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News Article

Vehicle Leasing Increases Market Share

By Alfonso Núñez | Wed, 10/27/2021 - 15:14

A reported increase in the leasing of Mexican vehicles could aid the automotive industry during a challenging time.

 

The leasing of heavy and light vehicles in Mexico increased by 0.7 percentage points in the Mexican automobile market during 1H21, rising to 4 percent of the market. According to the Mexican Association of Automotive Distribution (AMDA) Director Guillermo Rosales, this participation is only expected to increase as leasing could become an aid during a time of trouble for the automotive sector.

 

Light vehicle sales in Mexico hit their lowest point in the last 10 years, making up the year’s third contraction in sales. The shortage of semiconductors has deeply impacted the automotive sector as it was beginning to recover from COVID-19 losses due to a mass decrease in worldwide mobility and vehicle demand. This slump is only expected to increase due to the recent legalization of illegally imported “chocolate” vehicles in the country.

 

The long-term rise in the vehicle leasing during the pandemic goes hand-in-hand with decreased auto demand, as many drivers opted for short-term car rentals as long-term mobility halted across the nation. Even as the country continues to reopen and most states find themselves operating under “green-light” restrictions, the vehicle leasing industry expects to continue rising due to the 1.5 percent rise in tourism for the remainder of the year and to further grow during 2022.

 

Mauricio Medina, General Director, TIP Mexico, said that the leasing industry is not only a way for the industry to survive the current sales slump but a tool for all of the country’s industries to use on their path to economic recovery without going into further debt.

 

“Vehicle leasing has demonstrated to be a tool that promotes the democratic use of vehicles, due to permitting the acquisition of goods through a monthly rent during a determined period, giving companies the opportunity to renew their fleet,” said Medina. He explains that much like light vehicle leasing, heavy vehicle leasing benefits customers by offering cheap prices avoiding debt and tax, while offering personalized contracts made based on each client’s exact needs and vehicle services from a single supplier. It also allows them to save as they do not have to constantly maintain the vehicle.

 

 While the automotive sector figures out how to limit the impact of the microchip shortage, the “chocolate” car decree and the pandemic continue to affect sale numbers. However, the vehicle leasing industry is expected to rise by 0.5 further percentage points and become 4.5 percent of the market

Photo by:   Unsplash, Giorgio Trovato
Alfonso Núñez Alfonso Núñez Journalist & Industry Analyst