Latin America deploys technology, gears up for 2022 fleet challenges
In Latin America, the first part of 2021 was certainly an uphill battle in terms of dealing with the impacts of the COVID-19 pandemic, but recovery has been quite strong in the second semester considering the regions resistance against new Coronavirus variants.
By Daniel Bland, Editor Americas, Global Fleet (pictured)
As for 2022, I think we can put these thoughts behind us as Latin America is a region made up of resilience and determination, and this also goes for the fleet and mobility sector.
Using technology to improve efficiencies in 2021
Automobile factory shutdowns did occur throughout the region, but more sporadically so in Brazil, the region’s largest economy and automobile market. While Latin America as a whole was hit hard by the pandemic in the first semester of the year, the second semester proved to be much better as COVID-19 vaccines were more steadily being distributed.
I got my first shot in July and my second one in October. This was followed by confidence in the fourth quarter in terms of getting out and about and I saw a resurgence in business activity.
Despite this, the region did get hit hard economically and this required innovative solutions which were introduced by the private sector, much of them revolving around product launches and partnerships associated with new technologies and innovation.
During the year, while General Motors security and connectivity service OnStar kicked off its online vehicle fleet management platform Fleet Complete in Mexico, multinational vehicle leasing and mobility company ALD Automotive launched its connected car solution ALD ProFleet in various countries.
Both of them provide real-time vehicle usage data. And for ProFleet, Telefónica and Geotab are the preferred partners.
Also in 2021, Israel-based video telematics firm Cipia has partnered up with American IT solutions company Intcomex to provide driver monitoring solutions for commercial fleets, and IoT and connected transportation specialist Geotab has increased its offerings in the region by entering the Brazilian fleet market through Geotab Telemática.
Meanwhile, Brazil’s largest vehicle leasing and car rental agency Localiza is acquiring Unidas (second largest player in the country) and Ford South America is shutting down all vehicle production in Brazil as part of its global restructuring plan aimed at cutting costs and increasing efficiencies.
Gearing up for 2022 fleet, mobility challenges
Although I do see improvements in the general economy in Latin America in 2022, it looks like it will not see the year-over-year increase it seen in 2021, according to the latest economic survey conducted by the Latin America and Caribbean Economic Commission, ECLAC.
While the average GDP in Latin America is seen up 2.9% year-over-year in 2022, the uptick for 2021 is estimated at 5.9%. However, who knows what will happen. It is very difficult to predict economic ebbs and flows in the turbulent world of today.
Speaking of turbulence, one factor I will be keeping an eye on in 2022 is the relationship between Mexico and the United States. Although relations are usually quite good considering the needs they have for one another, there has been some spat over a bill currently being discussed in the US congress.
Some US officials are seeking a $12,500 tax credit on EVs in addition to a $4,500 credit for those built by union workers in the United States. Mexico’s economy minister Tatiana Clouthier, however, is not happy with the discussions and feels that the measure “is totally contrary to free trade”.
One thing Mexico could do in retaliation is impose tariffs on vehicles which are built in the US and sold in Mexico. Let’s keep an eye on this as it could impact the automobile market in Mexico and possibly further down south.
Another thing to look out for in 2022 is inflation. And considering the fleet and mobility industry, I am talking about the price of fuel and vehicles, the two largest expenses of a fleet manager. Although inflation is worse in countries like Argentina and Venezuela, I’d like to highlight Brazil as it boasts the largest economy in the region and certainly influences its neighbors.
Like other regions of the world, the higher prices of today are partially due to the lack of semiconductors and raw materials which have reduced the availability of vehicles and other goods. This, however, should pan out as we get closer to the end of 2022 as semiconductor stocks are expected to gradually replenish.
One thing to look forward to in 2022, if you like technology as I do, is the implementation of 5G service in Brazil. Although implementation will be gradual, prepare for a new era of digitization which will revolutionize communications, logistics, transport, and urban mobility.
Of course, this will need to go hand-in-hand with well thought out government policy to control the power of the technology.
Two wrap up, here are some of the things I see happening in Latin America in 2022
• Fleet management expenses to remain high at least in 1H22
• Leasing contract extensions popular owing to delivery constraints
• Vehicle availability low until stock replenished (est. 4Q22)
• Driver safety will remain a focus owing to precarious road conditions
• Last-mile delivery seen growing at an exponential rate
• Remarketing is also seen strong, owing to high resale prices
• Station-based mobility sharing schemes to gain popularity
• Telematics on the mind of more fleet managers
• Lack in semiconductors seen continuing at least until year-end 2022
• EV trend to increase, but slower than world average