Volatile Brazilian Economy Spawns Opportunities for Inorganic Growth in the Vehicle Leasing Market, Finds Frost & Sullivan

The growth of the core leasing business will boost the adoption of auxiliary services such as technology, dealerships and insurance

18 Feb, 2016, 11:00 ET from Frost & Sullivan

SÃO PAULO, Feb. 18, 2016 /PRNewswire/ -- There is a perceptible change in the vehicle funding and ownership pattern in Brazil, with vehicle buyers increasingly giving a wide berth to the expensive 'ownership' vehicle funding model. Instead, they are gravitating toward the more cost-effective 'operational leasing' model, wherein they can return the vehicle at the end of the contract period and avoid residual risks.

The growing scope of the mobility ecosystem is creating an environment wherein stakeholders such as original equipment manufacturers, corporate customers and dealers can establish long-term profitable relationships with fleet leasing companies.

New analysis from Frost & Sullivan, Analysis of the Brazil Vehicle Fleet and Leasing Market (http://www.frost.com/sublib/display-report.do?id=MBBA-01-00-00-00&src=PR), expects the total sales of passenger vehicle and light trucks to touch approximately 3.1 million units in 2015. The company car segment, which consists of leased vehicle segment and outright purchase, is anticipated to grow at a compound annual growth rate of nearly 5 percent by 2020, and account for more than 20 percent of the sales.

For complimentary access to more information on this research, please visit: http://corpcom.frost.com/forms/LA_PR_FValente_MBBA_9Feb16

"With mobility as a service picking up traction, vehicle leasing will prove to be a profitable business in the long term," said Frost & Sullivan Intelligent Mobility Research Analyst Abishek Narayanan. "The need of corporate customers to drive down costs related to finance, time and manpower is the key market driver, as leasing presents cost efficiencies through economies of scale."

One of the biggest markets for vehicle leasing will be the small- and medium-sized enterprises that do not have much flexibility in terms of initial investment or focus on non-core areas. This creates a fertile market for fleet leasing, fleet management and other associated services.

The Brazilian mobility market is highly fragmented with players offering various mobility services, ranging from core leasing to short-term rentals and fleet management. In addition to the presence of more than 5,000 players in the market, the complex tax structure leads to large tax payments and compliance issues, which lower the attractiveness of the business.

In spite of this fragmentation, the leasing market will move toward consolidation as it will enable participants to achieve economies of scale, share best practices and gain a strong capital structure. These benefits will see it through the current environment of stringent credit regulations.

"Creating awareness regarding the potential advantages of leasing and the consolidation of players through inorganic growth is vital to enhance the quality of mobility services," noted Narayanan. "Furthermore, market consolidation will create a stronger consortium of participants and other stakeholders that can form formidable lobbying groups and stimulate market growth."

Analysis of the Brazil Vehicle Fleet and Leasing Market is part of the Automotive & Transportation (http://ww2.frost.com/research/industry/automotive-transportation) Growth Partnership Service program. Frost & Sullivan's related studies include: the Electric Vehicle Market in Latin America, Select LATAM Commercial Vehicle Markets, the Mexican Tire Aftermarket and Passenger Vehicle OEM Strategies for INOVAR Compliance in Brazil. All studies included in subscriptions provide detailed market opportunities and industry trends evaluated following extensive interviews with market participants.

About Frost & Sullivan

Frost & Sullivan, the Growth Partnership Company, works in collaboration with clients to leverage visionary innovation that addresses the global challenges and related growth opportunities that will make or break today's market participants.

Our "Growth Partnership" supports clients by addressing these opportunities and incorporating two key elements driving visionary innovation: The Integrated Value Proposition and The Partnership Infrastructure.

  • The Integrated Value Proposition provides support to our clients throughout all phases of their journey to visionary innovation including: research, analysis, strategy, vision, innovation and implementation.
  • The Partnership Infrastructure is entirely unique as it constructs the foundation upon which visionary innovation becomes possible. This includes our 360 degree research, comprehensive industry coverage, career best practices as well as our global footprint of more than 40 offices.

For more than 50 years, we have been developing growth strategies for the global 1000, emerging businesses, the public sector and the investment community. Is your organization prepared for the next profound wave of industry convergence, disruptive technologies, increasing competitive intensity, Mega Trends, breakthrough best practices, changing customer dynamics and emerging economies?

Contact Us:     Start the discussion

Join Us:           Join our community

Subscribe:       Newsletter on "the next big thing"

Register:         Gain access to visionary innovation

Analysis of the Brazil Vehicle Fleet and Leasing Market
MBBA-18

Contact:

Francesca Valente
Corporate Communications – Latin America
P: +54 11 4777 5300
F: +54 11 4777 5300
E: francesca.valente@frost.com

http://www.frost.com

Photo - http://photos.prnewswire.com/prnh/20160218/334727

 

SOURCE Frost & Sullivan



RELATED LINKS

http://www.frost.com