Fleet LatAm °3 (English)

Nexus Communication - Fleet LatAm #1 - Periodic magazine - April 2019 - Deposit Office Liege X

Managing OEMs and understanding Mobility Innovation • New fleet cars in Latin America • Fleet sales trends and taxation • An insight into powertrain selection

03 APRIL 2019

This magazine is distributed in Latin America, Europe and United States.

Internationalisation of fleet, mobility & safety priorities

23,24&25

SEPTEMBER 2019

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Learn through expert speakers, get inspired via best practices and share through networking !

The Fleet latam Conference & Training is the first event on the continent that will gather Fleet & mobility leaders with an international scope.

What you will learn: • Internationalisation of Fleet & Mobility • Make Fleet Safety your N°1 priority • Connected Fleets • Global Trends impacting Latin America

Streamline your OEM management Welcome to the third issue of Fleet LatAm magazine, focused on the collaboration with car manufacturers and the emergence of new business mobility solutions for your vehicle fleet strategy in Latin America.

“The transition from car to smart mobility is only starting”

Even though most car manufacturers are present in Latin America, it’s not a straightforward exercise to select and work with car manufacturers on this complex continent.

Market reality combined with legislation and taxation elements make Latin America a country of importers and franchise dealer networks rather than one of OEM subsidiaries.

Hefty import taxes impact cost and delivery time and therefore also the popularity of certain brands and models.

It could also complicate the set-up of an OEM tender for Latam, but this complexity should not stop you from organising your OEM management in a harmonised way.

In some countries and some megacities, it could be useful to look beyond the company car. New mobility initiatives are popping up and the integration of ridehailing services and two-wheel mobility could be an add-on for the younger generation in your workforce, working and living in densely populated areas.

As the business environment is maturing, the habits and preferences linked to vehicle fleet and mobility management will also evolve, making Latin America a market to follow up in order to take the right decisions for your company and your employees.

A perfect way to do so is by attending the first Fleet LatAm Conference in Mexico City, from 23 to 25 September. Entitled ‘Internationalisation of fleet, mobility and safety priorities’, the conference will be the ideal place to learn and meet with fleet peers and future business partners.

Register now on www.fleetlatam.com/conference2019 Caroline Thonnon, Publisher

COLOPHON EDITORS Daniel Bland – Editor LATAM dbland@nexuscommunication.be T.: +55 (11)98542 - 2169 Steven Schoefs – Chief Editor sschoefs@nexuscommunication.be Céline Gilson – Project Coordinator cgilson@nexuscommunication.be Benjamin Uyttebroeck – Journalist buyttebroeck@nexuscommunication.be Contributors: Shane Curran, Fien Van den Steen

Experts: Pascal Serres Expert LATAM pserres@nexuscommunication.be Jose Luis Criado – Mobility Consultants, Thierry Merienne, Guira Barretto and Yeswant Abhimanyu – Frost & Sullivan, Fernando Cammarota – CEPA Safe Drive, Fábio Itio Samizu - Willis Towers Watson Layout: STR8! – www.str8.be Pictures: ©Shutterstock, ©Global Fleet SALES & MARKETING Daniel Savigny International Key Account Manager LatAm dsavigny@nexuscommunication.be

David Baudewyens – International Key Account Manager dbaudeweyns@nexuscommunication.be Saskia Lannau – International Key Account Manager slannau@nexuscommunication.be Elke Leën – International Key Account Manager eleen@nexuscommunication.be Mélanie Gohy – Sales Assistant mgohy@nexuscommunication.be Vincent Degives – Marketing Manager vdegives@nexuscommunication.be Virginie Emonts – Sales and Marketing Assistant vemonts@nexuscommunication.be Benoit Delisse – Sales and Marketing Assistant bdelisse@nexuscommunnication.be Aline Verpoorten – Management Assistant averpoorten@nexuscommunication.be

FLEET LATAM www.globalfleet.com/regions/latin-america www.fleetlatam.com Fleet LatAm @Fleet_LatAm FleetLatAm FLEET LATAM is published by Nexus Communication SA, Parc Artisanal 11-13, 4671 Barchon (Belgium), T. : +32 4 387 87 71 – Fax : +32 4 387 90 63 contact@nexuscommunication.be Fleet LatAm is registered and copyrighted trademark. Reproduction rights (texts, advertisements, pictures) reserved for all countries. Received documents will not be returned. By submitting them, the author implicitly authorizes their publication.

PUBLISHERS Caroline Thonnon – CEO & Business Development Thierry Degives – CEO & Managing Partner

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3

CONTENT

In this issue NEWS

FLEET MANAGEMENT 6

Fleet & Mobility in the News

Paula Diniz Oliveira, Zoetis:

32

Overcoming harmonisation challenges Nancy Scrocca, SGS: Innovation cannot be overlooked

OEMs

Axel Ernst, Syngenta: Focus on driver safety

Your fleet vehicles in 2019 Brazil, the engine powering growth Selecting the right powertrain The dangerous taxation relation in Latam Changing tide for fleet safety in Latam Armored vehicles, worth it?

Building a cost-efficient fleet through harmonisation Challenges of distribution fleets in Mexico Carefully tendering in Latam

8 12 16 18 20 22 24 26 30

36 37

WIKIFLEET Venezuela, the collapse of a rich country

33

MOBILITY Latam start-ups fill the innovation gap Ridehailing in Latam more popular than ever Why Mobility Budgets could emerge as

38 40 42

an attractive solution in Latin America

46

Plan your taxi mobility

Your Fleet and Mobility suppliers at your fingertips www.globalfleetdirectory.com

All the contact details only one click away The Global Fleet Directory is the best way to find the fleet & mobility suppliers you are looking for, classified by country, region and type of expertise. Discover their activities, the contact persons and contact details. All the info you need to network with your peers!

Ready? Search. GO!

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XC40 is the safe choice for Brazil A shared focus on putting people first makes car rental network Localiza and Volvo Cars a perfect match, says Localiza Fleet Solutions MD Joao Andrade. He explains why the brand has added 500 new Volvo XC40 models to its fleet.

Joao Andrade, managing director at Localiza: “The XC40 brings together beauty, technology, safety and comfort.

Choosing this innovative SUV for our fleet was easy”.

A new chapter in the Volvo XC40 success story has been written in Brazil, where car rental network Localiza has ordered 500 cars for its fleet. The mix of XC40 T4 and T5 models will be used for business and leisure rentals.

Volvo Cars and Localiza are a perfect match thanks to their shared peoplefirst focus, according to its Managing Director of Fleet Solutions, Joao Andrade. “Our two brands have very similar business values,” he says. “Our strategy is defined by caring for people and giving them the premium experience they desire.”

Localiza, which operates the largest car rental network in Latin America, was named one of the top 50 most valuable brands in Brazil in 2018. “The success of our brand is directly associated with the satisfaction of our clients and customers,” says Joao.

“Our mission is to offer them the best option for every trip.”

The XC40 is an attractive option for fleet drivers and managers.

It has a range of advanced safety features that protect those inside and outside the car, while thoughtful Scandinavian design gives it a confident, progressive character on the outside and a sense of comfort and wellbeing on the inside.

Innovations such as an intuitive touch screen, enhanced connectivity and the availability of the Volvo On Call app help boost productivity and allow fleet drivers to stay in touch safely when on the move.

It’s no surprise that the XC40 is already a popular choice in Brazil. As well as considerable sales success, it was named 2019 Premium Car of the Year by Brazil’s Auto Esporte magazine. Joao says that choosing the XC40 for the Localiza fleet was easy: “It’s an innovative car that brings together beauty, technology, safety and comfort. And all of this is wrapped up in the SUV body style that our customers increasingly demand.”

Volvo Cars’ reputation as a forward-thinking company was another key factor for Localiza. “It’s a brand associated with advanced safety technology, concern for the environment and innovative connectivity and ownership solutions. It’s looking to the future,” Joao says.

This progressive approach mirrors that of Localiza, according to Joao. “Like Volvo Cars, we understand that mobility is changing, and that we need to offer the experience that our customers want now, and in the future,” he says. The XC40 is already helping Localiza to do just that.

Find your local LATAM contact:

NEWS

Fleet & Mobility in the News Just like most of the world, fleet and mobility in Latin America has been going through a lot of changes.

Here are some of the top headlines in the first quarter of 2019. From automobile sales and electric vehicle launches to last-mile mobility and vehicle sharing schemes, these are just a few of the headlines you should know about this year. Remember to sign up for the Fleet LatAm newsletter to keep abreast with upcoming news.

Daniel Bland

Carlos Zarlenga to head GM South America Car sales in top 5 markets Considering the top 5 largest markets, Chile posted the best light vehicle sales result in 2018, increasing 15% year-over-year to 417,354 units. It was followed

by Latin America’s largest market, Brazil, which rose 13.7% to 2.47 million units and Colombia which saw a 7.6% uptick to 256,052 units. Meanwhile, Mexico fell 7% year-over-year to 1.42 million vehicles sold, and Argentina dropped by 10.9% to 802,992 units.

Carlos Zarlenga will head General Motors (GM) South America as of 1 April 2019, leading operations in Brazil, Argentina, Chile, Colombia, Ecuador, Peru, Bolivia, Paraguay and Uruguay. Mr Zarlenga, who is currently president of GM Mercosul (Brazil & Argentina), will be reporting to Barry Engle who is executive VP and president of GMI (General Motors International).

Mr Engle continues reporting to Chairman and Global CEO, Mary Barra.

Ford to close factory in Brazil

General Motors to invest $1.3bn

Ford Brazil has announced that it will close down its factory in São Bernardo do Campo (São Paulo state) by year-end 2019 to regain profitability in South America, following a loss of $678m in the region in 2018.

The US carmaker is expecting to cut some $460m in recurring annual expenses from the decision.

The factory is responsible for building Transit vans, F-series trucks and the subcompact Fiesta.

Meanwhile, also in São Paulo state, General Motors has promised to invest 10bn reais ($2.6bn) over the next five years at its factories in the cities of São Caetano do Sul and São José dos Campos.The funding will go toward building several products from 2020-2024, two of them being the new generation of Chevrolet S10 pickups (to compete with the Toyota Hilux) and an upcoming SUV which is yet to be named.

On-demand shuttle service launches in Brazil Ridehail company Via has kicked off its CityBus 2.0 service in Brazil, the first on-demand shuttle ride service operated by a public transit operator in Latin America. Backed by Daimler, the US-based company is operating in the city of Goiânia (Goiás state) in cooperation with local transit operator HP Transportes Coletivos. The CityBus fleet is made up of 30 drivers operating 14-seater Mercedes-Benz vans capable of handling 3,500 trips per day. Worldwide, Via has a total of 50 deployments in 15 countries.

6 #03 - APRIL 2019

Telematics, connectivity grow in Latam In recent months, there has been a continuous rise in telematics and connectivity related services throughout Latin America and the trend does not look like it will let up any time soon. Among the new members of the Fleet LatAm advisory board are executives from Mobileye, the vision-based advanced driver-assistance systems (ADAS) arm of Intel, and multinational telematics firms Geotab, MiX Telematics, Teletrac Navman, Galooli OTO, and Golsat.

Safety standards on the rise Finally, to further boost safety in your fleet, vehicle safety standards in Latin America will be improving in the coming months and years, something that will affect vehicle acquisitions. With the exception of Ecuador and Chile which already have fairly good standards, among the changes to be expected over the short to mid-term in some regions are side and front impact airbags, headrests, ABS braking, traction control, and Isofix child-safe seats.

Yellow Bike, Grin team up to form Grow Mobility In 1Q19, Brazilian dockless bike and scooter sharing company Yellow merged with Mexican electric scooter sharing startup Grin to form Grow Mobility. With at least $259 million in recently acquired secured funding, the group was operating approximately 135,000 vehicles in six Latin American countries as of February 2019.

Hybrids and Electric Vehicles coming Hybrid vehicles, plug-in hybrids (PHEV) and electric vehicles (EV) should be more common on roads in the months to come. This is expected to be a gradual change, however, and more for utility vehicles driving at least 200km per day. Among the models to be available in the region in 2019 are the Toyota Prius hybrid, Volvo XC60 PHEV, and EVs such as the BMW i3, Nissan Leaf, Chevrolet Bolt, Renault Zoe, and Kia Soul.

