Spotlight: TCO and sustainability goals of Latam Fleet Managers

Optimizing total cost of ownership (TCO), focusing on sustainability, and eying the possibility of new Chinese car brands are among the contemplations of today’s multinational fleet managers, according to the last session of the 2023 Fleet LatAm Conference in Mexico City. 

TCO  

Regarding TCO evolution for fleet vehicles in 2023, most people attending the conference felt that it will be higher than 2022, according to a live questionnaire conducted at the event. While 29% feel their TCO will be more than 10% higher, 21% feel that it will be 5-10% higher. 

Meanwhile, 25% feel that it will be more than 10% lower and 18% see it being 5-10% lower, and only 7% feel it will be roughly the same. 

"Our TCO should be more than 10% lower and that is due to incentives from OEMs and better negotiations", said Zoetis Global Head of Fleet Paula Diniz Oliveira, adding ''there is inflation but it will not impact us that much."

Decreasing for ABB is a bit difficult considering the cost of new technologies and the need to deal with inflation. “We see TCO increasing by 5-10% and that is partially due to the implementation of electric vehicles (EV). We are also adding 12 months to contracts to help balance out TCO,” said Alberto Mancillas Flores who is North America and Brazil Fleet Manager for ABB as well as the 2023 Fleet Latam Manager of the Year.  

“We see TCO about the same this year, but we will need to reduce it a bit in 2024 but it should be less than 10%,” said MSD Regional Manager Lead for Latam, Central America and Caribbean David Trujillo.

Sustainability 

Zoetis and ABB are seeking to become carbon zero by 2030 but also feel that it will be a challenge in less mature markets, according to their fleet managers. Mr. Trujillo agreed but also added that we cannot forget the complete lifecycles of the vehicles and other elements that matter like knowing whether or not the energy being used is actually green.

Finally the three fleet managers agree that taking advantage of technology to support fleet operations is of utmost importance, including connectivity to control and optimize your EV implementation, safety management, and overall fleet operations.

While Mr. Trujillo said that MSD carried out a multi-year study that saved the company 8-9 million US dollars by the use of telematics, Ms. Oliveira confirmed the use of telematics in Brazil but is receiving some resistance in some countries owing to data privacy issues which could be resolved by focusing more on the health and safety benefits the technology brings.

Chinese Brands

As for Chinese brands, all agree that they have come to the market but including them in their portfolios is not a strong focus right now. “Drivers are still not that familiar with the brands and there is some driver reluctancy so we need to test this option out first and prepare for change management,” said Ms. Oliveira.

The main concern of Chinese EVs is not aftersales service and remarketing issues like some may say, but the difference in the type of connectors on charging devices in comparison to North America standards or ABB devices,” said Mr. Flores.

“For more success in Latin America, Chinese brands need to show that they are complying to safety standards,” said Mr. Trujillo who is also the 2022 Fleet LatAm Manager of the Year.

2024 and beyond

Looking ahead a couple years, fleet managers should expect a complex and evolving market with new players offering new solutions. While buying and leasing cars in the past has mainly called for fueling and some follow up, it now calls for things such as having charging infrastructure, using various mobile apps, and considering subscription services. “This will require transparency and simplicity,” said Mr. Flores

To achieve success in all aspects of fleet management, fleet managers will need to collaborate with suppliers, and this means developing partnerships and accomplishing open communication with them so that the industry overall can mutually enhance the quality and the performance of fleet operations.

The session was moderated by Global Fleet Head of Strategic Relations Steven Schoefs. 
 

Photo: left to right, Steven Schoefs, Paula Diniz Oliveria, David Trujillo, Alberto Mancillas Flores (source: Fleet LatAm)