Editor's choice
19 Feb 18

Vehicle leasing, Brazil vs Mexico

Although Brazil and Mexico are home to Latin America’s two largest automobile fleets, the vehicle renting and leasing markets in these countries are far from the same. They both mirror the strategy of the world’s second largest vehicle fleet market, the United States, but in contrasting style.

First of all, Mexico (No. 2 in LatAm fleet size) is keen to using the open-end model of leasing commonly used by its northern neighbor, while Brazil is not.

Although an open-end lease provides customers a more detailed breakdown of all the costs associated with the vehicle and more flexible options at the end of the contract, it does not have fixed expenses like closed-end leases.

“I agree that the Mexican market is gravitating towards the open-end structure but the best type of lease, overall, is one that is tailored to your client’s needs,” says Global Fleet LatAm advisory board (GFLAB) member David Madrigal, who is also president of local automobile leasing association AMAV and Element Fleet Management in Mexico.


David Madrigal (SOURCE: Nexus Communication)

According to Pascal Serres who heads GFLAB, the competition between the North-American (open-end) and European (closed-end) leasing models is one of the main challenges fleet managers need to be aware of when doing business in Latin America.

As for Brazil (No. 1 in LatAm fleet size), it mirrors the United States in a much different way. It is one of the very few countries in the world where local companies dominate the automobile renting and leasing market.

“Among the countries in this position are the United States, Brazil, the UK, and Turkey,” says Serres who is also the founder and managing director of France-based mobility solutions company Moby-D.


Pascal Serres (SOURCE: Nexus Communication)

In Brazil, four local companies hold about half of the market, being Localiza with nearly a quarter of the market, Locamerica Unidas with a 14.2% share, Movida with 9.7%, and Ouro Verde with 3.2%.

Over the past year or so, some of the changes affecting the market have been Localiza acquiring the Brazil unit of Hertz in December 2016 and Locamerica acquiring a 33.7% share of local competitor Auto Ricci in March, 2017.

Most recently (January, 2018), Locamerica merged with local competitor Unidas to take over Movida’s position as the second largest in the country. Locamerica now has a fleet of about 100,000 vehicles while Brazil’s largest company, Localiza, has 185,000.

Meanwhile, the scenario in Mexico is quite different as every leading car rental and leasing company in the country is a multinational. Among them are Hertz, Avis, Budget, National, Alamo, and Dollar from the United States, in addition to Europcar from France and Sixt from Germany.

Despite the difference of these two countries, knowing the scenario of these and other markets in Latin America will help fleet operators plan their next move. One thing we do know for sure is that there is an overall need for more formal fleet management coordination throughout the region.

Top photo (Source: EntreJardas.com)

 

Authored by: Daniel Bland