22 Dec 16

Joao Andrade, Localiza Fleet Solutions: "Bringing customer value via technology and innovation"

In November this year, car rental and long-term leasing specialist Localiza in Brazil announced that it is to acquire rental company Hertz Brazil. Also the long-term leasing activity Localiza Fleet Solutions with about 35,000 vehicles in management had a dynamic 2016.

"In the first nine months of 2016 Localiza Rent-a-car grew revenues by 11.5% compared to the same period last year and Localiza Fleet Solutions grew 6.3%", says Joao Andrade, CEO of Localiza Fleet Solutions.

"We atribute this growth to the fact that we are continuosly investing in innovation and technology solutions, to deliver products that add value to our clients’ services. Moreover, we see the market increasingly concerned about cost reduction, what makes companies to consider fleet outsourcing as a viable option.

2015 was not a good year for the Brazilian economy and the fleet market, with companies deciding to shrink their fleetsizes. Is that trend continuing and what do you expect for 2017? 
Joao Andrade: "We know and realise that some clients may reduce the number of rented and leased cars for 2017, but like we did in 2016, we expect to reach out to new clients who want to reduce their fleet costs and increase their productivity through fleet outsourcing."

How do you the fleet market and lease market continue next year, in terms of size, professionalism, and trends impacting the fleet and lease business?
Joao Andrade: "We expect another tough year for the economy, but we believe we have an increasingly attractive product. Next to that we at Localiza understand that the use of new technologies and the constant improvement of our internal processes will allow us to deliver more and more value to our clients. The market has been matured a lot in terms of the training of fleet management professionals and it has taken a more professional look at the issues related to the fleet, what we consider to be extremely healthy and advantageous for those industry players that are the most structured, responsible and efficient."

Brazil is not at the forefront of alternative powertrained cars and alternative fuels, although fuel prices are relatively very high. Is there a change coming up?
Joao Andrade: "We do not see any strong trend in terms of an increase of alternative powertrained cars and alternative fuels. And although we support our clients in taking actions to reduce CO2 emissions and we do it also ourself in our own operation, we are not expecting great improvements for next year in Brazil".

If you look at the Total Cost of Ownership of a typical Brazilian fleet, will the TCO increase, stay stable or decrease in 2017 compared to 2016?
Joao Andrade: "We understand that with more fleets being outsourced, the overall TCO of the market tends to decrease, since outsourced fleet operations are usually more efficient in process and cost. The advent of technology is allowing more efficiency, and this tends to result in TCO reductions; for example, we can support our clients in the control of the field team, which can directly impact on Total Cost of Ownership of the fleet."

Do you expect a move in terms of preference for car models and segments? 
Joao Anadrade: "No. In the past we have seen, in parallel with the economic growth of Brazil, a migration from 1.0 litre cars to cars with a slightly stronger engine, in addition to safety accessories that were previously optional and now are mandatory, such as airbags. However, for 2017 we do not anticipate major changes, except for occasional shifts from more luxurious to more moderate cars with companies where cost pressure is high."

Authored by: Steven Schoefs