Brazil, Mexico start auto industry free trade agreement In March, Brazil and Mexico kicked off an agreement which stipulates the free trade of light commercial vehicles and automobile parts between the countries. The accord, which eliminates quotas and fees on exports and imports, will also include heavy vehicles (trucks and buses) as of 2022, further deepening the relationship between Latin America’s two largest economies.

Read all the news and subsribe to our newsletter on www.globalfleet.com/regions/latin-america

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OEMS

Your fleet vehicles for 2019 Although vehicle production and sales performance varied throughout Latin America last year, the region was up for the most part so we can expect a few new models this year.

Daniel Bland

C

onsidering vehicle sales in the top markets in Latin America, Argentina dropped by 10.9% and the region’s second largest market, Mexico, fell by 7%. This was offset, however, by results in Chile, Brazil, and Colombia which rose by 15%, 13.7%, and 7.6% respectively, paving the way for new fleet vehicles in 2019.

Although there are several new models coming to Latin America this year, here is a shortlist of just a few of them.

We start with a crossover for top-level executives, followed by two plug-in hybrids (PHEV), three full-electric (EV) vehicles and then four internal combustion engine (ICE) models to wrap up the list.

The cost of these vehicles really depends on the country, but as most of these cars were featured at Latin America’s largest auto show in São Paulo last November, the quoted prices below are for the Brazilian market.

Porsche Macan

BMW 530e PHEV sedan

So, kicking off our lineup is a sporty crossover for top-level executives, the Porsche Macan of which first deliveries were scheduled in the first quarter of the year. Priced at approximately $88,000, it is equipped with a 2.0 turbo engine with 252hp.

Up next are two PHEVs and two EVs. Although these types of cars are not so common in fleet as of yet, they are options that are gradually becoming more popular in in the region, especially if you are expecting your driver to travel at least 200km a day or 5,000km per month. A first example is the BMW 530e PHEV sedan. Priced at some $88,000, It has a 252hp powertrain with 420Nm of torque which can achieve 0-100km in 6.2 seconds and a top speed of 235km/h.

Golf GTE PHEV If you are looking for a hybrid for approximately half the price, Volkswagen is also launching its Golf GTE PHEV in the second semester of the year. The hatchback, which will come with a 150hp 1.4 turbo combustion engine and a 102hp electric motor, should be priced somewhere in the range of $44,000.

Nissan Leaf The first EV on our list is actually the best-selling vehicle of its kind in the world, the 149hp Nissan Leaf compact hatch with 241km-389km of range, depending on the model selected. It has a starting price of around $47,500.

8 #03 - APRIL 2019

Renault Zoe At the same time, the full-electric Renault Zoe is also being marketed in the region. Although it has a lower output of 88hp and a 300km of range, it has a starting price of just under $40,000, making it one of the most affordable EVs in Latin America.

Chevrolet Bolt Coming in at nearly the same price ($46,700) is the Chevrolet Bolt compact hatch EV with a range of 383km. Its 203hp powertrain accelerates the car from 0-100km/h in 6.5 seconds and it has a top speed of 148km/h.

Honda Accord The first ICE car on our list is the new Honda Accord sedan. It is equipped with a 10-speed automatic transmission and a 2.0 turbo engine with 255hp. With a price tag of approximately $50,000, it competes with the Toyota Camry, Nissan Altima, and even some BMW and Audi models.

Volvo S60 sedan The new generation Volvo S60 sedan is a 320hp premium car with a price starting at $45,300. A higher priced Polestar hybrid with 420hp will also be sold in Latin America at just over $60,000.

We wrap up our list with two SUVs, a category that has been gaining ground in the market over the past few years. First up is a brand that may not be so well known outside of China but it is slowing building up a following in some regions of Latin America, mainly due to its affordable price.

Tiggo 7 SUV Chinese brand Chery is marketing its new Tiggo 7 SUV with a suggested retail price of some $28,000. In Brazil, it has partnered up with CAOA and it is being marketed under the name CAOA Chery.

We wrap up our list with two SUVs, a Selecting your fleet vehicles will depend on the profile of your drivers, the distance they travel every month, and the prices you are quoted from OEMs or vehicle leasing and rental companies. As such, do your homework, negotiate appropriately, and enjoy looking at all the new and interesting models coming to Latin America this year.

Volkswagen T-Cross Finally, Volkswagen will start selling its new T-Cross subcompact SUV throughout Latin America to compete in this highly disputed category, going head to head with Hyundai Creta, Honda HR-V, Nissan Kicks, and Jeep Renegade.It will have two models, a 1.0l three-cylinder turbo with 128hp and a 1.4l four-cylinder turbo with 150hp and will start at a price of approximately $25,300.

INSPIRING FLEET & MOBILITY MANAGERS IN LATIN AMERICA WWW.FLEETLATAM.COM

9

OEMS

Brazil, the engine powering growth Key transformative trends are evident across Latin America, which will directly impact automotive sales in the upcoming years. Some of the regional trends will be led by changes in consumer behaviour, new regulation, OEM offering and new emerging services.

Guira Barretto, Senior Consultant, Mobility, Latin America, Frost & Sullivan

R

ota 2030 programme - the new industrial policy for the automotive sector - will start impacting the Brazilian automotive industry with new mandatory technologies to be incorporated into commercialised vehicles in the country. The acquisition and fusion of key mobility companies will lead to the emergence of many multi-mobility companies (e.g.: Grin and Yellow alliance into Grow Mobility Inc).

Latam sales expected to keep a growth trend The Latin American passenger vehicles market will be hoping to have turned the corner after a bruising 2018, as the market exhibited only limited recovery in 2018. Sales—analysing only the main markets: Brazil, Mexico, Argentina, Chile, Colombia and Peru—climbed to around 5.48 million units, representing growth of 2.9% from 2017 levels.

Chinese automotive OEMs are growing strongly in the Latin American region (especially in Peru, Colombia and Chile) and will drive for a stronger price competitive product strategy. To achieve better profit margins and to deliver products that meet a customer behaviour change, OEMs will focus on new launches in the SUV segment.

The rebound was driven by positive scenarios in Brazil, Chile and Colombia.

Sales in these three countries increased by almost 370,000 units in 2018 (growth of 13.3%), although they fell by around 213,000 in Mexico, Argentina and Peru (decrease of 8.3%). Brazil recorded the highest increase, leading from the front with sales of almost 300,000 additional

units reaching 2.47 million total vehicles in 2018. Overall, growth trends are expected to continue in 2019, propelled, in particular, by the encouraging outlook for the Brazilian market.

In the meantime, an analysis of key market segments reveals that the region followed global trends in 2018; pickups and light commercial vehicles (LCVs) retained their share, while SUVs expanded their share at the expense of cars. In terms of the most sold models, Chevrolet Onix emerged as the most popular, registering sales of more than 210,000 units in Brazil only, followed by Nissan Versa and Ford Ka. Pickups topped sales in Argentina and Peru, spearheaded by Toyota Hilux and Mitsubishi L200.

Growing SUV Segment

Improved Safety & Security Standards

Following the ongoing trend, SUVs keep growing in the region, expected to reach 25.4% of the light vehicle market in the region by 2019.

Mandatory safety technology standards defined by Rota 2030, such as structural design (2019), EBA (2019), ESP (2020), etc.

OEM & Mobility Services Convergence OEMs have started researching, testing and even launching mobility services in the region.

Chinese OEMs in Latam Fast growing presence of Chinese OEMs in Latin American markets, especially Chile, Peru and Colombia. Highly atomised OEM competitive landscape.

Source: Frost & Sullivan

12 #03 - APRIL 2019

Brazil: promising market outlook Although 2018 was characterised by general uncertainties in Brazil, the year ended on an upbeat note for vehicle sales. While several factors contributed to the instability –among the key factors impacting vehicle sales were a flat economy and volatile movements on the political front – a fall in interest rates with a greater supply of credit is understood to have aided growth.

Development agendas took a backseat and, consequently, there was a lack of focus on implementing policies that would revive the country’s economic growth. Simultaneously, Brazil experienced extremely polarising elections.

Economists, investors and the general population were left unsure about whether the post-election government would be from the extreme left or extreme right, thereby dampening investments in key areas. Confronted with this scenario, the economic climate remained tenuous with a ripple effect felt in terms of low levels of new vehicle purchases.

Despite all these factors, Brazil registered GDP growth of 1.1% in 2018, similar to 2017 levels, and vehicle sales increased by 13.5% or almost 300,000 units (total of 2.47 million units).

Although the economy has started out breathless in 2019, small signs of economic improvement gradually begin to appear after the election, but to speed up the economy and put Brazil back on the path of economic growth, the new government will have to face critical tasks in the next months to prove their

capabilities, in areas such as the welfare system reform, OEM pressure for tax reductions and incentives and several privatisations of state-owned enterprises.

Some carmakers (e.g. GM and VW) have announced that without stronger tax incentives it’ll be difficult to continue in Brazil, other carmakers confirmed they will be closing their Brazilian production facilities (e.g. Ford’s São Bernardo plant) while the vehicle portfolio of some OEMs is also undergoing changes.

If the government addresses these challenges positively and approves major reforms, thus accelerating the economy, Brazil will present a very interesting scenario that could support continued GDP growth and improvements in vehicle sales, especially in the second half of 2019.

Argentina: battling recession and falling sales The Argentinean automotive market contracted in 2018 as a result of the economic recession. In early 2018 OEMs reported record sales, following years of aggressive financing strategies. Backed by government support, the industry was on course to break records and reach the 1 million mark in unit sales in 2018. However, economic turbulence from May onwards negatively impacted the automotive market. In this month (May 2018), the Argentinean currency experienced high devaluation, along with increasing annual inflation and unemployment rates. During the second half of 2018, OEMs had to continuously adjust prices

of imported vehicles, and on average these price increases were still below currency devaluation. Meanwhile, the government continued to maintain high interest rates, and follow fiscal austerity measures.

In 2019, the recession is expected to continue impacting the automotive market, translating in falling vehicle sales during this period.

Chile: SUVs on track to equal car sales The total Chilean passenger vehicle (PV) market is forecasted to maintain its momentum in 2019, following an exceptional 2018 in which the market reached vehicle sales records.

The market grew at outstanding rates of 18.1% in 2017 and 15.6% in 2018, with the market achieving record volumes of 417,038 units in 2018.

The trailblazing performance of 2018 was primarily the result of high demand which, in turn, was driven by a range of easy credit options. While demand is expected to marginally decline in 2019, sales values, nonetheless, will still be above 2017 levels.

Chile is the only country in Latin America that has a major market share of SUVs, with this segment accounting for 35.5% of all PV sales in 2018. If SUV sales in the country continue increasing at the same rate in 2019, they will potentially equal car sales —including sedans and hatchbacks. At 15.8% in 2018, Chile also presents the largest market share of pickups in the region, and it’s expected to continue growing in 2019.

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OEMS

Top Latam Countries - Share in new car sales Latam region Brazil

Brazil

2018

2019 F&S projections

Mexico

Mexico

Agentina

Agentina Chile

Chile Colombia

45%

26%

14%

8%

4%

Peru

3%

47%

26%

12%

7%

Colombia

5%

Peru

3%

Colombia: signs of continued growth Continued growth is expected for the Colombian PV market in 2019, provided that a positive macroeconomic scenario and OEM competitive landscape persist.

While the first half of 2018 was characterised by a volatile economy and political uncertainty related to the presidential and parliamentary elections held in early 2018, the year closed with GDP growth of over 2.5%, along with low inflation and unemployment rates. High consumer confidence and low interest rates enabled PV sales volumes to expand by 7.9% in 2018, compared to 2017.

by -4.6% and -7.1%, respectively. The performance of the domestic market contrasts with the Mexican automotive industry and exports, both of which are US-focused.

Moreover, the Mexican fuel market is still in a phase of adjustment following the removal of price subsidies and the openness to competition in 2017. The increase in fuel prices has had a direct impact on the capacity of low income customers to purchase and maintain vehicles, resulting in many customers choosing to postpone their car purchases.

