Why is flexibility important in Latam vehicle leasing policies today

Generally speaking, Latin America is an open-minded region of which flexibility is seen in most cultures. This was true in the past considering the hardships many countries have had to get through and it is even more true now considering the supply chain issues and impacts of the COVID-19 pandemic seen today.

During the latest Fleet LatAm Conference in September 2021, leasing strategies was only one of many topics discussed. See a video playlist of the event here. 

According to executives from some of the key vehicle leasing and fleet management companies in the region, flexibility is of utmost importance in their operations, but it is not new. 

In addition to being able to allocate capital toward other investments, companies opting to outsource vehicle leasing and fleet management should look for flexibility in various aspects of their contract. 

Besides seeking adjustments in mileage (kilometer) limits and contract duration (extending or early termination), look at the possibility of having a substitute car or complementary mobility services or even a pay-per-use model. 

As no two fleets are the same, leasing companies are always looking to create tailor made solutions for their clients, according to TIP Mexico CEO and president of Mexico vehicle leasing association AMAVe Mauricio Medina as well as Manuel Tamayo who heads Element Fleet Management in Mexico.

Flexibility is the name of the game, and as fleet managers internal needs are constantly changing, they need support from a qualified leasing company. 

To reduce their monthly payments, a request for adjustable terms has been quite common recently. “In early 2021, the biggest request from fleet managers was contract extensions. Customers are seeking flexibility so that they can appropriately manage the lack of car inventories,” says Mr. Medina (pictured left). 

Availability is of utmost importance right now and customers are willing to change the brand or model of their cars to get this. In some cases, used cars are even accepted to fulfill short term needs, he added. 

Fleet management companies need to understand the mobility needs of clients and deliver the right solutions and this requires identifying TCO alternatives aimed at reducing costs, according to Mr. Tamayo (pictured right)

“This involves offering new and used short-term vehicle leasing agreements as well as contract extensions,” says Tamayo, adding that “consultancy offerings today are more important than ever before.”

Down south in Brazil, flexibility has always been provided by Localiza Fleet Management, whether for shorter term rent-a-car customers, longer-term corporate clients, or something in between like the company’s subscription platform Localiza Meoo.

More than ever before, companies need to free up cash for their operations today, according to managing director Joao Andrade (pictured left).

“Through flexible solutions, current and potential customers will be able to reduce expenses, improve fleet safety, and increase productivity. They can count on us to support their migration to our integrated solution of combining rent-a-car and fleet management” says Mr. Andrade.

The need for flexibility is not new but requests for this has accelerated in recent times, especially in terms of contract duration, according to Kent Bjertrup who is Latam region director for ALD Automotive.

Having a flexible contract is particularly useful under certain circumstances: When companies cannot predict the duration of a project; for season peak times; for trial powertrains (EV or hybrid); for new employees during probation period; When there is a lack of inventory (new cars or the one your driver needs or wants)

“Through customization, fleet managers can adapt their needs and ensure mobility for their company. And one powerful tool for companies in 2022 and beyond that we are offering is ALD-Flex, a well-rounded mobility solution for flexible leasing,” says Mr. Bjertrup (pictured right).

Although we were unable to include all the main fleet leasing and managment players in this article, among the others in Latin America which are also providing flexibile solutions include multinationals LeasePlan, Arval, and Fleets International Enterprises, as well as Casanova Rent (Mexico), Ariza (Mexico), Unidas (Brazil), Movida (Brazil), RDA Mobility (Argentina), and others.