By Daniel Bland, November 2024
Fleet Mobility Today
Light vehicles play a critical role in the commercial vehicle fleet leasing industry throughout the Americas but what are the differences between vehicles and their leasing costs in North America and Latin America?
Vehicle Types
In North America (United States and Canada), fleet is predominantly composed of light trucks and vans, accounting for some 80% of the total. This preference is driven by the demand for cargo capacity and the suitability of these vehicles for a variety of commercial applications. As such, passenger cars only represent 20% of the fleet market.
Conversely, passenger cars dominate in Latin America, constituting approximately 70% of total fleet while light trucks and vans account for no more than 20% and motorcycles make up the rest. Motorcycles are increasingly popular due to their cost-effectiveness and maneuverability in urban settings.
This stark contrast in vehicle types reflects differing transportation needs, with Latin America favoring smaller, more economical vehicles for personal use as well as commercial applications.
The average age of fleet vehicles is another area where the two regions diverge. In North America, the average age of a light truck or van is nine years old while it is 12 years old in Latin America. Cars in Latin America average 10 years and motorcycles just five years.
This suggests a relatively modern fleet in North America that may be better equipped with the latest technologies and safety features. Latin America is more reliant on older vehicles in commercial operations, particularly in the truck and van segment, which may impact efficiency and emissions.
Leasing Costs
Before talking about costs, knowing the average leasing duration and the overall fleet management strategy in each region is key.
In North America, which is mainly composed of light trucks and vans, the average lease duration is 2-4 years while it is five years for these types of vehicles in Latin America. A period of 2.5 years can be negotiated for cars in Latin America and even less for motorcycles.
While North America favors newer light trucks and vans, the approach of the more varied vehicle acquisition path in Latin America reflects different needs amidst different economic scenarios.
When it comes to cost, North American fleet vehicles average $550 per month, while leasing in Latin America average $440.
Keep in mind that most fleet vehicles in Latin America are passenger cars (20% cheaper) and motorcycles are half the cost of cars, a disparity which reflects different economic conditions, financing options, and market demand.
Last but not least, note that fleet vehicles in North America average 25,000 miles per year while those in Latin American average just over 15,000 miles (nearly 25,000km) or to say 40% less. This difference reflects the use of more operational (work tool) vehicles in North America and more executive (work benefit) cars in Latin America.
With all this said, you can see that the commercial fleet industries in North America and Latin America are different without a doubt. While North America leans toward a modern fleet dominated by light trucks and vans, Latin America’s fleet is characterized by older, more varied vehicles, and with a significant presence of motorcycles.
Open-end or Closed-end
Regarding contract types, we must consider open-end leasing and closed-end leasing. While the open-end lease (more flexibility, more residual value risk) is more common in North America, the closed-end lease (less flexibility, less residual value risk) is more common in Latin America. Both can be a good option depending on the profile of your fleet.
In the end, understanding these nuances is essential for fleet managers aiming to navigate the fleet market effectively throughout the Americas. However, as economic and environmental factors continue to evolve, both markets will likely adapt so prepare for a possible change in fleet compositions in the years to come.
Fleet Mobility Today knowhow is supported by private meetings with industry experts throughout the Americas, including regionally organized FMT Alliance Committees as well as FMMC, the fleet and mobility managers club of the Americas.