The Peruvian automotive market is similar to that of Chile’s, in that it is heavily liberalised, diversified, and has a high predominance of Asian OEMs. This is a natural result of the strenghtening of strategic relations between the countries of the Pacific Alliance.

However, recent increases in the Selective Consumption Tax have impacted prices and competitiveness in the automotive market.

In 2018, SUVs represented about 33.1% of the total PV market, pushed principally by Renault Duster and Chevrolet Tracker. The outlook for Colombia’s automotive market in 2019 is optimistic, reaching 10.7% growth.

Nevertheless, Frost & Sullivan expects a slight market recovery of 3.7% towards 2019. This growth will be spurred mainly by the SUV and pickup segments.

In 2018, selected Chinese OEMs grew, driven by the LCV and SUV segments where they are highly competitive, and this outlook may extend towards 2019.

Peru: tax impacts prices and competitiveness Coming out of a politically unstable 2018, the Peruvian market is expected to recover at a slow rate in 2019, conditional to a positive macroeconomic scenario and a highly competitive OEM ecosystem.

Despite all the challenges that Latin America may face in 2019, the year should be promising and present a scenario of growth in sales, which again should be led mainly by the expected growth in the Brazilian market. The participation of Chinese companies should stir up the price brawl, and new mobility business models will impact consumer decisions.

Mexico: slow comeback After two years of falling sales, Mexico’s domestic automotive market is forecast to resume growth, albeit at a low rate, in 2019.

Although the Mexican economy grew by about 2.3% in 2017 and 2% in 2018, while the automotive market contracted

14 #03 - APRIL 2019

In 2018, the Peruvian PV market registered 149,600 new vehicles, falling by

-8.6%. Several factors underpinned this contraction which occurred at a time when the overall economy grew (it’s expected a growth higher than 3.8%).

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Intelligent Mobility: Nissan’s commitment to business fleets Constant changes in consumer trends, the boom in new industries and the needs of large corporations and SMEs are the current challenges that vehicle manufacturers need to overcome when developing vehicles that are profitable for business.

In response to these challenges, Nissan’s new business unit, LAC34, which works with importers in the region, is committed to intelligent mobility through its range of vehicles, whose technological features offer customized solutions to meet its customers’ needs. The new business unit handles 34 markets, 28 importers and more than 200 dealers in Latin America.

Ricardo Rodriguez, president of the LAC34 Business Unit, said: “Our aim is to become one of the region’s top three vehicle manufacturers with a portfolio specifically designed by taking versatility and business requirements into account. Our mobility solutions are backed by our heritage of Japanese quality, our dealer network and our post-sales team that meets the high standards of satisfaction for which Nissan is known.”

Since it was set up in 2015, the mission of Nissan’s business fleet team has been to improve negotiations with fleet customers and offer them a personalized service in Latin America. To achieve this and ensure that customers are provided with a comprehensive service, Nissan has a wideranging value offer based on DQR (durability, quality and reliability), its range of vehicles and its post-sales team in each country.

Fleet sales currently account for 20% of Nissan’s overall sales in the 34 markets and its estimated forecast for 2022 is 30%.

“Sustainable growth backs our business vision, with which we are seeking to be recognized by customers and position ourselves as the company that will be offering the best comprehensive fleet solutions in Latin America in 2020”, said Diana Ruiz, head of the Corporate Sales Department.

A range of products for all business needs Remaining at the forefront of the industry by offering a versatile and modern range of products is a priority for Nissan. The Japanese brand has come to the conclusion that customers are not only seeking options that meet their business requirements, but also that they want very safe and durable vehicles, equipped with the best technology available.

Within Nissan’s portfolio, one of the vehicles that meets all of these characteristics is the Nissan Frontier, the emblematic pickup of fleets in Latin America of which there are currently several versions for both work and mixed use.

The Frontier, Nissan’s emblematic pick-up for Latin fleets, is provided with the multilink suspension, unique in its segment for a better reaction and greater comfort on uneven road surfaces.

The premium pickup of Nissan’s light commercial vehicle range stands out due to its unbeatable performance-consumption ratio. It has multilink suspension, unique in its segment, which provides better reaction and greater comfort on uneven road surfaces, and a double C chassis reinforced with eight cross struts that is four times stronger than the previous version.

Nissan’s pickup is a vehicle that represents the brand’s Nissan Intelligent Mobility vision, thanks to its intelligent driving features, which makes it an innovative option that guarantees passengers unbeatable safety, control and comfort.

The popularity of the robust and intelligent Frontier pickup stems from its work-oriented capabilities, focused on meeting the needs of every sector. In line with its importance in the region’s industry, Nissan began the manufacture of the Frontier at its Cordoba factory in Argentina several months ago, with an investment of 600 million dollars and a presence in 38 countries in Latin American and the Caribbean.

Nissan is making a major effort in the light commercial vehicle fleet sector and underlining its commitment to providing comprehensive solutions for all industries in Latin America.

OEMS

Selecting the right powertrain From internal combustion engines (ICE) to plug-in electric vehicles (PEV), there are several powertrain options to consider for your vehicle fleet in Latin America. However, which one is best? It often depends on your fleet composition and offer.

Daniel Bland

A

lthough ICE vehicles running on standard fuel, diesel, and ethanol are by far the dominant powertrains in Latin America, others are natural gas (GNV), hydrogen, hybrids, and plug-in electric vehicles (PEV) which include plug-in hybrid EVs (PHEV) and full battery electric vehicles (BEV).

While other regions of the world such as China are seeing a large uptick in PEV sales, Latin America (the world’s fastest growing automobile market) is not. One reason is that PEVs are still quite expensive in the region, considering a GDP per capita of approximately $9,400 per year.

Among the other factors hindering progress are subsidised fossil fuels, the presence of ethanol (primarily Brazil), a lack of vehicle fuel efficiency standards, and insufficient charging infrastructure (especially for intercity travel).

For many OEMs, “stronger legislation and better tax incentives are the main reasons why there is a lack of EV demand in Latin America,” says Jean Michel Ferrand who is regional Sales and Client Satisfaction Director for Renault and a Fleet LatAm advisory board member.

Despite growth being slow at the moment, Renault and actually all the major OEMs are working on EV plans for the region, said Mr Ferrand.

Electrification, Top 5 markets COLOMBIA Boasting the largest percentage of PEV market share is Colombia, where some some 1,000 were sold last year (0.4% of the overall market). Some of the popular models are Renault Twizy and Zoe, and the BMW i3. Keep an eye out for Chinese manufacturers which offer lower priced cars.

MEXICO In Mexico, its recharging network is growing thanks to the support of EV manufacturer Tesla and the changing culture in the wake of the booming electric scooter and bicycle market in Mexico City.

Approximately 1,500 PEVs were sold last year (0.1% of market), led by Tesla and Nissan BEVs. BRAZIL In Brazil, less than 1,000 PEVs were sold last year, a growing number but still less than 0.1% of the market. Renault and BYD are the best-selling brands.

CHILE Meanwhile, Chile sold just under 200 PEVs last year (0.04% of market). Common brands in the country are BMW, BYD, and Renault.

ARGENTINA Argentina is a bit late on the electrification bandwagon with the first PHEV just introduced in the country last year (2018), selling less than 200 units (0.02% of the market). A boost in BEV sales should come with the Nissan Leaf.

16 #03 - APRIL 2019

Ethanol, the fuel type that is widely spread in Brazil. Here ethanol production in Minas Gerais, Brazil.

One thing OEMs are doing is improving vehicle technology.

Besides falling battery costs, increasing vehicle ranges are sure to boost demand in the years to come. For now, hybrids and PHEVs could be a consideration for long-distance drivers.

In the short to mid-term, expect fleet managers to be considering more electrification for utility vehicles that commute at least 200km a day and more for those who do not travel long distances between cities.

GNV and hydrogen We cannot go without mentioning Brazil with more than half its vehicles running on ethanol, mostly flex fuel-cars which operate on both petrol and the sugar cane-based alternative.

While ethanol is not a problem in most of the country, drivers could face cold starts in the far south where temperatures can reach near freezing. Keep in mind that ethanol has approximately 70% the efficiency (kilometers per liter) of petrol so select your fuel according to the price at the pumps.

Also remember that basic fuel in the country has a 3-to-1 ratio, meaning three parts petrol to one-part ethanol, or a staggering 25% ethanol.

As for GNV, it has been around for a while but most of the GNV owners are composed of those who drive a lot (e.g. 5,000km per month).

For instance, converting your powertrain to GNV in Brazil costs some 4,500 reais ($1,200), a modification which usually pays off in about four months, according to Fleet LatAm interviews with local taxi drivers. However, it may not be advisable for smaller cars as the modification reduces cargo space.

Moreover, when converting to GNV, keep an eye out for the possibility of losing the guarantee on your car (shock absorbers or even more) due to the adaptation.

In terms of diesel, it is much less common in Latin America than in places like Western Europe. Most of the diesel vehicles are pickup trucks or larger commercial vehicles.

Finally, as hydrogen is the newest alternative in the region, the cars are still quite expensive and very rare in Latin America.

Despite this, technology is hitting the automobile industry at a record pace so things could change in the months to come.

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The dangerous taxation relation in Latam Covering 13% of the earth’s land area and accounting for 8% of the world’s GPD, Latin America (or Latam) is no longer an up and coming part of the world, it is a major player. The 33 countries that make up the region of Latin America and the Caribbean include Brazil, the 8th largest economy in the world and Mexico, the 11th.

Both are among the ten largest vehicle producers in the world.

Shane Curran

Despite the size and the growing wealth of the region, it’s dangerous to assume too much about the regulatory and legislative rules in place. It’s also dangerous to assume homogeneity between countries. There is no more or less similarity between (say) Brazil and Chile than there is between Austria and Spain.

The complexity of managing fleets in a region of 33 separate sovereign countries is compounded by the relative immaturity and undoubted complexity of many of the taxation regimes.

Recent years have seen rapid change in this area and there is no indication that change is going to slow down.

The changing global tax base Throughout the world, governments have decreased their reliance on direct taxation (such as company tax and income tax) and increased their reliance on indirect tax (VAT/GST, excise duties, licensing fees, etc). While this tends to make life easier for the individual paying less income tax, it can create a minefield for business.

Indirect taxes are generally politically difficult to implement and the result is that there is often a raft of exemptions and special cases. VAT rates are rarely uniform and application of specific rates can seem quite arbitrary.

Low tax region, but…

Latin America remains a low tax region overall with tax revenues accounting for 22.7% of GDP across the region and it is increasing the proportion of indirect taxation similar to other parts of the world. A key difference though is that Latam is filled with its own quirks and nuances that can be bewildering to the outsider.

For this reason, perhaps the best advice that could be given to any international manager planning to in-house their tax affairs in Latam is simple: Don’t.

18 #03 - APRIL 2019

The level of complexity, both in terms of the variety of taxes and the variety of rates is further compounded by a range of restrictions and exemptions.

BRAZIL In Brazil for example, there is a 35% import duty on the purchase of any vehicle not manufactured in Brazil. There are consumption taxes applied at state level (ICMS) that is levied at one of three different rates (17%, 18% or 19%) depending on the locality. There is a federal consumption tax (IPI) that is generally about 10% but can be levied anywhere in the range from 0% and 330%.

I’ll type out that last rate again to be clear that it’s not a typo.

Three hundred and thirty percent.

Apart from these, there are also taxes for “social contribution for social security financing” (COFINS) and for “social integration programme” (PIS) which range from around 1.5% to around 10%.

Then there are the annual fees and charges that need to be paid. Brazil has an annual automobile tax (IPVA) that amounts to 4% of the vehicle’s value for a petrol-powered vehicle.

Discounted rates are available for electric and gas-powered vehicles. This means, for example, that a vehicle valued at say $30,000 will have an annual payment of $1,200 due.

A substantial amount and once again there are a variety of discounts and exemption available.

Finally there are the various fees that need to be paid for compulsory insurance and registration. While the amounts are modest (less than $50) the complexities involved are yet another headache for the fleet manager.

MEXICO The situation in Mexico is a little less complex, but still can create headaches for the unwary. VAT, known as “impuesto al

valor agregado” or IVA, is imposed at 16% with some exemptions available for food, books, medicines and similar items.

