AMAVE: Only One in Five Mexican Companies Uses LeasingBy Alejandro Enríquez | Thu, 04/08/2021 - 14:45
Q: What are AMAVE’s priorities for the leasing sector?
A: AMAVE’s goal is to promote an environment for leasing and fleet managers to grow their operations with commercial and light vehicles. The association addresses key issues for the sector, the most important being the need for a proper legal framework for our business. Other topics include visibility and formality in automotive leasing, while promoting a financial culture that supports the development of the automotive industry, as well as the renewal of the vehicle park. We also aim to provide competitive mobility alternatives for companies and individuals. To reach our goals, we need to enable communication channels with local and federal authorities to address regulatory issues.
Q: How has the pandemic influenced AMAVE’s operations?
A: Leasing has not been impacted although we did see a deceleration in mobility. A growing number of entities are looking at leasing as an alternative amid uncertainty. Leasing allows companies to not lose capital while enjoying fiscal benefits. In contrast, the renting segment has suffered greatly compared to 2019, suffering a 22.9 percent drop as most clients are leisure and business tourists.
2020 was also a year of intense work for AMAVE. We remained close to different authorities at the federal and local level, including SCT, SEMOVI and REPUVE, to address essential procedures, including plating. By staying close to the authorities, we reinforced AMAVE’s mission to make fleet management visible and formal while making regulatory procedures easier for leasing companies. It required a great deal of work but all processes are now in place.
Andrés Lajous, Mexico City’s Minister of Mobility, supported us with all procedures involving vehicles. He remains open to support our sector. Having said that, it is essential that state authorities promote digitalization. We have made an effort in this regard but vehicle registry in all states should be digital for both individuals and companies. We keep stressing the importance of digitalized systems to make life easier for everyone.
Q: What are some of the lessons learned from the pandemic?
A: After the pandemic, we see three different scenarios. In the short term, investors will remain cautious, while in the midterm, mobility will regain regular levels. In the long term, we see automotive leasing growing. In times of uncertainty, we believe leasing promotes entrepreneurship while supporting SMEs and helping them to avoid losing capital and to focus on their business.
In Mexico, less than 20 percent of companies use automotive leasing against 80 percent in Europe and the US, so there is potential to grow. One of the elements that hinders growth is the importance of ownership in the Mexican culture. This does not seem to be the case among younger generations but older generations appreciate owning their assets. This, however, does not make much sense if that asset is depreciating. Another important element is that companies do not understand the availability and benefits of automotive leasing or of contracting a fleet manager. This is what we try to preach.
Q: What is your perspective on new mobility trends?
A: New mobility trends include bicycles, shared vehicles and different transportation alternatives. We should also include electric and hybrid vehicles in this category. Among AMAVE’s members, there is an increasing interest in electric and hybrid fleets. However, we do not see this happening in the near future because of the lack of fiscal benefits these vehicles can offer. Of the hybrid and electric vehicles registered with INEGI in 2020, we represent around 17 percent.
Q: What benefits do AMAVE members enjoy?
A: Our membership is based on four pillars. First, training and continuous education through the partnerships we have with key players. We offer courses, forums and webinars in which industry leaders are involved. A second pillar is our research and analysis department that gathers data to deliver business intelligence with the help of industry associations, including ANPACT and AMDA. This increases the visibility of the leasing market. It is important to note that, previously, there was no data available for our sector. We are proud to say we have changed that. A third pillar is the way we address all the regulatory procedures companies need to perform, while serving as a channel to connect with local and federal authorities. The fourth pillar is our work toward a regulatory framework that influences the development of the sector. We have a specialized committee to address each of our pillars.
Q: What are AMAVE’s priorities for 2021?
A: Our No. 1 priority is to strengthen the legal framework that protects leased assets. Unfortunately, Mexican law has failed to provide effective mechanisms that allow companies to retrieve leased assets following overdue payments. Regaining control over a leased asset is really difficult and it can take up to 24 months. After that time, the vehicle is already depreciated and often misused. We drafted a proposed amendment to the Mexican Trade Code to create a preventive measure that allows the retrieval of physical assets leased due to lack of payment. In practice, this will allow companies to retrieve the goods while the trial takes place. Should companies lose the case, a similar product will be returned to the other party. The Mexican Ministry of Economy has given its consent to present this bill to Congress.
We will also maintain our focus on improving regulatory procedures. It is important for the legal framework to strengthen the leasing market and to make regulatory processes agile in strategic states, including Mexico City, State of Mexico, Nuevo Leon, Jalisco and Puebla. We are also committed to strengthening AMAVE’s presence across different media.
The Mexican Association of Vehicle Lessors (AMAVE) is a civil association founded in 2015 that gathers fleet management and leasing companies of commercial and light vehicles