LatAm, a diverse fleet management universe
The word LatAm is an acronym invented for grouping all the Spanish speaking countries in the Americas, plus Brazil. It is a confusing term as it suggests some capacity of encompassing its commonalities, which of course only exists to a certain extent.
From Tijuana to Ushuaia you can drive 16,500km, and still speak the same language. This is more than three times the driving distance between Lisbon and Moscow and I don’t want to know how many different languages you would encounter on that road. The point I am trying to make is that LatAm is big, but it is also diverse and not uniform.
In the chart below we can observe some indicators related to the most populated countries that give us a first indication of this diversity. I have purposely left Venezuela out.
|Population in Million||Income per capita in US$ (PPP)||Cars/1000hab||2017 Sales of new Veh in 000s|
These figures, as diverse as they are, can be only a small part of the story.
For example, Brazil’s registration of new vehicles last year, at 2.2 million, is quite impressive. However, a different picture arises when seeing that five years before, it reached a peak of 3.8 million.
Similarly, Argentina has the highest number of vehicles per person in the region, at 314 per 1000 habitants, which could suggest a dynamic full service leasing market, which in fact is not there as the bulk of the present fleet management market does not include funding and is limited to different levels of services.
Only four countries, Mexico, Brazil, Argentina and Colombia, have local assembly plants. The rest import the totality of the vehicles sold. This combined with an almost generalised instability of currencies makes pricing unstable which can be very confusing for European or US fleet managers.
Closed end leasing dominates
In terms of fleet management products, the closed end or full service leasing product is widespread as the prevailing system. Possibly the only exception would be Mexico, where open and closed end products co-exist. This is because the first international leasing companies in Mexico came from the US in order to serve their American clients. What’s more, the term fleet management can be confusing as it can be used from a full service leasing contract, to simply managing the registration and road tax processes.
Brazil is of course the biggest regional market with well over a quarter million vehicles, followed by Mexico with close to two hundred thousand. This represents over two thirds of the regional total.
Chile has an interesting history, too. Global operators did not arrive to the Chilean market till very recently. However, the Chilean fleet management market has been developing steadily for over thirty years. A peculiarity of this market has been the influence in its growth of the mining industry, where vehicles are stationed in remote self-contained compounds and most services are carried out on site. The short-term rental companies that started it were soon joined by companies related to vehicle importers or financial institutions. Together they generated a dynamic and mature market.
Overall, fleet management is not a consolidated industry and the level of coverage of the mobility needs of companies varies tremendously. This diversity is not only true by country, but also within countries. Hence, the variety of imaginative local solutions is surprising. Many major fleets with country-wide coverage have had, however reluctantly, to adapt themselves to this.
In spite of the limitations mentioned, the fleet market is growing steadily and quickly catching up with all the technological tools available. In my view, the most important challenge is the uneven level of infrastructure in each of the countries. This will remain an obstacle for the total coverage of certain services.
Read more about fleet and mobility management in Fleet LatAm magazine N° 1. Ask for your copy!
Image: traffic in Buenos Aires, Argentina
Author: Jose Luis Criado, founder Jose Luis Criado Mobility Consultants