Element-Arval: Defining vehicle leasing in Latin America
On the sidelines of the Fleet LatAm conference 2021, we were fortunate enough to have a chat with two of the top executives in Latin America representing the Element-Arval Global Alliance, the longest standing fleet management partnership of which celebrated its 25th anniversary in 2020.
Overall, the alliance is present in 50 countries and manages more than three million vehicles and in Latin America, its footprint reaches eight countries and more than 121,000 vehicles.
In respect to the largest Latam countries, Brazil (covered by Arval) and Mexico (covered by Element), the two showed year-over-year increases in fleet size of 8.9% and 11.1% respectively in 2020. The alliance in the region also includes Chile, Peru, and Colombia as well as RDA Renting which covers Argentina and Uruguay and Mareauto AVIS which covers Ecuador.
The executives joining in on the talks were Arval Global Business Development Director (Latin America) Ricardo de Bolle (pictured above, left) and Element Fleet Management Head (Mexico) Manuel Tamayo (pictured above, right).
According to the executives, the alliance is going well and intends to continue expanding in Latin America as well as around the world. There are no plans for any specific Latam country right now, but the group is always open to new partnership opportunities. Meetings are occasionally held on a global scale to discuss the matter.
As for new services, among those mentioned involve technology and sustainability.
“More recently, our focus has been on the digitization of our business so that we can better serve our clients. The COVID-19 pandemic has actually accelerated demands for new technological solutions,” said Mr. Tamayo, citing examples such as tracking purchase orders, improving communication between fleet managers and drivers, and other connectivity advancements.
In 2020, Arval launched its Arval Beyond plan which calls for offering sustainable mobility solutions in all the countries it operates in. This means achieving a 30% reduction in CO2 emissions in its leased fleet and a 100% reduction in its own operations by 2025.
“We have a carbon free program to neutralize the carbon footprint of our clients. Very soon, we will also be disclosing an improved Global reporting tool platform and a new way to manage our regional clients,” said Mr. de Bolle.
Getting past the pandemic
Since the start of the COVID-19 pandemic, alternative mobility solutions which are quick and flexible have been sought after, one being mid-term leasing. Moreover, the demand for car sharing schemes aimed at reducing idled vehicle time and optimizing overall fleet operations has risen.
There has been a shift from outright purchase to full-service leasing for many companies as they are seeking to invest more on core business activities, the executives said.
Besides 69% of companies seeking to increase their fleet, some 28% who are using outright purchases today have plans to develop a full-service leasing program within the next three years, said Mr. De Bolle, citing the latest Arval Mobility study in Brazil.
Customers are seeking to cut costs. They want to reduce TCO in their fleets and be more productive amidst the hardships of today. However, the world is gradually returning back to normal so many are looking forward but what is on the horizon?
Like other regions of the world, a demand for electric vehicles is on the rise but there is still a lack of government incentives in the region to stimulate the market, according to the executives.
Other growing trends seen include on-demand mobility cards so having a mobility budget is seen progressing in the years to come. As mentioned before, shared solutions should remain popular as the health crisis fades, especially corporate car sharing and ride sharing. Private lease or salary sacrafice is also seen on the rise.
“According to Brazil’s AMO Barometer, 59% of companies are considering the implementation of at least one alternative fuel technology in the next three years. And the reasons for this are to lower environmental impacts, to reduce fuel consumption, and to anticipate future restrictive public policies,” said Mr. de Bolle.
Another growing trend is the awareness that data collection is key. Through this, companies are not only looking for more fleet efficiency but more sustainability, meaning reducing their carbon footprint. Despite the lack in government incentives today, the awareness is there, Mr. Tamayo added.
Tips for including Latam in your Global Fleet Program
- Latin America is big so prepare for the challenge of standardizing operations. Know the idiosyncrasies of each country (taxes, prices, transportation alternatives, etc.)
- Start with an internal RFI, and then you can define what can or cannot be harmonized.
- Besides its size, Latam is constantly transforming and at a rapid pace. Rely on your own experiences as well as the experience of your international fleet management partners.
- Finally, keep in mind that reliable data is hard to get. Keep it simple and focus on the basics (inventory, mileage, usage types, etc.)
- Follow global practices which have been proven in more mature markets. This could stem from North America or from Europe, depending on your company’s headquarters.
Ricardo de Bolle and Manuel Tamayo are among the many key industry players who spoke at the Fleet LatAm Conference 2021 on Thursday (22 April).
Read more about the 2021 Fleet LatAm Conference