Fleet LatAm Expert Meeting: Keys to overcoming fleet management challenges
Flexibility, Data Gathering, and Telematics are key to dealing with the fleet management challenges seen in Latin America today, according to fleet industry experts who spoke at the Fleet LatAm Expert Meeting on Tuesday (7 March).
Vehicle and chip shortages, supply chain disruptions, and high inflation has impacted interest rates and in turn, delivery lead times and total cost of ownership (TCO) for fleet managers but there are ways to deal with it.
It is necessary for corporate fleet managers to be flexible by first reviewing vehicle selection and financing models as well as the period of use for a vehicle lease against a vehicle purchase and then making the necessary changes.
“Make sure to analyze fleet information on a country-by-country basis and keep in mind that longer contract periods usually result in high maintenance costs,” said Rodrigo Monroy who is VP of the Fleet LatAm Advisory board as well as Fleet Manager for the Latin America region at Novartis pharmaceuticals.
To mitigate supply chain risks, anticipate renewals which can be quite long these days (6 months or more). “Find flexible mid-term leasing solutions, consider contract extensions of 12-24 months, and look for alternative vehicle makes and models,” said ALD Automotive Latin America Key Account Director Sergio Lecue.
“We need to anticipate what will happen and then plan (together with our partners) and this calls for flexibility. Maintain close communication with your suppliers, at least monthly,” Phizer pharmaceuticals Latin America fleet and travel manager Karina Uribe said.
“As residual values and maintenance costs usually falls on our hands in South America where closed end leasing is more popular, we propose a contract extension. This considers the new residual value of the vehicle, thus a more flexible option,” said Arval Business Development Director for Latin America Ricardo de Bolle.
Make sure you consider vehicle availability when making a choice and be more open to what is available in the market.
There are new brands arising from countries such as China. Although low residual value and high maintenance could be of concern, we have found that these issues do not really hit you so hard, Mr. Bolle said, also pointing out other mobility alternatives such as car sharing, mid-term rentals (1-24 months), and mobility budgets.
Data Gathering and Telematics
To control fleet cost, first understand the needs and the characteristics of the fleet you own, monitoring and managing data you collect by way of technology such as telematics.
“Considering the challenges fleet managers face today, we are finding that they are seeking technologies which help them run their fleet more efficiently,” said Geotab AVP of Sales Juan Cardona.
Using telematics with AI to schedule preventative maintenance and repairs with no downtime is key to fleet operations. Parts need to be ready immediately upon repairs. Vehicles that are idled can be a costly mistake, Mr. Cardona said, adding that telematics usually represent only 2% of total fleet cost.
Fleet Management Tips
• Although employee car selectors are nice, they restrict bulk purchases
• As such, do not offer too many vehicle model options
• Take advantage of fuel card services
• Don’t wait. Carry out preventative maintenance now
• Don’t do it yourself. Get support from your partners
• Benchmark options. Know the best practices in the market
• Consider mid-term rentals of 1-24 months
• Create a mobility budget, a very flexible option
After a 2022 GDP growth of approximately 2.9% in Latin America, pushed by Colombia which was up 7.5% and Argentina up 3.7%., the annual growth momentum should be some 2.4% in the 2023-2027 period, according to Frost & Sullivan Director of Automotive in Latin America Lorena Isla.
As for this year (1Q23), inflation and interest in the largest markets have been 5.7% and 13.8% respectively in Brazil so far, and 7.9% and 11% in Mexico.
“Although Latin America faces social and political impacts such as corruption, social unrest and economic factors surrounding sustainability, companies operating in the region can benefit from labor cost advantages, extensive free trade relations, and proximity to US markets, said Ms. Isla.
Top: Rodrigo Monroy, Lorena Isla, Sergio Lecue
Bottom: Karina Uirbe, Ricardo de Bolle, Juan Cardona
“For 2023, there will be some supply chain issues. However, we should not face the general supply chain problems we have seen recently, and I do feel we will start to see a recovery,” added Mr. Lecue
TCO should be up in 2023, sparked by rising fuel and insurance costs as well as supply chain issues, but not as much as we have seen in the last couple of years.
As for leasing and fleet management costs in South America, Brazil and Chile should see single digit upticks in leasing rates while Peru and Colombia should see double digit increases, according to Mr. de Bolle.
The meeting was hosted by Global Fleet Editor In Chief Steven Schoefs and Fleet LatAm Board Chairman Pascal Serres. Stay tuned for the next Fleet LatAm Expert Meeting schedule for 20 April. More information here.
Top Photo: Fleet LatAm Expert Meeting (copyright: Fleet LatAm)