Additional taxes are levied on the acquisition of the vehicle in addition to the VAT with some exemptions allowed for low emission vehicles (Impuesto Sobre Automoviles Nuevo).

Then for businesses (but not always for individuals) there is the local tax - Tenencia - an annual road tax, levied by the state at varying rates depending on the vehicle type and location.

What it all means This article is just a sample of what you can expect and we haven’t mentioned Colombia, Argentina, Peru or Venezuela, all countries with populations above 30 million. The best lesson you can take away perhaps is that difficult circumstances require expert advice. Talk to your financial, tax and fleet advisors to ensure you get everything right that needs to be right.

Free advice!

Whether your fleet is expanding into Latam or you are trying to get a firmer grip on an existing fleet, perhaps the best resource available as a starting point is Global Fleet’s Wikifleet page. This kind of resource is never a replacement for professional advice but is a great way to find out. It’s free, but if you really want to contribute something, you might consider making a contribution to the information there.

Fast facts The table below shows some key statistics for the top 10 Latam countries (by populations).

EU, USA and UK are included for comparison.

Country

GDP Growth

GDP PPP (millions US$)

GDP PPP per Capita (US$)

Median Age

Population

Pop Growth

Vehicle Production

Brazil

1.0%

3,524,064

16,727

32.0

209,685,000

2.7%

2,699,672

Mexico

2.0%

2,696,454

21,412

28.3

126,577,691

1.7%

4,068,415

Colombia

1.8%

791,995

15,720

30.0

45,500,000

0.6%

Argentina

2.9%

922,951

20,482

31.7

44,938,712

0.6%

Peru

472,158

2.5%

487,417

14,999

28.0

32,495,510

0.4%

-14.0%

107,611

3,300

28.3

32,219,521

0.4%

Chile

1.5%

507,939

27,059

34.4

19,107,216

0.3%

Guatemala

2.8%

153,433

8,711

22.1

17,679,735

0.2%

Ecuador

2.7%

193,753

12,215

27.7

17,203,900

0.2%

Haiti

1.2%

21,825

1,940

23.0

11,577,779

0.2%

EU

2.2%

21,998,000

38,700

42.9

512,648,000

2.2%

19,600,000

USA

1.5%

20,412,000

59,495

38.1

328,915,000

4.3%

17,440,000

UK

1.1%

3,028,000

47,042

40.5

66,040,229

0.9%

1,817,000

Venezuela

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Changing tide for fleet safety in Latam Latin America is an exciting, multicultural, and vibrant region that presents its share of challenges for corporations that want to implement global strategies aimed at enhancing corporate fleet safety and safe mobility.

Fernando Cammarota, CEPA

V

ehicle safety has evolved considerably over the last 50 years, primarily driven by developments in Europe and North America (USA, chiefly). This means that all new vehicles sold in these regions need to comply with and exceed minimum regulatory standards. These standards include both secondary safety developments (e.g. airbags and structural elements), designed to reduce the severity of injuries in a collision, as well as primary safety technologies (e.g.

AEB1 and ESC2) which reduce the chance of a collision occurring. These standards aim to provide the highest level of cost-effective safety performance.

Latin NCAP safety standard Despite an expanding automotive market, in many Latin American countries safety standards established by governments for vehicle manufacturers and importers are still quite lenient or non-existing. Superficially, there may not seem to be any difference between vehicles available in Latin America and similar models sold in high-income countries. But when tested, the results are shockingly disparate. Comparatively speaking, a zero-star awarded Latin American vehicle against its five-star awarded European counterpart. What this effectively means is that someone buying a

car in Latin America is significantly less protected on the roads than someone buying the same model in Europe.

Hence, this translates into higher casualties and injury rates for vehicle occupants and pedestrians throughout our region.

Present in the Latin American and Caribbean region since 2010, Latin NCAP has helped fleet operators and users by providing independent and impartial safety assessments of new cars, while at the same time encouraging governments across the region to improve local vehicle safety regulations.

1. Automatic Emergency Braking - 2. Electronic Stability Control

20 #03 - APRIL 2019

almost exclusively on purchase price, efficiency, and Total Cost of Ownership (TCO). Little, if any, thought was given to passive or active safety features, such as airbags and ABS, which were generally only available on high-end models.

safety requirements established in a corporate or global fleet policy.

Several of our corporate clients have requested CEPA’s Fleet Consulting Department to assist their local teams (fleet managers and drivers) to identify how the fleet vehicle will be used, what its operational requirements are, and any specifications the driver needs to perform his or her job. Thus ensuring the right balance between cost and function.

Today, in addition to all other elements fleet operators and users alike agree on the importance of selecting vehicles that are both adequate/efficient for the job and meet specific and stringent

How to enhance road safety for fleet drivers?

Make sure your company has in place a…

1 Comprehensive fleet management system (including: senior management commitment, written policy, and regular communication on road/fleet safety topics);

2 According to Dalve Soria Alves, InterAmerican Development Bank (IDB) Senior Transport Specialist/IDB Coordinator for Road Safety, “Some Latin American countries have started the legislative process and are now applying some standards that are similar to the EU and other industrialised regions, but there is still a significant gap between the regulated vehicle safety standards in the industrialised regions and Latin America.”

Shifting paradigm for fleet acquisition In the past, strategical decisions regarding fleet vehicle selection and acquisition in Latin America were based

Driver management process (including; safe driving standards, screening and testing of new hires, Initial and ongoing driver training and education, and driver monitoring);

3 Vehicle management process (including: vehicle selection and specification, vehicle inspection and maintenance);

4 Journey management process (including: route planning and elimination of unnecessary trips);

5 Incident management process (including: crash/incident reporting procedure, and crash/Incident investigation and analysis).

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Armored vehicles, worth it?

The global armored vehicle market is expected to increase by 5.4% to $36.4 billion from 2019-2025. However, is this feasible for your fleet? Is it necessary?

Daniel Bland

O

ne thing on the minds of some fleet managers is whether or not a bulletproof car is feasible, or even necessary for his or her fleet.

While some may think that armored cars are for high-level government officials, drug dealers, and the likes of James Bond, there are actually some regions around the world where they are more common than one may think, one being Latin America.

Considering the costs involved, one of the first things a fleet manager must determine is whether or not a driver needs this type of security.

For the most part, the common profiles of an armored car driver are men from 30-39 years old and women from 4049 years old. Most of them are highprofile executives such as CEOs, VPs, and top-level directors who are married and with children less than 18 years of age.

While armored cars can protect the driver from car-jacking incidents (some executives could be driving a car valued at more than $100,000), the main reason for these vehicles is the safety they provide for the driver and their family.

Although a luxury car is a pretty prize for any would-be thief, most fleet operators are more concerned about kidnapping and incidents of large cash withdrawls from banks forced at gunpoint.

Multiple costs involved Costs vary from country to country and depending on the type of vehicle of course but armoring a car should run

22 #03 - APRIL 2019

Armored cars are more common in Latin America than in other parts of the world.

about $20,000-$30,000 on average, and possibly more for high-end protection.

cars are usually made to withstand shots from caliber 22, 38, 44, 357, and 9mm guns.

To give you an idea, Brazil’s federal government is spending 74,759 reais ($20,205) per car on its new armored vehicle fleet this year. It is acquiring 30 new Ford Fusion Titanium AWD sedans, 12 of which are armored (239,045 reais apiece) and 18 unarmored (164,287 reais apiece).

Besides the cost of the actual shielding, those wanting to own or drive a bulletproof automobile will also face the cost of bureaucracy which normally includes a criminal record check and some other fees.

In Brazil, the largest armored car market in Latin America, shielding a car commonly involves applying a multi-layer skin made up of aramid and stainless steel to opaque surfaces and curved ballistic glass for windows. Once done,

Unlike security measures such as car alarms which could reduce the cost of vehicle insurance, bulletproof vehicles in most of Latin America will likely be more expensive to insure. In 2018, men in Brazil were seeing an average increase of $284 and women, $351.

Audi Q5 and some BMW models are among those being bullet-proofed in Mexico.

The two countries armor some 15,000 and 3,000 cars a year, respectively.

Requests for bulletproof cars come from all types of industries but one common factor is that these types of clients are usually more demanding than your normal customer.

Remember, you are dealing with people looking for a car that will save their life if needed. Therefore, automobile providers must have a very trustworthy company performing the armoring of their cars.

Moreover, time is of the essence. Having a high-quality bulletproof car that takes three months or more to customise is just too long.

Also remember that these cars are heavier than their non-armored counterparts. Following the development of the first bullet-proof Tesla Model S P100D in Mexico last year, Latin America’s second largest armored car market, the weight of the all-electric vehicle increased by 550lbs.

Not only does a heavier car cost more due to the larger amount of energy, or petrol, it requires to run it (up to 30% more), acceleration and top speed will also be affected.

Remarketing-friendly While common armored vehicles in Brazil are Volkswagen Jetta, Volvo XC60, and Range Rover Evoque, the

“We armor our cars within 60 days after the car leasing contract is closed,” says Fleet LatAm advisory board member Maximiliano Fernandes who is also the

executive director of fleet leasing company Movida Frotas.

Armored cars fall under the company’s Movida Premium line which involves a concierge service with various benefits. Among them is door-to-door pick-up and delivery when carrying out maintenance and repairs.

As for remarketing, demand is still high for used armored vehicles in Brazil as well as Mexico.

Some of the advantages of a secondhand Movida Frotas car, according to Mr Fernandes, is that their cars have very low mileage, are commonly not that old (2-3 years), belonged to only one owner/driver, and have a 100% maintenance guarantee.

In the end, deciding on whether or not to use armored cars really depends on the profile of your drivers and the areas they will be driving in. And yes, you will need to prepare for higher costs and ongoing expenses but what’s the price for saving a life anyway?

Armored Car Law Brazil • Registration certificate required from armored vehicle control system, Sicovab.

• Sicovab checks federal, military, and criminal records.

• Three-year certificate takes 30 days to process. Cost is 100 reais ($27).

• High-powered gun and grenade protection not permitted for average citizen.

Mexico • Must have ID number registered with vehicle public registry Repuve.

• Enforced by national armored vehicle association AMBA. • Vehicle will be inspected during Repuve registration.

• Armored level varies (I-VII), from 22 cal. pistol to 50 cal. sniper rifle protection.

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Building a cost-efficient fleet through harmonisation Company-owned or leased cars continue to be significantly more prevalent than car-related cash allowances across Latin America. This applies to all employee categories that are eligible for this benefit, and this practice is common across the region where almost three-quarters of organisations on average provide some type of car benefit.

Fรกbio Itio Samizu, Willis Towers Watson - willistowerswatson.com

Eligibility for Company-Owned or Leased Car or Car-related Cash Allowances in Latam Non-sales executive

Eligible for company car ONLY No option to take car allowance instead of a car

Non-sales middle manager/Sr. professional Non-sales supervisor and professional

Eligible for car allowance ONLY No option to take a car

Sales manager Sales professional (average for all countries) 0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Eligible to choose between a company car and a car allowance

Source: Willis Towers Watson 2018 Company Car Benefits Survey Report

T

he year 2018 saw luxury vehicles and SUVs being provided to top-level leaders, and an array of compact and sub-compact vehicles for middle managers, supervisors, and senior professionals. The Toyota Corolla was particularly popular for managers, and a year-on-year

perspective reveals that its prevalence in company fleets has actually been rising consistently in previous years. And not just for managers, but also for the Supervisory and Professional bracket.

