Mexico auto industry gets leasing boost

Despite Mexico’s automobile industry seeing a 7.7% drop in both vehicle sales and financing in 2019, leasing was up by some 8% year-over-year.

Approximately 1.32 million light vehicles were sold to the public last year, down 7.7% from the 1.43 million sold in 2018, according to data from the country's statistics and geography institute Inegi. 

Considering January-October figures, electrified vehicle sales will likely report some 24,000 units sold, including mild hybrid, plug-in hybrid, and full electric vehicles.

                                     source: Globla Fleet - Wikifleet Mexico

In terms of the models coming out on top, ruling the roost was Nissan Versa of which 88,707 units were sold, down 2.9% year-over-year, followed by Chevrolet Aveo with 70,947 (-13.5%).

Coming in third was Chevrolet Beat with 68,114 units (-3.6%). A total of 24,715 of them were hatchbacks and 43,399 notchbacks. Wrapping up the top five were Nissan NP300 with 62,989 units (-6.1%), and Volkswagen Vento with 47,179 units (-14.5%).

2019 Nissan Versa (source: Nissan)

At the same time, 805,741 new and used vehicles were financed from January-November last year, according to local automotive distributors association AMDA. This equates to a 7.7% drop of which should not change much considering only one month is yet to be tabulated.

Leasing, another story

Despite sluggish sales, vehicle leasing has been increasing by some 8% per year over the last two years. Compared to purchasing, multi-year leasing provides for more flexible payment terms, something that is sought after in the current economic scenario in Mexico where there are still some long-term uncertainties.

While Mexico’s economy contracted 0.5% in 2019, AMAVe aggregated numbers grew by 15% last year and this shows the potential of the market, according to David Madrigal who is the president of the country’s vehicle leasing association AMAVe.

Remember that hiring out fleet management makes your company more competitive than self-managing your fleet. It also allows you to dedicate critical resources to your core business, said Mr. Madrigal who is also executive VP of Element Fleet Management.

David Madrigal speaks at Fleet LatAm Conference 2019 in Mexico City (source: Fleet LatAm)

“As for 2020, we see that growth in vehicle leasing will continue. How much growth will really depend on company budgets but the overall consensus is that leasing companies will continue to expand their operations in Mexico this year,” Mr. Madrigal told Fleet LatAm.

Through the commercial efforts of AMAVe members and the industry events taking place in the country, continued market awareness and growth will be seen in Mexico, for both the private and public sectors.

Leasing company footprint

With nearly a quarter of the long-term vehicle leasing market, leading the country is Element Fleet Management which saw its fleet increase by 55% last year to 62,000 vehicles. 

                                   source: Fleet LatAm Directory 2020
 

Fleet LatAm identified 283,395 vehicles under leasing contracts in 2019, a 56% jump from the previous year. Overall, Mexico’s passenger car and light commercial vehicle parc totals some 33.5 million. It is home to Latin America’s second largest vehicle fleet, only behind Brazil.