First interview with Manuel Tamayo, CEO Element in Mexico: fleet up 16% in Q1
Despite the challenges Mr. Tamayo has amidst the COVID-19 crisis, the company does look to be faring quite well considering its 55% growth in fleet size in 2019 to 62,000 long-term leasing vehicles and its 16% increase to 70,000 already in the first quarter of this year.
Although Element operates in five countries (Canada, the United States, Mexico, Australia and New Zealand), our focus today is on Mexico. Join me in my brief one-on-one with the executive to get a taste of what’s going on in the country from the view of its leading long-term leasing firm.
Following last year’s performance, Element Fleet Management now represents nearly a quarter of the long-term vehicle leasing market in Mexico. How is the company achieving this?
Tamayo: First of all, we have a well-organized sales force which is constantly on the lookout for new fleet customers. We have a team that is focused on seeking targeted clients as opposed to taking more of a macro approach.
Moreover, as retaining clients is just as important as getting them, we have been receiving referrals from existing clients. As such, communication through word-of-mouth is also a pillar helping us to grow.
The third pillar I’d say is that we leverage our position through our international presence which is supported through our global alliance with French multinational Arval.
There are some companies operating in Mexico which already have a relationship with Arval in Europe and other Latin American countries so that obviously helps. Maintaining communication with our contacts in the United States and Canada also supports in obtaining other international customers.
Is Element more focused on larger companies or are smaller ones also a target?
Tamayo: We target both multinationals and local businesses. However, considering our product offering, we are better suited to bring added value to companies which have 50 vehicles or more.
What are companies looking for in terms of leasing products in Mexico nowadays?
Tamayo: Basically, we have two types of services being sought after today and it really depends on where the headquarters of companies are located.
While those based in Europe are looking for a complete rental product which includes paying for a variety of services along with the provision of the car in one payment, those headquartered in the United States and Canada look more for a pay-for-use model and this is a trend also being followed by most Mexican companies.
I don’t want to go into detail as to saying which one is better, but I’d say that the clarity and the justifiability seen in the pay-for-use model is working better for some of our customers. They only want to pay for what they use.
Another thing that affects the type of leasing service our clients are looking for depends on the profile of the fleet (sales, utility, executive, etc.).
For example, a driver who is an executive may want to know exactly what their purchase options are at the end of the lease and tie it to their HR policy, while a utility driver may just want to get the most out of the vehicle and then give it back at the end of the lease without any payments or penalties.
So, we really need to analyze the situation first and then adjust the policy to what our clients are looking for.
And what about car types? Are hybrid or electric vehicles (EV) in demand?
Tamayo: Hybrids are more so in demand than EVs and it is mostly due to the options available right now. Mexico does have models such as Tesla cars or the BMW i3 but for the most part they are out of budget in terms of being a fleet vehicle.
With that said, hybrid vehicles such as those offered by Toyota are very popular with customers right now, but we need to determine TCO to see if they are a good choice.
Overall, electrification is a hot topic in Mexico but what is really missing is more product offering from OEMs.
Finally, according to this month’s COVID-19 Global Fleet Survey, fleet managers are seeking advice and communication from their vehicle suppliers in the face of the pandemic. What is Element doing for their customers in this respect?
Tamayo: One problem occurring in Mexico right now is the lack of vehicle licensing services in some cities. As such, we are advising our clients of alternative locations where they can get plates for their vehicles.
We are also recommending that they catch up on fleet maintenance schedules by bringing in cars that are currently not in operations. Moreover, we have set up a special COVID-19 page on our website with useful information. For instance, we are publishing information as to where they can or cannot drive.
Element-Arval global alliance, 2019 data (source: Fleet LatAm)
Element Fleet Management is part of the Element-Arval global alliance which manages more than 120,000 vehicles in Latin America. In South America, the alliance is supported by Arval, Mareauto, RDA Renting, and Relsa. Together, they cover Argentina, Brazil, Chile, Colombia, Ecuador, Mexico, Peru, and Uruguay.