Global Fleet Conference: Developing future-proof fleet strategies in Latin America
Considering the precarious state of health and economies around the world today, developing ways to minimize the effects of these market stresses and anticipating future action plans are key for the automotive fleet and mobility industries.
This exact topic was opened up during a “virtual” panel discussion scheduled on the third day of the 2020 Global Fleet Virtual Conference and the expert at hand for Latin America was Fleet LatAm advisory board chairman Pascal Serres.
Let’s first give you a look at the Latin America fleet signature. Every year, approximately 5.7 million fleet cars are registered, of which 20% (1.2mn cars) are corporate vehicles. Brazil, Mexico and Argentina make up 76% of the total and the entire Latam footprint is 7% of the global market.
In terms of fleet management, 250,000 new contracts were identified in 2019, equivalent to 20% of the corporate market and 4% of the world total. With this, last year’s expected product penetration growth is estimated at 30% and continued opportunities are seen in the years to come, Mr. Serres said during the panel discussion.
Active leasing in Latin America today totals some 800,000 cars. The market is made up of international players ALD Automotive, Arval, and Leaseplan, along with local players which usually combine renting with fleet management.
Before anticipating future action plans, we need to know the current scenario of the Novel Coronavirus pandemic in Latin America. With that said, keep in mind that while Asia, Europe and most of the United States has passed their peaks, most of Latin America is approaching its peak right now.
While Peru & Chile are still under strict confinement measures, Brazil is the most affected. Unfortunately, due to the lack of discipline for quarantine measures, peaks in some countries will likely take a while to subside.
To give you an idea of the differences in countries, while a recent study by telematics firm Geotab (figure 01) on vehicle movement showed that traffic in Argentina, Chile and Peru dropped nearly 50% from March-May, the reduction in movement was only down some 25% in Mexico and much less in Brazil.
figure 01 (source: Geotab)
Impact on the market
Meanwhile, as many vehicle registration offices and automobile shops are closed, fleet managers in many countries are facing difficulty registering cars, not to mention keeping them properly maintained thereafter.
“When combining the health and economic impacts of the crisis, the region should see a drop in used car prices and an increase in new car prices, thus pushing the need to request vehicle leasing contract extensions,” said Mr. Serres.
In terms of who is being impacted, automobile manufacturers are feeling most of the brunt while impacts to fleet management companies are limited. While larger firms are getting hit a bit more, some smaller local suppliers can actually benefit from the situation and the overall fleet market is expected to increase, the executive added.
Among the other factors he highlighted is that electric vehicle (EV) growth in the region will be very gradual, more so to the higher price point of the vehicles and the popularity of ethanol in Brazil than any impact from the pandemic.
Pascal Serres (source: Global Fleet)
As for the trends expected in the short to mid-term, less commuting to work is seen, resulting in less kilometer usage and the extension of vehicle leasing contracts. The concept of mobility will also change where we also see the integration of alternative options such as taxi, ride-hailing and short-term fleet options.
Moreover, according to the Global Fleet COVID-19 survey published in May, more than 75% of survey takers are seeking innovation such as telematics solutions and other technologies. Finally, Mr. Serres also pointed out that fleet managers in the region are looking for more flexibility in products.
Hosted by Global Fleet chief editor Steven Schoefs (pictured top) who commented on the scenario in Europe, other panel members besides Pascal Serres were Yves Helven talking on behalf of the APAC region and Mike Antich representing North America. To watch the full panel discussion, visit here.