Fleet Management demands are changing in Latin American markets
26 Jun 2014 Smart Mobility
Fleet Management solutions are telematics based services that allow companies to track their vehicles in real time, manage logistics processes and improve driving behaviour. The Latin American market is evolving from security-focused telematics to optimization-focused telematics.
Fleet Management is crucial to reduce fleet operational costs and improve company revenue thanks to productivity improvement. How is this possible? In the case of cost reduction through fuel reduction, fewer accidents, minimizing idling time, among others. Managers have more information about how their drivers are using vehicles, so abuses and misuses are eradicated and that deeply impacts operational costs. Only in fuel reduction, companies average 15-25% savings.
How can we achieve an impact on revenue? Thanks to Fleet Management, customers can optimize vehicle routes and reach more customers with the same vehicles increasing as a side effect customer satisfaction. Fleet drivers are less prone to overusing their vehicles when managed so productivity soars as well.
Worldwide, business customers are demanding different solutions based on industry use cases (i.e. field force, road transport, passenger transport, etc.). In Latam the typical market entry-point is stolen vehicle recovery service (SVR), from where customers evolve to Fleet Management solutions aiming to move from an asset protection tool to a business solution.
The Fleet Management Market is growing strongly – not only in the Latam market, also in Europe and the US – but due to the Latam market still being very young the growth rate remains stronger than the rest. In fact, we expect the Latam market to remain as healthy as it currently is. Our 2013-2016 forecast foresees steady 30% annual growth rates for the Latam market. SVR for companies plus fleet management reported € 292 million in 2013. The forecasted business figure for 2016 is € 629 million.
If we breakdown the Latam market country by country, each market behaves in an independent way. Chile, for example, is the most mature market focused on Fleet Management in road transportation and mining industry.
On the vehicle parc side, the market in Latam has shifted from mainly being services for heavy vehicles (Middle or Heavy Vehicles or MHV) to a more diverse situation. Nowadays this has changed and affects all sorts of fleets including smaller size trucks (Light Commercial Vehicles or LCV) and passenger vehicles.
The way of marketing these services has shifted from feature based to a second mature stage with consultative processes where return on investment (ROI) is the priority considering customers industry and their specific use cases . The selling points are how Fleet Management can positively impact their specific needs and challenges.
Finally, an important trend detected in the Latam market is the current shift from a fragmented market (with up to 100 companies in some countries fighting for a market share) to a concentrated one as an effect of the increasing maturity in the Latam market. Telefónica foresees that big players will start to acquire and consolidate smaller companies like we have recently seen in Brazil with the Sascar acquisition by Michelin.