Mexico's Fleet Conditions in 2014

The Mexican fleet market is expected to see an ongoing conversion from purchasing to leasing. The subcompact is the most popular vehicle in Mexico, followed by compact and multiple-use vehicles. In the Mexican marketplace, two distinct business models are available: 

First, the traditional “American” open-end model is based on transferring risks to the lessees, and operational expenses (taxes, insurance costs, maintenance, and repairs) are passed as they occur. Open-end leases convert into financial leasing under Mexican GAAP. Residual value risk is borne by the lessee and interest rates are typically variable.
The second business model is the “European” closed-end model — also known as “renting” or “full-service leasing.” It is based on a monthly installment, which includes all operational expenses based on an agreed mileage, and all risks are borne by the lessor. Interest rates are kept fixed over the period of the lease.

Over the past few years, the closed-end model has rapidly gained ground in the Mexican market, according to LeasePlan México S.A. de C.V.
The lease term is typically 36 months (sometimes 48), and the option to buy is frequently offered to drivers. Some companies do require drivers pay for maintenance and repairs, and insurance is not mandated by law, but comprehensive coverage is the market standard for fleet. Many companies offer to pay the deductible for a first accident, with subsequent payments due by the driver. Drivers also regularly receive a budget for gasoline.

On the automaker side, Nissan is the most popular fleet vehicle with about 25.5 percent of total fleet sales, followed by GM at 18.7 percent, VW at 14.5 percent, and Honda and Toyota at just under 6 percent each. Fleet sales for General Motors de México are a large part of its business.
Toward the end of 2013, fleet represented 19 percent of the total auto sales in the country, according to Ariza de México.

According to LeasePlan México, order-to-delivery times of two to four weeks are normal, and a good relationship with manufacturers and dealers across the country is key to reserve and obtain desired vehicles with short lead times.

Among the most sold GM vehicles are Chevrolet Silverado, Spark, and Aveo. The latter, in addition to being the best-selling car in Mexico, is also the best-selling car in fleet. GM also has corporate, government, rental, and leasing clients. In the private sector, clients use GM fleet for the pharmaceutical industry, consumer products, food and beverage, as well as for the distribution of products, telecommunications, cosmetics, chemicals, and services.

In terms of insurance and accident management, the typical insurance offering consists of policies offered by local insurance companies, and brokers act as intermediaries and support operations in terms of policy issuance, reporting, and follow-up, according to LeasePlan México. Accident management is a time consuming process in México, involving dealing with authorities and follow-up with workshops, brokers, and the insurance company.

There is only one fuel supplier, according to LeasePlan México, the state-owned oil company PEMEX, therefore there is not room for fuel-price negotiations. There are many fuel cards in the market, however, that allow the ability to register mileage and plates. The fuel cards allow for full deductibility of taxes and most cards are pre-paid with relatively high fees.

Victor Campuzano, director of sales & marketing for Ariza de México, noted that, due to corporations increasing focus on business efficiencies, market needs have been changing over time. He noted four current fleet market drivers: real savings, transparency, impeccable attention to the driver, and visibility of information in the decision-making process. Based on these drivers, a total cost of ownership (TCO) analysis is now available in this market, which helps corporations make the best decisions. The adoption of a TCO analysis plus a fleet management expert contributes to cost savings and increased efficiencies.