Analysis
24 Mar 20

COVID-19: Ready your car rental, leasing contingency plan in Latam

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The new Coronavirus (COVID-19) pandemic has moved from Asia to Europe and it is now starting to proliferate in the Americas with Latin America trailing behind the United States and Canada.

Just like those before them, countries South of the U.S. border have started to implement nation-wide lockdowns which demand the closure of public areas such as shopping malls, schools, and restaurants as well as federal borders.

As preventative measures entail limiting the movement of people, some impact is expected on the car rental and leasing industry as well as fleet management.

Teleworking from home has also started and the announcement of quarantine periods is becoming common throughout the region, all of which will reduce economic activity for urban mobility and the transportation industry overall.

According to Brazilian car rental association ABLA president Paulo Miguel Junior, it is difficult to measure the overall impact that COVID-19 will have on the rent-a-car industry. It depends on activities such as air transportation, corporate events, business meetings, and leisure travel, all of which have dropped significantly for the time being.

“As for Brazil, there are more than 10,000 car rental companies in the country and 90% of them are small to medium-sized. This means that many are not technologically advanced enough to continue working remotely from homes.  Also, remember that rent-a-car is an industry that depends on people,” the executive told Fleet LatAm.

Considering the prediction of government authorities, the car rental sector looks like it will be impacted for at least another 90 days (end of June 2020), he said.

Up north in Mexico, while rent-a-car for the tourism industry has certainly been affected, only a small impact on the leasing industry is being seen, according to Manuel Tamayo who is treasurer of the country’s vehicles leasing association AMAVe.

With 316 cases and two deaths as of Monday (23 March), the Coronavirus impact on Mexico is currently lower than in many other regions in Latin America.

Mr. Tamayo, however, does foresee an upcoming impact on executive fleets but not as much on fleet sales as most international companies continue to operate by teleworking from home.

“If the situation worsens, we do foresee a slowdown in fleet activities and more so on the industry overall. Fewer miles driven equates to less fuel usage, telematics services, and obviously fewer maintenance services,” the executive told Fleet LatAm, adding however that a rebound is expected once the situation is under control.

“Regarding fleet management, although many fleets have been reduced in the region, most companies are adopting teleworking so their fleet administration operations have not really stopped. And for logistics operations, only consumer goods which have been appropriately quarantined should be transported,” vehicle fleet consultant Anselmo Belizario told Fleet LatAm.


Paulo Miguel - Manuel Tamayo - Anselmo Belizario (source: Linkedin)

 

And what can be done about the situation?

As for car rental companies, industry players can count on ABLA for safe and effective guidance throughout the crisis, said Mr. Miguel Jr, listing some key tips to tackling the impacts of the COVID-19 fallout.

  • Increase vehicle hygiene and take more care when delivering vehicles to customers
  • Adjust employee schedules to avoid spikes in public transport
  • If ridesharing, only encourage in-company rides
  • Allow for more flexible lunch hours
  • Re-evaluate vacation scheduling
  • Accountants, seek legal ways to reduce and/or extend tax responsibilities.

A lot of communication is needed in a crisis and this means having accurate and verified information. Disinformation can lead to bad fleet operations and, in turn, additional costs. Fleet operators must inform themselves appropriately and plan accordingly.

“Use the local infrastructure available to ensure that your fleet receives the appropriate maintenance and repair services. Consider that your day-to-day operations will be impacted as some government offices will be closed. Plan ahead and make quick decisions to maintain services,” says Mr. Tamayo who is also the new head of Element Fleet Management in Mexico.

For distribution fleets that are being used by more than one employee, consider getting a service to disinfect vehicles during stop times. This will mitigate the contagion of your drivers, he added.

“Besides maintaining good hygiene, drivers need to keep hydrated by drinking liquids and eating well-balanced meals to maintain good immunity,” said Mr. Belizario who is also a former fleet manager for Norbrasil Saneamento and Tfleet in Brazil.

Regarding technicians, they should wear disposable gloves and masks to avoid contamination. After each activity, change gloves and masks and do not use uniforms more than once without proper cleaning, the consultant added.

As you can see, there are a lot of things to keep in mind if we want to overcome this crisis. As of Monday (23 March), COVID-19 cases continue to rise in Latin America but if appropriate actions are taken by governments, the private sector and citizens in general, cases will eventually drop and economies will start to recover. It’s just a matter of time!

Image: car hygiene (copyright: Shutterstock)

Authored by: Daniel Bland
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