Top 3 Make and Model Employee Category

Rank

2018

2017

2016

Business Unit Head Country Manager

1 2 3

Jeep Grand Cherokee Audi A4 Ford Explorer

Audi A4 Ford Explorer Jeep Grand Cherokee

Volkswagen Passat Ford Fusion Volvo XC60

Executive

1 2 3

Ford Fusion Toyota Corolla Audi A4

Ford Fusion Honda CRV Audi A4

Toyota Corolla Ford Fusion Volkswagen Jetta

Middle Manager Sr. Professional

1 2 3

Toyota Corolla Volkswagen Jetta Ford Focus

Toyota Corolla Honda Civic Ford Focus

Toyota Corolla Honda Civic Volkswagen Jetta

Supervisory and Professional

1 2 3

Volkswagen Jetta Honda Fit, Hyundai Elantra, Audi A3, Ford Fiesta, Mazda 3

Volkswagen Jetta Toyota Corolla Chevrolet Spark

Ford Toyota Corolla Mazda 6

Sales Manager

1 2 3

Toyota Corolla Volkswagen Jetta Honda Civic

Toyota Corolla Volkswagen Jetta Honda Civic

Toyota Corolla Volkswagen Jetta Honda Civic

Sales Professional

1 2 3

Nissan Versa Volkswagen Vento Ford Fiesta

Nissan Versa Volkswagen Vento Chevrolet Aveo, Nissan Tiida

Volkswagen Voyage Volkswagen Gol Toyota Yaris, Nissan Versa

24 #03 - APRIL 2019

“There is probably nothing that changes more than company car plans. Tax legislation changes, vehicles need to be replaced, financing methods evolve and company structures change,” according to Willis Towers Watson Company Car Benefits Expert Fabio Samizu. “Not getting your arms around this benefit may result in reduced cost control and attraction issues.”

The increasing need for harmonisation Over the last three years, ‘harmonisation’ has been emerging as one of the key influences on company car policy evolution across major markets in Latin America. Fabio noted that “having a harmonised approach can help save money.”

Company branding could be another reason for the emerging practice of harmonising car models in the company fleet – even for employees at the executive level.

Main Objective/Issue for Changes

Median of % responses by what will change and year

BRA

83.6

PAN

75.0

CRI

77.8

VEN

76.5

ARG

76.7

21.4

31.3

40%

60%

80%

44.4

Aquisition/financing method

30.6

Phase out from from a company car policy to a cash allowance policy

33.3

20.0

Ristriction of the company car benefit provision

28.6

49.3

42.9

28.1

40.6

44.4

18.2

29.4

Phase out from a car allowance policy to a company car policy

25.0

Phase out from a company car policy to a car allowance policy

25.7

28.6

25.0

Introduction of possibility to choose between a company car or a cash allowance

26.7

Introduction of more environmentally friendly cars

24.7

67.9

20%

Makes and models allocated

33.3

20.0

62.5

0%

37.5

35.3

71.4

MEX

37.5

60.0

COL

PER

52.1

33.3

62.5

CHL

20.5

100%

120%

140%

Alignment with market best practices/competitiveness Harmonisation across countries or subsidiary companies Introduction of flexibility Reducing costs Reduction of administration

In 2016, a majority of organisations in Mexico were giving their Business Unit Heads and Country Managers a relatively free hand over the choice of vehicle up to a maximum cost. But the succeeding two years have seen less freedom granted to this employee bracket, as top leadership has had to accept limited choices in models and makes.

Thus SUVs appear to be the preferred vehicle type for Business Unit Heads and Country Managers region-wide. Depending on the country, companies tend to designate the make and model of the cars that carry their high-level executives. Only 1.7% of executives in the Latin America region are allowed to choose the car make and model without limits.

Freedom of choice further decreases at the Senior Professional and Middle Manager bracket, with up to 45% across the region having no choice in the company car assigned to them.

19.6

11.1 12.5

Introduction of a flexible benefits scheme

17.1

Extend replacement periods for rented/leased cars

14.3

Phase out from a cash allowance policy to a company car policy

14.6

Year

2016

2017

2018

23.1

0%

15.5

20%

23.6

16.7

40%

60%

80%

100%

120%

There is also an increasing number of Latin America organisations that are managing choice through changing how they acquire the company fleet. Across the region, organisations in seven out of ten major markets are purchasing the cars by themselves, and thus fully owning the fleet. This is particularly prevalent in Venezuela, Argentina, and Peru. An exception to this market practice is Puerto Rico, where it is more common to engage a leasing company that also offers vehicle maintenance. Leasing is emerging to be a prevalent practice in Colombia and Brazil.

Harmonisation is likely to continue and evolve as a market practice for fleet management in most of Latin America. The rate at which it will grow is likely to vary, as various socioeconomic and geopolitical factors could inevitably come into play. But the cost-efficiency and ease of administration that comes with harmonisation could make it a consistent part of company car policies in the region.

Findings are based on market data collected for the Willis Towers Watson Company Car Benefits Survey. The annual survey comprises 1,800+ participants from leading organisations across all industry sectors and ten major Latin America markets, responding to detailed questions covering 25+ company car benefit topics.

Willis Towers Watson (NASDAQ: WLTW) is a leading global advisory, broking and solutions company that helps clients around the world turn risk into a path for growth. Learn more at willistowerswatson.com

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Challenges of distribution fleets in Mexico It has been said that Bimbo, the Mexican company leader of the global baking industry, is a big transportation company that also produces bread. A way to understand what logistics represent for Mexican food companies, and what might become a hot topic: how to manage the multiple challenges of Direct Store Delivery (DSD) fleets in a country with large geographical extension, and where the ability to control logistics has been key for success.

Thierry Merienne

W

ith 2 million km2, Mexico is almost half the area of the European Union and shares with its North American neighbours a model centred on transportation by road. Population is 125 million, of which 80% urbanised, with the doubtful privilege of having Mexico City among the largest cities in the world. On average, 79% of net household income is spent for food and basic consumer goods.

The market share of modern distribution has been increasing for the last decades as shown by Walmart (Mexico is by far their biggest market out of the USA).

Nevertheless, traditional distribution has shown resilience: small shops are necessary in remote areas. In addition, even if still in crisis, the “changarro” (“mom and pop store”) has been evolving during the last decade, and chains of modern convenience stores are growing, like Oxxo (subsidiary of Femsa) with 18,000 stores opened in less than 15 years. Proximity, need for basic goods (60% of sales on 4 food items only), day-to-day micropurchases by lower classes, but also changes in consuming patterns of urban middle classes are probably the main causes of this success.

After decreasing for decades, the participation of small PoSs has been recovering from 43.7 up to 46.9% between 2013 and 2018. Coming back to fleet management, covering efficiently this small PoS network is an

26 #03 - APRIL 2019

incredible challenge, with an amazing 970,000 points of sale in the country.

of market intelligence and a way to control the market.

Change of paradigm in the distribution fleet management strategy Distribution capability was core in the strategy of food producing companies, as it allowed them to deliver quickly to any PoS in the country, to maintain strict policies of inventory rotation (less than 2 or 3 weeks) in PoS and to guarantee the quality of goods despite deficient transport and cold chain infrastructures. Plus the fact that a strong link with PoS was a key source

Under this assumption, these companies of course had to own their fleet as it was a core asset. A very patrimonial approach is still common in Mexico, but it was especially true for food producing companies.

These big fleets (up to 7 or 10,000 units) are used in CEDIS (Distribution Centres), dispatching facilities close to main areas of consumption (cities, etc…): transportation by heavy trucks is used between

With the development of modern convenience stores, like Oxxo with 18,000 stores opened in less than 15 years, and small shops still necessary in remote areas, covering efficiently this PoS network is an incredible challenge for distribution fleets. production sites and CEDIS, and lighter trucks or LCVs are used for the DSD segment.

created dedicated subsidiaries like Femsa, number one Coca-Cola bottler in Latam, with Femsa Logistics.

Given huge constraints on logistics, vehicle maintenance is done on-site in the CEDIS. Some big companies have their own repair shops, hiring mechanics and managing inventories of spare parts, fluids, etc‌ Some even

But the golden age of owned and selfmanaged fleets is now ending, and a revolution could take place soon, as Mexican companies are increasingly obliged to focus on their core business.

The outsourcing appetite In most economic sectors, vehicles are only a necessary evil to provide mobility to sales or after-sales teams.

Outsourcing the management of the fleet is painful, but at least there is no doubt of its ancillary nature. But for food producing companies, the question is far more complex: is distribution an essential part of their business or not?

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27

OEMS

To anticipate the strengthening of the regulation applied to distribution fleets, Bimbo designs and manufactures its own electric vehicle, with more than 350 units currently in use.

The issue is not only to guarantee delivery of the goods anywhere, but also about quality (especially for perishable goods, or when the cold chain is essential to the security of the consumer), knowledge and ability to react to short term ups and downs in market demand, etc… Losing control of one of the most important links in the chain is a risk that many companies do not want to take.

But there are also compelling reasons to outsource the fleet and its management. Use of capital is the first one: in the case of Bimbo, the group balance sheet reveals that vehicles represented at the end of 2017 an asset with a value of 17.6 billion MXN or $800 million or many slices of bread indeed…

In addition, companies realise that inhouse know-how is not a guarantee for success: without benchmarking, how to be sure? Fleet management is sometimes based on practices which would scare many experts: “We keep vehicles up to 10/12 years, and as depreciation is

28 #03 - APRIL 2019

in 5 years, a big part of our fleet has no cost,” thus omitting the huge cost of maintenance necessary to keep an old fleet at a high level of performance.

Complexity Other factors, such as security and regulation, add to the complexity of managing distribution fleets.

Other risks are related to internal organisation: management of the fleet is usually decentralised in the CEDIS which tend to develop local organisations, suppliers’ networks, etc… with a pretty loose control by headquarters.

Overcosts, not to say more, are possible without corporate policies and controls, and economies of scale are not fully taken advantage of.

In traffic-suffocated urban centres, regulation applied to distribution fleets will be constantly reinforced: authorised delivery hours in big urban centres, CO2 emissions, “no drive day” (even if vehicles transporting food have usually been exempted from existing programmes), etc…

Finally, cost measurement is impossible: cost is distributed among many internal departments or business units, or accounted according to the nature of the expense, etc… Difficult to know the cost of a fleet when reporting is just basic, and when some managers think that the maintenance of executive cars comes at no cost, as the structure in place for the distribution fleet is a fixed cost…

For example Bimbo has been anticipating on these regulations by testing alternative solutions: the company designs and manufactures its own electric vehicle, with more than 350 units currently in use.

Another key point is security: even if its financial inclusion has improved, the most informal retail segment is still a cash-based market, in which the driver of the delivery unit is also in charge of collecting payments. Transporting not only goods but also cash creates big

issues of robbery and security of drivers.

Therefore, telematics are cherished in Mexico for reasons unknown in other regions: localisation and remote immobilisation of stolen units, alarms of all sorts, etc…, making use of the most advanced technologies.

It’s about transparency Mexican companies want to get rid of their DSD fleets, but without jeopardising their operational efficiency. One first key for success: transparency.

Abrupt changes in costly but efficient set-ups must be avoided, and companies should first be able to compare their performance/costs against third party solutions.

Top of the list: cost reporting and measurement, a complex exercise as accounting is vague or inaccurate. A realistic first step could be … to keep everything unchanged, and to use an external fleet manager with one mission only: accounting every peso spent for the fleet. The most critical objective is to reach total transparency on costs and on rules.

This first step will be fruitful because it will impose a single way to look at costs throughout the company: 1. Control by itself leads to self discipline, 2. strong deviations against company averages will be detected, and 3. benchmarking will help to define priorities and guidelines.

The second step is to test alternatives: • Decentralisation of fleet management at the level of CEDIS is a weak point but can also be an advantage, as new solutions can be tested in just one or a few CEDIS. • Some companies with international operations can test innovations in smaller countries, as Bimbo has been doing before looking at its Mexican operations.

• Other fleet categories, for example the executive fleet, could serve as test. Even if some of us might consider riskier to have one CEO irritated because of changes in policy than to have just a few thousands angry LCV drivers…

frotas.localiza.com/en-us

LOCALIZA FLEET SOLUTIONS. Miles and miles of experience in fleet management.

To take care of all the details in fleet outsourcing for small, medium and large companies.

We came into being 20 years ago with this goal in mind.

Localiza Fleet Solutions is a corporate division of the Localiza platform, which can also count on Localiza Hertz, as a result of the acquisition of Hertz operations in Brazil. In total, that makes 45 years of history, 8 million customers, a fleet of

Pioneerism and innovation are part of our history.

more than 240,000 vehicles and 591 agencies in 6 countries.

These numbers make Localiza the company that understands car rental in South America better than anyone, by a long way.

We are proud to be part of this organization’s history, considered the 22th most valuable Brazilian brand and recognized as one of Brazil’s most innovative companies.

