February 20, 2023
By:EmpoweringCPO Insights Team

Fleet Leasing-Brazilian Market

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A Fleet Leasing agreement is an agreement between a company and the owner of the fleet. The company pays to use the fleet of vehicles for a set period of time. This report on Fleet Leasing- Brazilian Market will be very useful for your team responsible for managing and buying this category. It gives in-depth information about Fleet Leasing, types of leasing, key cost drivers in this industry, customer preferences, major players in this industry, analysis through the porters 5 forces model, and other useful information for managing this category. Our team of experienced sourcing and procurement professionals can help you through the process of providing all sorts of Procurement Consultancy, Procurement Intelligence, etc. which can help the procurement team to benchmark the current contract with the market.

Abstract:

  • The Rental and Leasing industry in Brazil will part ways once the two segments are able to sustain themselves.
  • Brazilian firms are increasing employee car benefits; 100% of company presidents and VPs, 96% of directors, 82% of senior managers & 64% of managers receive car benefits.
  • Leasing a fleet of vehicles provides flexibility by making it easier to adopt a firm’s fleet as its organizational needs evolve.
  • The Brazilian fleet leasing market is expected to move in a consolidation phase, deriving benefits such as economies of scale, sharing best practices, & a strong capital structure.
  • TCO for fleet leasing companies is expected to decrease with the Government of Brazil lowering its SELIC rate to just 5% & its long-term interest rate (TJLP) to around 5.5%.
  • Key cost drivers for fleet leasing firms have been favorable for the last two years as the cost of funds & people costs have decreased, however, vehicle cost has marginally increased.
  • The cost of non-preventive maintenance drastically increases for vehicles that do not stick to a preventive maintenance schedule.
  • The point in the lifecycle where the cost per mile is the lowest is the breakeven point, and that is the optimal time to cycle out vehicles.
  • Customer preference in mobility services in Brazil is shifting from owning a fleet to leasing a fleet, driven by cost and maintenance benefits.
  • The leasing industry is expected to post consistent growth driven by its benefits to corporates in terms of cost.
  • There are two major areas covered in a fleet management agreement: Leasing (or purchase/disposal) – a financial transaction and Services – an operating transaction.
  • Price, performance, and legal; These 3 issues are part & parcel of every fleet management agreement and will benefit if they are addressed, clearly outlined, and understood.
  • A master fleet lease agreement is a legally binding contract. However, unless agreed upon in advance, the lessee is not required to lease vehicles.
  • Maintenance management and accident management are the two main negotiable aspects of fleet management services.
  • Buyers have strong bargaining power as this is a commoditized service and the switching cost is low.
  • Purchasing approaches should consider to leverage category, which includes the use of full purchasing power, substituting products or suppliers, and placing high-volume orders.
  • Demand Management, Process Improvement, Relationship Restructuring & Competitive Bidding sourcing levers can be applied to this market.
  • Unidas entered into a partnership with the mobility solutions firm Alphabet in 2019. Localiza & Unidas together have a market share of 24% & the rest of the market is fragmented.
ContentSlide No.
Fleet Leasing Market3-4
Types of Fleet Leasing5
Vehicle & Fleet Leasing Market: Reasons for Growth6
Benchmark Rates7
Peer Comparison and Cost Drivers8
Total Cost of Ownership (TCO)9-10
Market Drivers11
Benefits of Fleet Leasing12
Negotiating Fleet Leasing Contract13-16
Competitive Analysis17
Kraljic Matrix18
Sourcing Levers19
Supplier Landscape20-21

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