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Argentina, Uruguay: To buy or to lease

When considering whether to buy or lease your fleet cars, both Argentina and Uruguay pose a few challenges which fleet managers should be aware of. Global Fleet, along with the help of Latin American advisory board chairman Pascal Serres, points out some of them below. 


Although car sales are on the rise, there are financial constraints in the country which explain why this is happening, according to Serres.

Due to high inflation (approximately 25%), interest rates are also quite high. As such, the nominal value of a 3-4-year-old car could be higher than its nominal price when first purchased. This makes it very difficult for leasing companies or car buyers to get credit, which is already very expensive.

In the end, “those with cash on hand are more likely to buy cars than finance them,” says Serres.

To give you an idea, on April 10, 2018, the Central Bank of Argentina kept its benchmark interest rate at 27.3% and policymakers are not expecting much improvement for at least two years.

Moreover, one must be aware that the country’s average rate since 1979 has been 61.7%, reaching an all-time high of 1,390% in March 1990 and a record low of 1.2% in March 2004.

It is the lack of credit coupled with the low demand for financing which explains why there are almost no funded fleets in Argentina.

One key solution would be to offer fleet management service to companies which already own their cars. This would give them more time to focus on their core business in addition to helping them control costs, the latter being complex when inflation is high.

As for OEMs, one interesting scenario would be to focus on producing cars in Argentina, get the benefit of the ongoing inflation, and then work on exporting the cars to countries such as Brazil since there is no obligation to repatriate over the short-term, says Serres.

Argentina's best-selling pickup Toyota Hilux. Produced Locally (SOURCE: Toyota)


Due to its high per capita income and human development index as well as its low level of corruption, Uruguay is in better shape than many of its South American neighbors. The country, however, is very small so leasing companies are not very common due to a lack of real opportunity from a lessor’s point of view.

The lower inflation, on the other hand, does stimulate financing products. Currently, some of the lessors in the country are banks such as Santander, BBVA, and HSBC which more than likely offer financial leasing. Most of the cars being offered through leasing in the country are utility vehicles.

Authored by: Daniel Bland