renting companies are aiming to exploit. In a market in which 67% of vehicles are imported from Mexico, Japan, South Korea, United States, Brazil and China, purchasing vehicles outright can be expensive. With operational leasing, however, a significant percentage of this can be offset against residual values. In some cases, longterm renting can save a company 15-20% in TCO (total cost of ownership).

Then, there is the fact that renting keeps capital in the business and preserves corporate credit lines, which means finances can be access when needed for more profitable ventures rather than tied up in cars. Owning vehicles is risky and they depreciate in value.

Where fleet renting operators add value is in the administration of the fleet. The renting company assumes all inherent risks from the use and depreciation of it.

Vehicles have to be managed and it’s complex. They have to be correctly licensed, taxed, maintained and serviced regularly, repaired when necessary, adhere to compliance in terms of consumables like tyres and brakes. All this is an administrative burden on companies in which managing vehicles is not their core business.

In Colombia, the AVIS brand is operated through Mareauto, an Ecuadorian group with 37 years’ experience in the automotive sector. It has held the franchise for eight years and offers short and longterm rental from bases in many commercial locations in Colombia, primarily airports. It currently looks after over 200 corporate customers and has enjoyed growth rates of 30-40% per annum.

ALD Automotive only began trading in Colombia in the past 12 months but David Palmer, managing director, is upbeat: “The arrival of an international player in the domestic market will energize the industry. We are introducing new but tried and tested ways of approaching customers with a wider and more flexible offer.” he stated.

The market in terms of corporate sales in Colombia is small and emerging. There are few competitors and knowledge of the type of service offered by fleet management companies is low.

“Our main mission,” Palmer adds, “is to broaden knowledge of the advantages of the service and make it clear and transparent for customers and market agents.”

Dealer networks are showing an increasing interest in corporate fleets but they need professional and well-structured support and that so far has been lacking in the Andean country. The new breed of fleet management company, however, is aiming to be the change.


Authored by Alison Campbell