INSPIRING FLEET & MOBILITY MANAGERS IN LATIN AMERICA WWW.FLEETLATAM.COM

29

OEMS

Carefully tendering in Latam For a global fleet manager it is somehow surprising to find out that organising an OEMs tendering process in Latam, the way it is done in Europe or North America, is simply not possible.

Jose Luis Criado

T

he reasons are varied, but they all mainly boil down to coverage, or in fact, lack of it. My comments here are aimed at a global or regional fleet manager responsible for the Latam region, as a local fleet manager is most probably well aware of his country characteristics.

An international OEM tender, when based in Europe or North America, would either be done directly by the company or through a leasing company. And that is where coverage issues begin, as very few leasing companies or OEMs would have an organisation covering the needs of the fleet manager. So in fact, at the end you would have to make local tenders or at best a mix.

Having said all this, of course tenders can be done and are done, but with a little less uniformity and a little more work and probably with a more intense involvement of the local teams or local leasing suppliers.

One of the confusing issues to tackle is the lack of price stability in some countries, due to currency fluctuations. It can happen that when prices are quoted, the time elapsed between the request for proposal, its approval and the delivery of the vehicles, make it necessary for the OEMs to include price revision clauses. Which as fair as they are for imported vehicles, can be confusing for the international fleet manager. In countries like Mexico and Brazil, this is not a serious issue, however, in countries like today’s Argentina suffering from a high inflation rate and an unstable currency, price stability is simply not there.

But having listed the hurdles, as said before, tenders are done and successfully. If your company operates in say, ten Latam countries, you’ll find that the exercise will be more multilateral than expected. With this in mind and running the risk of oversimplifying, I will close daring to include some suggestions, hoping that some could be of use. Here they are: • If you work with a leasing company, use it. They will take some of the burden and can help you with the analysis and coordination.

• When selecting makes and models, confirm the OEM’s direct presence or if you’ll have to deal with an importer.

30 #03 - APRIL 2019

It can happen that when prices are quoted, the time elapsed between the request for proposal, its approval and the delivery of the vehicles, make it necessary for the OEMs to include price revision clauses. Which as fair as they are for imported vehicles, can be confusing for the international fleet manager (Port of Veracruz, Mexico).

•

• • •

The manufacturer is often not responsible for the service delivery of local independent importers.

If your corporate car policy requires some vehicle features as mandatory, such as safety features, make sure to revise the local model specifications. Your local leasing supplier and teams are better positioned to check this. A specific feature could define a change in your choice. Check the cost impact.

Don’t be surprised if you have to make independent tenders in the bigger countries such as Brazil and Mexico.

Be patient but clear and precise with your expressed needs.

‘Timing’ and ‘urgent’ can have different meanings.

Make a second round, always.

Everyone has an angle.

Safety is ours.

Safety is good for business.

A simple collision in a car park can result in up to eight times the cost of fixing the damage to the car.

Time and business lost, increased insurance premiums, incident reporting and the associated paperwork are the real costs behind low-speed collisions in the city.

With our latest update to City Safety we have added steering support to help the driver take evasive action when required.

Our focus is making your life easier, protecting your investment and saving money where it matters most – on the bottom line.

VOLVOCARS.COM/FLEETSALES

Official fuel consumption for the Volvo XC60 range in l/100km: Urban 6.1 – 10.2, Extra Urban 5.0 – 6.8, Combined 5.4 – 8.0. CO2 emissions 143 – 183 g/km. Fuel consumption figures are obtained from laboratory testing intended for comparisons between vehicles and may not reflect real driving results. Models may vary depending on market.

FLEET MANAGEMENT - CASE STUDY ZOETIS

Overcoming harmonisation challenges Responsible for fleet management in 12 countries, Paula Diniz Oliveira of pharmaceutical and animal health company Zoetis is optimistic about the added value of a regional Latam fleet programme, although differences in market maturity and tax challenges stand in the way.

Daniel Bland

Company name

Zoetis

Business sector/Industry

Pharmaceutical - Animal Health

Name

Paula Diniz Oliveira

Job Position:

Senior Facilities and Fleet Manager - Latam

Years/Months at this job position

6 years

Number of cars managed in Latin America

728 vehicles

Number of countries you are responsible for

12 countries

D

epending on the country, multi-year leasing is usually the first option for Zoetis when it comes to acquiring vehicles. As reducing the number of steps to acquiring cars is necessary, using a leasing company that knows what it is doing is important.

Telematics One of the crucial factors for fleet management is being able to create reports which can efficiently analyse fines, damages, accidents and any other costs which can negatively affect the safety of employees.

However, for countries like Argentina with its high inflation and Costa Rica with its heavy tax burden on leasing, direct purchase is the way to go. During procurement, leasing and fleet management companies must know exactly what their clients’ needs are, and have the appropriate tools to provide the necessary reports and support throughout the contract period. In the case of OEM tenders, automakers must assure good post sales service and spare parts availability, as well as a good price.

For Zoetis, telematics is a good fleet management tool.

Although the company mainly uses this technology to reduce accidents and company costs, it can be used for many other things. Overall, you want to get a better understanding of how your fleet works so that you can develop a more functionable fleet policy.

Electric Vehicles As for electric vehicles (EV), they are not an option for Zoetis right now. Approximately 80% of the company’s fleet drive long distances to rural areas so vehicles must have as much autonomy as possible. Besides EVs having shorter autonomy, there is a lack of quick recharging infrastructure. Moreover, electric vehicles are still very expensive even considering the savings in maintenance and fuel.

Internationalising fleet Finally, for a company like Zoetis, internationalising fleet and standardising operations is key to helping with benchmarking and making sure company strategies, policies and procedures are kept in compliance. Among the challenges to putting together a regional fleet policy are high taxes which make it difficult to justify leasing in some regions and the lack of fleet management providers in countries such as Ecuador and Costa Rica.

Although these things make fleet management across the region a bit difficult, it is far from impossible.

However, with more investment in technologies and new car models coming to the market, the EV option could be more feasible in the future, more so for executives which circulate in large cities.

INSPIRING FLEET & MOBILITY MANAGERS IN LATIN AMERICA WWW.GLOBALFLEET.COM

32

WIKIFLEET

Venezuela, the collapse of a rich country Maduro took over in 2013 when Chavez died and brought the country to bankruptcy. In 2019, Venezuela is facing one of the worst economic and political crises ever seen in Latin-America. The World Bank estimates that 87% of the population lives below the poverty line. Civil unrest is rife.

Pascal Serres

J

uan Guaido (Will Party – social-democrat), president of the National Assembly, proclaimed himself interim president in January 2019 and has been recognised by fifty nations. The future of the country is at the centre of geopolitical interests: Russia and China support Maduro while the US and most European and Latin-American countries support Guaido.

20 years of mismanagement Chavez won the election in 1999 on promises of giving power to the people, and ending corruption of the traditional political

parties that had governed Venezuela. He rewrote the constitution to perpetuate himself in power and got it approved by popular referendum. It enshrines free education, free health care, access to a clean environment, minority rights and popular sovereignty. He reversed IMF policies, imposed a fix exchange rate and paid back foreign debt. In the early 2000s, when oil prices soared, Chávez’s government consolidated its power over the economy and used oil funds to pay his welfare programmes, land reform, and the creation of workerowned cooperatives, disregarding investments necessary in the oil industry.

Venezuela significant economic indicators Car registrations

International oil price

Production: barrel per day

GDP

Inflation

2005

174,757

50.59

3.3m

10.32%

16.00%

2006

321,171

61.00

3.3m

9.87%

13.60%

2007

457,340

69.04

3.1m

8.75%

18.70%

2008

239,120

94.10

3.3m

5.28%

31.40%

2009

105,000

60.86

3.0m

-3.20%

26.00%

2010

107,774

77.38

3.0m

-1.49%

28.20%

2011

99,670

107.46

3.0m

4.18%

26.10%

2012

108,287

109.45

2.9m

5.63%

21.10%

2013

83,439

105.87

2.9m

1.34%

43.50%

2014

14,901

96.29

2.8m

-3.89%

57.30%

2015

12,931

49.49

2.7m

-6.22%

111.80%

2016

2,297

40.68

2.6m

-16.46%

254.40%

2017

5,000

52.51

2.1m

-14.00%

1087.50%

2018

2,069

69.52

1.3m

-18.00%

13864.60% Source: World Bank and others

33 #03 - APRIL 2019

WIKIFLEET

Venezuela has the largest oil reserves in the world. For twenty years and until 2010, daily production was above 3 million barrels a day. However, from 2013, production has been regularly falling down to around 1.5 million because of bad management by the military forces in charge. The US Energy Information Administration (EIA) predicts that oil production could fall to 700,000 by December 2019.

When Maduro took over after Chavez’s death in 2013, oil represented 95% of exports and more than 25% of GDP. With Maduro, Venezuela’s economy has steadily deteriorated. When oil profits began declining in 2014, Maduro began limiting imports needed by Venezuelans and shortages began to grow.

Foreign reserves, usually saved for economic distress, were being spent to service debt.

In July 2018, the IMF compared the hyperinflation in Venezuela to that of Germany in 1923. The collapse has led to shortages of food, medicine and other basic goods, and prompted an exodus of Venezuelans that has overwhelmed neighbouring countries. The United Nations estimates that 7% of the population (2.3 million people) have emigrated to escape poverty and violence. The country is ranked as the most insecure nation in the world by Gallup due to shortage and hunger: 98% of the crimes remain unpunished, while prisoners are abandoned and die in overcrowded prisons.

Mobility ecosystem is a ruin The automotive sector has not been spared. Imports have fallen and internal production has slumped from 450,000 registrations in 2007 down to 2,000 in 2018. Drivers are finding increasing difficulties to keep their vehicles on the road.

Fuel is almost free (one cent per litter) but petrol shortages are ever more common creating six hours or more fuel queues. To alleviate the shortage the government has organised a census likely to ration fuel and avoid smugglers reselling fuel for a profit in neighbouring countries. Batteries, engine oil, and tyres are prohibitively expensive – if they are available at all. Transport union leaders estimate that in just two years the country’s fleet of 280,000 passenger buses has dwindled to 30,000.

In 2017, the Venezuelan government took over a car factory owned by General Motors, a company that’s been doing business in the country since 1948. For years, they’ve struggled to import car parts and other raw materials due to government currency controls. In 2018 Ford produced and sold 1,000 cars, followed by Toyota with 600 and FCA/Chrysler with the remaining 400. The government has tried to remedy the situation by teaming up with Chinese companies to produce cars in Venezuela. During the military parade of 2018 marking Venezuela Independence Day, new Chinese military armoured vehicles were unveiled. Between 2005 and 2017, the China Development Bank and China Export-Import Bank have loaned more than $62 billion to Venezuela.

New car registrations in Venezuela 500,000 450,000 400,000 350,000 300,000 250,000 200,000 150,000 100,000

50,000

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

Source: World Bank and others

34 #03 - APRIL 2019

Due to the severe economic crisis and lack of spare parts, it’s become very difficult to repair and use cars in Venezuela.

What’s next: The White House’s measures to freeze PDVSA’s US assets, including proceeds from oil exports, largely cut off Maduro’s access to hard currency. Shortages weaken Maduro’s regime but the army which controls the economy has remained loyal so far. Foreign aid from the US stored along the Colombian and Brazilian border has not been able to enter Venezuela due to Maduro’s opposition weakening the regime’s support even more. US military intervention to oust Maduro remains unlikely and both Russia and China have threatened to defend the regime. Venezuela’s destiny is likely in the hands of its people and the capacity of Juan Guaido to win support from the army.

It could be a question of days or months before the regime falls and a new era opens. Venezuela is rich in oil and should attract international support to accelerate reconstruction.

Petróleos de Venezuela, S.A. (PDVSA) is the Venezuelan state-owned oil and natural gas company. It has activities in exploration, production, refining and exporting. Since its founding on 1 January 1976 with the nationalisation of the Venezuelan oil industry, PDVSA has dominated the oil industry of Venezuela, the world’s fifth largest oil exporter.

Following the Bolivarian Revolution, PDVSA was mainly used as a political tool of the government. PDVSA contributed to the government’s social development projects. Profits were also used to assist the presidency, with funds directed towards allies of the Venezuelan government. Freddy Superlano, parliamentary opponent also estimates that $400 billion were stolen by Chavez and Maduro.

