Vehicle Ownership Paradigm Is Shifting in Mexico
Although Mexican culture has favored traditional car ownership, new alternatives have become popular among younger generations. Automotive dealers, second-hand vehicle websites, car-as-a-service providers and mobility applications are shifting toward these new trends, which are set to change the automotive business in Mexico.
While Mexico is one of the countries with the fewest financial incentives for buying new cars, there is still significant interest from the general public in acquiring one, according to Anasofía Sánchez, Director General, Waze LATAM. However, this preference is gradually changing in the country. The COVID-19 pandemic boosted several trends in the world, including the vehicle-subscription plans.
The vehicle subscription model was originally offered by OEMs. Similar to subscriptions offered by streaming applications, it allows consumers to lease vehicles directly from automakers and third-party lessors. This provides consumers flexible terms and vehicle choices not often found in lease agreements, reported MBN. Subscription models were born as a convenient alternative to leasing. Under this scheme, customers pay an “all-in” monthly fee, which includes vehicle access, insurance, maintenance and servicing. The only other consumer expense is gas.
This modality is still in trial mode in some US and EU cities, but it could become popular in Mexico, according to Forbes. While subscriptions are still far from becoming the preferred alternative, leasing and other mobility options are growing in the Mexican market.
Leasing has been in Mexico for several years. Although it is not as popular as in other countries, it has grown steadily through the years, according to HR Ratings. By 4Q2021, Mexico City, Nuevo Leon, Jalisco, State of Mexico and Puebla represented 96.1 percent of the total leasing business in the country. The distribution of lessees includes the transport industry, professional services, construction and private users.
Digitalization and technological trends have also reached dealers’ sales floors, which are shifting toward a more digital, interactive and omnichannel sales approach. In addition, due to shortages and supply chain disruptions, second-hand vehicle sales grew exponentially during 2021. E-commerce and digital channels have played a leading role in this growth.
Beyond leasing, subscriptions and second-hand vehicle sales, dealerships have also faced a fierce competition in the form of mobility apps, which have become the ideal car-as-a-service provider for younger generations in Mexico’s main cities.
Supply chain issues and historic low productivity figures have accelerated the industry’s path toward new sales, ownership and aftermarket strategies. Learn from the leaders who are shifting the sector in Mexico Automotive Summit 2022. Join the conversation with Guillermo Rosales from AMDA, Iliana Vetrano from Mercado Libre, Richard Farr from DiDi, Fernando Enciso from Surman, Karla Flores from LeasePlan and Rubén Hoyo from Autocosmos.com in the panel “The Future of Vehicle Sales, Ownership & Aftermarket Services.”
Tickets for the summit are available here. Join the future of B2B conferences now!