12 Jun 18

Brazil’s hurdles to car ownership, fleet management

As Brazil’s total car park consists of 382 vehicles per 1,000 inhabitants compared to the global average of 143 vehicles/1,000 inhabitants, we can certainly say that Brazilians love their cars.

However, whether you seek to own a single vehicle or manage a large fleet in the country, there are several obstacles you must overcome when considering TCO, according to Global Fleet Advisory Board Latin America member João Andrade.

“Among them are the cost of cars and related items, vehicle theft, and bad road conditions,” says Andrade who is the managing director of local fleet management company Localiza Fleet Solutions.

In Brazil, owning a car is quite expensive. Let’s take the Honda Fit EXL for instance. Compared to the United States, the vehicles initial price (US$25,000 in Brazil) is approximately 17% more expensive than in the US, or about 34% more expensive if considering interest on a financed car.

Moreover, the annual vehicle tax (IPVA in Brazil) on this car is nearly four times more expensive in the South American country.

When it comes to more sophisticated vehicles (sports cars or electric vehicles) the difference is quite a bit more. After considering US tax incentives, the BMW i3 EV is nearly three times more in Brazil (US$90,000) than in the US. In Brazil, only 3,296 hybrids and electrics were sold in 2017.

Other costs to point out, according to Andrade, is fuel (94% more expensive), road tolls (7x more expensive on average) and tires (nearly double the price).

João Andrade discusses Brazil's challenges at Global Fleet Conference 2018 in Rome (Source: Nexus Communication)

Car theft

Another thing to watch out for is vehicle theft. In 2016, one car was stolen in Brazil every minute.

In terms of capital cities, the worst are Porto Alegre (Rio Grande do Sul state) where 1,446 cars are stolen per 100,000 vehicles, followed by Porto Velho (Rondonia), and São Paulo (São Paulo). The ones seeing the least theft are Vitória (Espirito Santo) with a rate of 292 stolen/100,000 vehicles, followed by Joáo Pessoa (Paraíba), and Florianópolis (Ceará).

Considering the worst overall state, Rio de Janeiro sees a rate of 917 stolen/100,000 vehicles. As for fleet cars, about 2.4% of these vehicles are stolen in the state.

Bad road conditions

Finally, the condition of roads can also affect TCO, something that can result in high maintenance costs or even accidents.

In Brazil, only 38% of the roads are considered in good or excellent condition and about half have good quality asphalt. While the best road conditions are in the state of São Paulo, some of the worst road conditions are between the cities of Natividade (Tocantins state) and Barreiras (Bahia).

As you can see, operating a vehicle fleet in Brazil can be a tall task with all the hurdles you must jump. However, with proper cost evaluations and knowledge of the local market, you will be better prepared to manage your fleet.

Authored by: Daniel Bland