With PDVSA focusing on political projects instead of oil production, mechanical and technical statuses deteriorated while employee expertise was removed following thousands of politically-motivated firings.

Incompetence within the company has led to serious inefficiencies and accidents as well as endemic corruption.

This article was written on 03/03/2019

INSPIRING FLEET & MOBILITY MANAGERS IN LATIN AMERICA WWW.FLEETLATAM.COM

35

FLEET MANAGEMENT - CASE STUDY SGS

Innovation cannot be overlooked Closing regional and global agreements is one of the keys to the deployment of sustainable fleet management, according to regional procurement manager for international certification company SGS, Nancy Scrocca.

Daniel Bland

Company name

SGS

Business sector/Industry

International Certifications

Name

Nancy Scrocca

Job Position

Regional Procurement Manager South & Central America

Years/Months at this job position

3 years

Number of cars managed in Latin America

1,467

Number of countries you are responsible for

10

A

s a provider of specialised business solutions for improving quality, safety and productivity, Genevabased SGS is focused on adding operational value and ensuring business sustainability for its clients, something that it also stresses in its fleet management.

Putting together regional and global agreements as opposed to local ones can help companies save money owing to the proportionate saving in costs gained by an increased level of production, or economies of scale. Standardising and applying global agreements across multiple countries is a bit of a challenge, however.

Acquisition The most common way to acquire cars for SGS is through multi-year leasing but it really depends on the needs of the business.

Besides providing specific vehicles based on the client’s needs, one of the key things the company looks for during procurement is leasing companies should offer a variety of options and services, as well as detailed studies on total cost of ownership (TCO), availability, etc.

Innovation Although somewhat new to the scene in many Latin American cities, making use of technologies such as telematics, carsharing, and electric vehicles cannot be overlooked.

36 #03 - APRIL 2019

For SGS, telematics is mainly used to promote safety and better health within fleets. By monitoring driver behaviour through data collection, follow up activity aimed at improving driver efficiency and teaching staff can be implemented.

Carsharing is also a concept to consider. Depending on the needs and the facilities available, different vehicle usage packages could be negotiated and this is something that leasing companies are starting to include in their service packages.

Finally, electric vehicles (EV) are indeed still quite new in Latin America but leasing or purchasing an EV is always an option.

Of course, it is highly recommended to study the needs of the user/driver first.

Factors such as driver profile, type of vehicle, country idiosyncrasies, local pricing, TCO, infrastructure, charging points available, and others must be considered first.

The SGS Latin America fleet is made up of vehicles in Argentina, Brazil, Colombia, Chile, Peru, Ecuador, Guatemala, Panama, Paraguay, and Uruguay.

FLEET MANAGEMENT - CASE STUDY SYNGENTA

Focus on driver safety For Switzerland-based agrochemical company Syngenta, operational efficiency is important but driver safety is first and foremost, according to global head of fleet management Axel Ernst.

Daniel Bland

Company name

Syngenta

Business sector/Industry

Agrochemical

Name

Axel Ernst

Job Position

Global Head of Fleet Management

Years/Months at this job position

3 years, 2 months

Number of cars managed in Latin America

1,800 (approximately 10,000 worldwide)

Number of countries you are responsible for

9 in Latin America (66 worldwide)

O

f the 10,000 fleet cars Syngenta operates worldwide, approximately 1,800 are in Latin America with Brazil leading with 850 vehicles. Other countries falling under the company’s Latam umbrella are Mexico, Argentina, Colombia, Chile, Guatemala, Panama, Paraguay, and Uruguay.

Although EVs have been put into use in Europe and Asia, they have not yet been deployed in Latin America. The company’s overall EV fleet in the region makes up less than 1% of total fleet.

As the vast majority of the company’s business occurs in rural areas where farming takes place, fit-for-purpose recharging infrastructure and EV battery capacity needs to be improved to push more EV usage. The company, however, is actively running hybrid and bio-ethanol engines across all regions.

Syngenta is making great progress in transitioning to fullservice leasing with 48-month 150,000km contracts. Currently, all vehicles in Brazil are leased, Mexico is in transition, and the remaining countries are under evaluation. Argentina is an exception as it is facing very high inflation right now.

Drive For Life In Latin America, especially for the three largest markets (Brazil, Mexico, Argentina), there is a spotlight on driver safety through the company’s “Drive For Life” programme.

It is set up with enablers and driver safety policies which include consequences for not meeting good driver obligations and rewards for those who are good drivers. To supplement the programme, behind the wheel training to keep drivers up to par is also provided once or twice a year.

Once leasing periods are over, drivers are also given a chance to buy their cars at a discount (up to 50%) with the reduction amount depending on how good of a driver they are.

Currently, a best practices policy is being developed in Brazil, a model which will be replicated in other countries throughout Latin America and even around the world.

Although telematics is used to improve operational efficiency by monitoring the behaviour of cars and drivers to control fuel consumption and idling and others, the main focus of telematics is driver safety.

INSPIRING FLEET & MOBILITY MANAGERS IN LATIN AMERICA WWW.GLOBALFLEET.COM

37

MOBILITY

Latam start-ups fill the innovation gap 2018 was a record year for investment in tech start-ups in Latin America. Since many large companies lack the flexibility to adapt to the changing market, start-ups are jumping in the innovation gap and entering the mobility market.

Fien Van den Steen

S

tart-ups in Latin America are perfectly positioned to change the business market across business sectors from agriculture to mobility. WEF Latin America notes that “companies in Latin America and the Caribbean are 20% less likely to introduce a new product than companies in the middle-income countries of Europe and Central Asia.” So, start-ups can bridge this innovation gap. And they do!

Chilecon Valley A study by LAVCA (the Association for Private Capital Investment in Latin America) of five-year investment trends in the Latin America region reveals how investors have closed deals worth $2.3 billion in 2018.

Brazil is the largest start-up market by capital invested. In the first semester of 2018 start-ups in Brazil raised more VC financing than the entire region’s startup market in 2016. The Brazilian startups raised about $546 million across 88 deals in 2018, up from $362 million across 47 deals in 2017.

Mexico is the region’s second-largest market, where year-over-year investment also doubled, from $36 million in 2017 up to $75 million VC investments in 2018. In Colombia, Argentina and Chile the investment dollars also grew significantly over the last few years.

Chile is sometimes called Chilecon Valley because of the number of foreign entrepreneurs attracted by its accelerators.

38 #03 - APRIL 2019

Start-ups in Latin America can fill the innovation gap by being more flexible, innovative and inventive.

Unicorns So, where did these investments go?

The logistics, distribution and transportation sector captured $398 million in 12 deals in 2017 and the first semester of 2018. The big investments in the Colombian delivery start-up Loggi, and the Brazilian ridesharing start-up 99 are particularly noteworthy.

Marketplaces were the number two sector of investments, of which the lion’s share went to the Colombian last-mile delivery start-up Rappi.

Moreover, the first Latin American unicorns (start-ups valued at more than $1 billion), 99 and Rappi, are found in the transportation sector, even though the fintech sector is the number 1 of start-up investments.

Last mile to the next level Start-ups in the field of transportation are mostly addressing Latin Americans’ major urban mobility challenges: traffic congestion and air pollution.

By providing alternative means of mobility, they optimise the last mile both for people and goods, saving time and money for companies, drivers and riders.

The two first Latin American unicorns are both situated in these exact markets.

The Brazilian ridehailing start-up 99 provides alternative last-mile mobility for people, while the Colombian startup Rappi provides enhanced last-mile delivery for goods.

Global attention Moreover, the growth and potential of Latin American start-ups did not go unnoticed by big global players. Didi, the Chinese ridehailing giant, for instance, acquired 99, the Brazilian ridehailing start-up, in January 2018, at a reported valuation of over $1 billion.

Good to know: after the sale of 99, the founders of 99 founded yet another promising start-up: Yellow (cf. box-out), illustrating how fast the mobility market is evolving in Latin America and how start-ups can be in the driver’s seat.

Remarketing Besides beating traffic congestion, start-ups are improving other aspects of the automotive sector as well.

Rappi, rapid delivery The Colombian last-mile delivery service Rappi became a unicorn in September 2018 and is as such the first Colombian unicorn.

The ‘Everything-delivery’ app aims to improve the last-mile delivery of goods in congested Colombian cities.

Loggi, Uber for goods The Brazilian start-up Loggi connects independent motorcycle couriers to customers for express delivery services.

The 5,000 drivers are connected through a smartphone application which matches supply and demand and improves delivery routes. Loggi tackles infrastructure and traffic congestion which undermine efficient (e)-commerce in the region.

Some start-ups address the remarketing phase by creating on-line market platforms. The e-marketplace for used cars of the Mexican start-up Kavak is an example, or the innovative Instacarro, a Brazilian car buying and selling platform where it takes less than an hour to sell or buy a car.

Start-ups are in the lead Taking all these mobility forms together, it becomes clear that shared mobility will determine the future of mobility in Latin America in line with the global dynamics. This trend is intensified by the specific Latin American urban conditions of overwhelming traffic congestion, which causes many economic losses.

Grow, remarkable growth The merger of the Brazilian dockless bike and scootersharing service Yellow and the Mexican electric scootersharing start-up Grin resulted in a promising mobility start-up: Grow (Mobility).

Both start-ups together offer in total 135,000 dockless bicycles and scooters across six Latin American countries, and accomplished 2.7 million journeys in half a year in 2018.

INSPIRING FLEET & MOBILITY MANAGERS IN LATIN AMERICA WWW.FLEETLATAM.COM

39

MOBILITY

Ridehailing in Latam more popular than ever Regardless of the traditional value attached to car ownership and the dominance of public transportation in the region, ridehailing is gaining importance in Latin America. Moreover, the offer is wide and on the verge of tremendous change.

Fien Van den Steen

B

ig ridehailing company Uber is dominating the Latin American market for the moment, however it has competition of strong local players, and it should prepare itself for the battle with other ridehailing giant Didi Chuxing, who last year acquired one of the biggest local ride hailing companies, 99. Let’s have a look at who’s in the game.

Uber Since Uber’s arrival in Latin America in 2013, it has expanded rapidly to become the dominant ridehailing company. Latin America is currently Uber’s fastest growing region in the world.

In fact, Mexico and Brazil are the ridehailer’s biggest markets outside the US. According to Uber they have more than 36 million active users in the region, and about 1 million drivers in a total of more than 200 cities in more than 16 Latin American countries.

Besides the traditional ridehailing services, Uber also offers carpooling services like UberPool and country-specific services like Uber Angel, to drive revellers home in Colombia.

Still, Uber faced a lot of issues to enter the Latin American transportation market, with legal woes and even demonstrations and physical battles with taxi drivers.

99 (previously 99Taxis) After Uber, the Brazilian ridehailing company 99 has an impressive market share in Latin America. Just in Brazil, it serves about 14 million users and contracted about 300,000 drivers, compared to Uber’s Brazilian market which serves 17 million users with 500,000 drivers.

This is where Didi Chuxing comes in: 99 is no longer a Brazilian company since the Chinese ridehailing giant acquired it last year for nearly $1 billion – after first having invested about $100 million in the company. This is Didi’s first foray to enter the Latin American market, where it had no activity previously.

40 #03 - APRIL 2019

Easy Taxi & Tappsi Before Uber expanded its services to Latin America, people could already rely on the ridehailing services of Easy Taxi.

Although it gained a strong position since its launch in 2011, Easy Taxi decided to merge with the Colombian ridehailing company Tappsi (which was launched in 2012) to join forces in 2015.

Moreover, since 2017 Easy Taxi has been a part of Maxi Mobility, which also owns Cabify. This parent company now operates across various Latin American countries including Argentina, Mexico, Bolivia, Panama, Brazil, Peru and Chile.

Cabify The other subsidiary of Maxi Mobility is the ridehailing company Cabify. Even though the company has its roots in Madrid, it claims to be a Latin American company and it invests heavily in the region.

As a result, Cabify is active in more than 100 cities in Argentina, Brazil, Chile, Colombia, Ecuador, Spain, Mexico, Panama, Peru, Uruguay, Portugal and the Dominican Republic. In total, the ridehailer serves more than 13 million users and has a self-reported 40% market share in São Paulo, one of the largest cities in Latin America.

