Leasing Strategies: from Digitalization to EVsBy Jan Hogewoning | Wed, 05/06/2020 - 18:52
The added benefits of vehicle leasing are starting to be understood and the Mexican market is gradually embracing this alternative. “Even though ownership is an important element of Mexican society, the country is gradually opening up to the shared-economy culture,” says Kent Bjertrup, CEO Mexico and Regional Director Latin America of automotive leasing company ALD Automotive.
ALD Automotive leases close to 26,000 vehicles in Mexico, a figure that is low compared to our 400,000 units in Europe or 300,000 in the US and which suggests a large opportunity for growth. To try to penetrate the market further, ALD has made both the American and European leasing models available to the Mexican public. “In Europe, clients have a fixed rate for the car and the service costs. They know exactly what they are paying for their fleet every month. US companies, on the other hand, are used to handling a scheme in which every service is billed individually and costs can vary per month,” says Bjertrup. Here in Mexico, clients are veering toward a combination of the two models. They rent a fleet for a fixed price but then have the management of the fleet billed using the American model. This provides certainty of costs but also allows flexibility in the price of managing the fleet.
Clients have evolved to the point where if something is not available on their smartphone, they do not care about it.”
.- Kent Bjertrup, ALD Automotive
By embracing leasing, companies free up time and resources that would otherwise have to be dedicated to fleet management, according to Bjertrup. “Rather than investing in owning assets with little return on equity and needing your own staff to manage it, companies can direct their resources to grow their core business and let an experienced partner manage their fleet,” he says. Through outsourcing, companies only pay a monthly fee equivalent to the car’s depreciation and the services it may require. When a lease ends, clients can choose to buy the car or enter a new contract. This provides significant added value for clients given that cars change all the time and buying them is not always attractive.
Technology is vital to developing the lease market in Mexico, according to Bjertrup. “Clients have evolved to the point where if something is not available on their smartphone, they do not care about it.” ALD Net is the company’s response to this new reality. The online reporting platform allows clients global access to monitor their fleet’s performance. The company also offers Carselector, a consultancy platform for users and fleet managers that helps clients decide what cars to add to their fleet based on initial costs, fuel consumption and other KPIs.
Bjertrup says all countries have seen major impacts from technology services albeit in different ways. “In Europe, cars share data regarding functionality; in Mexico, most technological advances are oriented to tracking and security.” ALD has adapted to different client need. Its ability to gather data on the car’s performance and driving style can help to improve safe driving practices and follow up on service and maintenance schedules.
The company is also considering how to ride the electrification trend. Although the country still faces a lack of charging infrastructure, ALD Automotive wants clients to see these units as a viable alternative. Bjertrup is confident that this technology is here to stay. “Some high-end and volume OEMs are already offering electric options in their lineup and these models will play a key role in the adoption of electrification.”
ALD is in talks with a potential partner to build an electric vehicle program. Broadening that segment is especially attractive considering Mexico is dealing with challenges such as rising fuel prices and fuel theft and the company is working on highlighting these and other benefits to clients. “It is true that electric units require a larger initial investment but that is compensated by low costs in maintenance, increasingly longer warranties for batteries and slower depreciation,” says Bjertrup. Because of their high quality and low maintenance needs, electric vehicles are also great options for second-life leases. Clients can choose to renew their contract with a fleet of new electric cars while their first fleet is leased to a new client.
Although significant steps must still be taken, the Mexican market is advancing. Many car lease companies have a global presence, which means they already have relationships in other countries with multinationals that are looking to lease a fleet in Mexico. “Our goal now is to attract the large number of small to medium-sized companies in Mexico,” says Bjertrup.