Integrating Vehicle Leasing Services to Maximize EfficienciesSat, 09/01/2018 - 09:56
Q: What opportunity did LUMO Financiera del Centro identify in working for the public sector?
A: The Federal Government has changed the way it buys vehicles. It used to arrange individual tenders to acquire vehicles, spare parts, insurance and maintenance services, but that is highly inefficient and can open the door to corruption and price distortion. Today, the government usually calls for bids for integral services.
Companies must now present proposals that include the vehicle, its maintenance, insurance and other related services. This allows the government to deal with a single company and reduce corruption as fewer people are involved in the process. Furthermore, vehicle maintenance and other service costs can be reduced by 25-30 percent. LUMO Financiera del Centro is one of the few companies in the market that can offer an integral service with a strong financial backbone to support leasing in great volumes.
Q: How are LUMO Financiera del Centro’s operations distributed across the country?
A: The government leases approximately 100,000 vehicles through contracts with over 50 Federal Government dependencies. We are present in 17 states and 15 regional capital cities. Just in the metropolitan area of Mexico City we have over 5,100 leased vehicles, including more than 350 garbage trucks and 2,000 patrol cars. The company has worked toward expanding in the northern part of the country where gasoline prices were first liberated and it now has contracts in most of the border states and the Baja California Peninsula. LUMO Financiera del Centro is also designing a strategy for tourist zones focused on electric, hybrid and low-consumption vehicles so tourists can support a nonpolluting culture.
The transportation sector accounts for 45 percent of the company’s portfolio. From this percentage, about 60 percent of LUMO Financiera del Centro’s operations are focused on financing and 40 percent on leasing. Dividing by segment, 30 percent of our contracts are for heavy vehicles, 50 percent for light vehicles and the remaining 20 percent for specialized vehicles such as armored or patrol cars. The company celebrated its ninth anniversary in 2017 and in those nine years we have grown tenfold. We expect to replicate that result in the coming five years by offering integral leasing solutions with the best brands of vehicles, spare parts, insurance, GPS and assistance companies.
Q: What is LUMO Financiera del Centro’s value proposition for government agencies and other clients?
A: We partner with OEMs and distributors and build a proposal according to what the government plans to do with the vehicles. It does not make sense, for instance, to have delivery people driving an eight-cylinder vehicle that will consume fuel indiscriminately. Choosing vehicles depending on the use cuts fuel costs and eases maintenance procedures.
LUMO Financiera del Centro also offers leasing services by the month, with insurance, preventive and corrective maintenances, legal and road assistance and a substitute car if necessary. The contract periods for these services range between 12 and 48 months and clients can renew their vehicles after the contract ends while paying the same amount. LUMO Financiera del Centro is also associated with the most important insurance and bonds companies in Latin America: Interprotección, which helps us offer the right kind of insurance for each situation.
Q: What is LUMO Financiera del Centro’s advantage over other full-service operators in the market?
A: LUMO Financiera del Centro has experience with larger vehicle fleets thanks to its work with the government. Tending to thousands of vehicles around the country gives the company a logistics background that no other company has. We also have a strong financial backbone, which differentiates us as most other full-service companies are integrated vertically, with service centers and shops. Instead, we offer lower financing costs and alliances with OEM shops to prevent warranty losses. LUMO Financiera del Centro also offers contracts that ensure fixed prices of spare parts and other supplies throughout the year.
Q: Who are LUMO Financiera del Centro’s partners in the heavy and light vehicle segments?
A: Daimler is our main ally in the heavy vehicle segment. The largest fleet in charge of vaccine distribution and most of Liconsa milk deliveries are done with Daimler trucks, most of them leased. LUMO Financiera del Centro has a partnership with International through which we can offer new garbage trucks for cities and municipalities. We also have projects with Volvo for articulated buses for urban transportation and a strong alliance with MAN.
Regarding light vehicles, LUMO Financiera del Centro works with Toyota and Nissan to provide hybrid and electric taxis and charging stations for Guadalajara, Monterrey and several cities in the State of Mexico. Since the New Mexico City International Airport (NAICM) will strive to only have hybrid airport taxis, we expect to be the best option for taxi drivers who need financing or who want to lease these vehicles.
Vehicle brands approach integral leasing-solution companies such as LUMO Financiera del Centro because we can serve clients in both the public and private sectors. Integration enables clients to hire vehicle leasing services more inexpensively and also helps brands to better understand their customers. LUMO Financiera del Centro has become a node for information distribution that helps clients buy in a more informed way.
Q: How have uncertainty and high interest and inflation rates impacted LUMO Financiera del Centro’s activities?
A: As interest rates rise, we have seen the need to optimize operations. Today, leasing fees are 30 percent lower than four years ago due to increased competition. Companies strive to deliver the best service possible to the government and the government will only hire the company that offers the best price and service.
Fuel costs have also incremented, which boosts the transition to gas and hybrid engines to cut these costs back. I think in 10 years at the latest, all government vehicles will transition from gasoline to hybrid and gas and eventually EVs. Although there are only a handful of hybrid cars in Mexico, this transition should start with urban transportation and then with the fleets of large companies.
Q: What would you consider the biggest challenge in ensuring the continued growth of the domestic market and what changes do you think the industry should make?
A: Under no circumstance should we go back to buying instead of leasing because that would only deplete necessary resources to renew the national fleet. Aside from maintaining a leasing policy, we should address pollution problems by implementing hybrid technology. Doing so, however, requires companies to create an area of cost-benefit analysis capable of pondering the benefits of transforming their fleet away from combustion engines. Once this happens, we will start seeing a new and more efficient vehicle fleet managed by companies such as LUMO Financiera del Centro that integrate the best brands and technologies while offering a good price.