In the beginning of 2019, Cabify received a financial injection of IDB Invest (InterAmerican Development Bank), conditional on the ridehailer’s promotion of social and environmental benefits, gender equality and financial inclusion of drivers. In return, Cabify received a $70 million loan to support an innovative digital business model aiming to transform the urban transport sector.

Other locals on the rise Besides the four big ridehailing companies, there are some smaller companies to watch as well. One is the Greek (Taxi) Beat which started expanding in Peru. Other local ridehailing companies are active in Brazil (Meleva and Flapper), Mexico (Laudrive), Colombia (MiAguila) and Peru (Pusakuy), whereas other foreign ridehailing companies are trying to get their piece of the Latin American pie as well, such as BlaBlaCar (France) and Voom and Lyft (both US).

The future with Didi Didi may not yet have operations in the region, besides its acquisition of 99, it could be eying up Latin America as well.

The company already dominates the Asian market, where it managed to defeat Uber, so the company can now set its sights on other territories, like Latin America.

So far, Didi acquired 99 but it hasn’t announced further plans.

However, it is not unthinkable that the Chinese ridehailer could be setting up a strategy to conquer the Latin America market and become a serious competitor for Uber and the local players. Besides the activities of 99 in Brazil, Didi already set up an office in Mexico as well.

Since Didi is sitting on more cash than Uber, it could buy cars and lend them to its drivers which could be very appealing on the Latin American market, where car ownership is often problematic.

Didi already started advertising for staff in some Latin American countries, including Chile, Peru, and Colombia. However, official announcements for the start of their ope-rations in those regions have not yet been made.

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MOBILITY

Why Mobility Budgets could emerge as an attractive solution in Latin America The urban mobility landscape in Brazil and Latin America has changed dramatically over the last 4-5 years.

The market has traditionally been driven by a combination of personal vehicle ownership and public transportation for everyday mobility. While these means of transport continue to dominate, the emergence of a plethora of new and innovative mobility business models has produced a noticeable change in people’s mobility patterns and transport usage.

Yeswant Abhimanyu, Principal Consultant & LatAm Research Manager, Mobility, Frost & Sullivan

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heir comfort, convenience, availability and potential costeffectiveness have propelled their growing popularity and market success. These solutions have started to transform definitions, perceptions, understanding and expectations of mobility among customers, both for personal and for corporate use.

Dynamic corporate mobility landscape Today, corporate employees undertake business travel within a city using company cars, leased fleets, carsharing, taxis, public transport and/or even micro-mobility solutions, depending on the business scenario and journey requirement.

In Brazil and Latin America, some employees are eligible for a company car, which could then potentially be used for both corporate and personal purposes. The terms and conditions of its use are usually structured by a company policy. Often, such company cars are provided as a benefit to motivate, retain, or reward highperforming employees. It is highly valued and the overall market has been growing including leasing. In other cases, employees who might not be eligible for a company car may be offered a daily travel allowance. Such an allowance may cover only certain journeys such as, for example, daily

home-to-work and work-to-home travel. Alternatively, this allowance can be used to pay for parking if the employee is using their personal car.

However, such travel allowances do not necessarily budget for all of the employee’s business journeys.

Depending on the policies related to employees who have a company car, some work-related journeys may or may not be expensed back to the company. The fact remains, however, that every business journey—whether for business travel or the daily work commute— varies and may therefore require the use of different modes of transport. This is one instance highlighting how potential mobility budgets allowing access to a wider range of mobility options could be an attractive additional option for corporate company car employees, functioning not necessarily as an alternative, but rather as a complement. It could mark a change in the understanding and definition of using the mobility budget primarily as an alternative to the company car.

Avoiding inefficiency At the same time, employees who do not have a company car also undertake work-related journeys and this is where a more holistic and inclusive approach to mobility budgets might

yield dividends. While these employees may have a daily travel allowance, their business trips are generally expensed back to the company or a different corporate solution, such as a corporate taxi account is used. The challenge here is that while corporates typically have a robust expense management system, processing the sheer number of variables associated with employee business travel is invariably a complex and unwieldy task. For both employees and employers, the result is a disjointed travel experience marked by time, resource and cost inefficiencies.

Employers may often be faced with the lack of visibility about the actual money spent on business travel, until after the completion of the journey.

An ideal situation in this context would be for employers to gain improved visibility into potential travel outlays before employee journeys, allowing them to more accurately and effectively manage the overall total cost of mobility for all their employees. This highlights yet another new dimension and way of thinking, whether mobility budgets could have a wider scope of application extended beyond company cars employees, towards a larger corporatewide employee base. More importantly, this inclusive approach to the concept of a corporate mobility budget could be an inspiring, motivating and unifying continued on page 44 >

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MOBILITY

Changing Mobility: Changing landscape and new business models, Latin America, 2019

Corporate e-hailing Corporate bike sharing and micro-mobility On-demand offices

Corporate car leasing and rentals

Corporate integrated solutions

Fueling, parking, tolling and other services

Corporate car sharing

Corporate taxis

Source: Frost & Sullivan

Corporate ride sharing

Mobility budgets

> continued from page 42

stimulus for the wider organisation to achieve its corporate mobility vision and goals.

What consumers and employees alike are requesting today are real-time, flexible, multimodal mobility solutions that are on-demand and offer first-tolast mile connectivity. This thinking is beginning to be reflected in company mobility strategies as illustrated by the gradual gravitation from total cost of ownership (TCO) focusing on company cars and leased fleets, to total cost of mobility (TCM) for all employees.

Mobility budgets could rationalise overall expenditure on business travel, while allowing for the flexibility to select from a range of multimodal mobility options that best match their travel preferences and business travel requirements. In essence, this expanded view of a mobility budget represents an all-round win-win situation.

44 #03 - APRIL 2019

Newer solutions within the Mobility Budget In countries like Brazil, solutions and offerings that specifically target corporates are available across a range of new mobility business models, including in bikesharing, e-hailing, ridesharing and integrated mobility. In e-hailing, for example, a company can provide its employees with a corporate account that can be used to reserve and order a ride. As e-hailing takes off in Brazil and other parts of the region, the inclusion of such solutions is becoming increasingly attractive, particularly for corporates that do not use a leased fleet or offer company cars to their employees.

The use of integrated mobility cards and applications in Brazil and other parts of Latin America is also expanding rapidly.

They offer users access to a host of different mobility modes—buses, metros, trains, and bikesharing, and allied solutions such as parking, fuelling —on a single platform. In some Latin American countries, employees are offered integrated mobility cards with pre-loaded monthly top-ups as a part of their daily travel allowance benefits.

This gives users the flexibility to choose the combination of mobility options that works best for them.

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Signalling the shift in this direction, an employee expense management company in Brazil recently introduced its next-generation payment card for mobility that includes access to carsharing, e-hailing, bikesharing, parking, public transport and air taxis, in addition to a host of other related services.

Expanding this concept towards a mobility budget that includes wider

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business travel options may represent an attractive offering for employees, especially given changing expectations related to comfort and safety; the advantages of being able to manage all business trips on a single, rather than multiple, platform; and, their familiarity with, and exposure to, integrated mobility-as-a-service solutions.

Also, a number of leasing companies have started to realign their strategies to reflect the changing landscape shaped by new mobility solutions. For instance, in 2018, some of Brazil’s largest vehicle rental companies, which also operate in the company fleet market, moved into offering e-bikes and 3-wheeler personal micro-mobility solutions. This approach

could potentially evolve into the various services being bundled together under the umbrella of a corporate mobility offering with a unified value proposition.

Multiple opportunities Trends clearly indicate that employees want to pick different solutions for varied business scenarios. Offering them this flexibility and empowering employees with the responsibility of making the best mobility choices for their business travel needs has the potential to boost cost, time and resource efficiencies. Ultimately, each company will need to develop a mobility budget plan that synergises with their particular circumstances and requirements.

Among major factors to consider while designing this plan will be the location of the company, nature of the employees’ work, mobility needs, fit with existing policies and company culture, business impact on employees and the company, and effect on company car policy. Importantly, any successful mobility budget will need to meet employee expectations in terms of enhancing productivity and promoting employee satisfaction. In the long term, mobility budgets could prove a great value addition to any company and there will, undoubtedly, be several growth opportunities as the idea gains more adherents.

anuncio_virtus_ingles_em_curvas_v2.pdf 1 22/03/2019 11:08:00

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Plan your taxi mobility One of the most flexible ways to getting an instantaneous ride in an urban area today is by hailing a taxi.

Here are some of the services available in Latin America.

Fien Van den Steen

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ne transportation alternative that mobility managers need to keep in mind for their corporate commuters is the proper use of traditional taxi and mobile app taxi services. In Latin America, some of the services available are radio taxi, taxi ranks (Sitios in Mexico), taxi co-ops, and app-based ridehail companies.

More recently, the trend has been to use the latter which has grown incrementally over the last couple of years and this is partially due to its lower cost. Some companies actually prohibit their employees from using traditional taxis in favour of their app-based cousins.

Listen to radio taxi One commonly recommended service in many cities in Latin America, however, is radio taxi services or taxi ranks in which a central office is called and the nearest cab driver is dispatched to pick up the customer. In most cities, this is highly regulated and quite safe.

In other cities, there are other more common taxi service models. For instance, in Latin America’s largest country, Brazil, which is home to nearly half a million shared mobility providers (some 150,000 cab drivers and nearly 300,000 app-based drivers), taxi co-ops are quite common.

Basically, a taxi co-op is a group of taxi drivers which are obliged to put a sticker on their car and use a particular type of clothing. Some large companies have

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exclusive agreements with taxi co-ops to provide transportation services for their employees.

“Considering the standards set forth by the USE Taxi co-op, the cars are usually no more than three years old, drivers all wear a tie, and they have safety and cleanliness standards to follow. Sometimes, even the type of car is stipulated,” according to Ryan Marques who is the founder of Brazilian start-up In Taxi Media.

To be part of a taxi co-op, drivers must obtain a 20-year concession right which is granted by the city hall where the car will be operating.

This concession is awarded to one person with one car and cannot be transferred (with the exception of an inheritance), according to Belo Horizonte cab driver Geraldo Magela Veloso who is also the former president of local Cooperfins taxi co-op.

“For years, black market transfers have been taking place for a price tag of some 50,000-100,000 reais ($13,500$27,000). However, this is quite rare now considering the entry of app-based ridehail companies such as Uber and 99,” Veloso told Fleet LatAm. Although mobile app companies are an interesting alternative for commuters, “traditional taxi co-ops have stricter standards and are more professional,” Marques said, confirming however that app-based drivers are on the rise.

Due to growing urbanisation and rising internet penetration across the region, the app-based ridehail market in South America is forecasted to increase at a compound annual growth rate of 11.5% by 2023, according to international market research firm Research and Markets.

To avoid this, use taxis from official taxi stands, use radio taxis, and know the local colour schemes of these vehicles.

For instance, cabs in Chile have a yellow top, black body and orange number plates while normal vehicles have white number plates.

Another thing to keep an eye out for are drivers who overcharge you, so know your fares. You can do this by confirming prices beforehand (with more than one driver), using the GPS on your mobile phone to pre-calculate your distance and fare, or use resources online such as taxi fare finders.

Finally, although there have been some incidents of crimes associated with ridehail companies as well, using mobile app services in Latin America such as Uber, Easy Taxi, 99, Beat, Cabify, and Safer Taxi are usually good options for commuters.

Not only are drivers pre-registered and screened, most app-based services inform you of the price before you even hail your ride.

Make sure you don’t flag down a black-market taxi.

Wrongdoings Although flagging down a taxi is a convenient option which works well for most corporate commuters, there are several risks mobility managers and riders alike must be aware of.

Among those are making sure you do not catch a black-market (unlicensed) taxi or even worse, a fake taxi. These are unregulated drivers which could end up charging you three times or more the normal fare or in some cases, rob you.

Go for the perfect mix To sum up, whether using a traditional taxi or an app-based ridehail service, these are certainly two options mobility managers across Latin America should consider as alternatives in their mobility policy. Finally, remember to train your staff accordingly to reduce any risk to them or your company, and to mix taxi services with a corporate car fleet and collective transport mobility cards.

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