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HISTORY
In the 1970s, there was demand and potential market
for fleet outsourcing services in the Northeast of Brazil,
especially in Salvador (Bahia state). The development of this
important business segment for vehicle rental and leasing
companies would have been perfect at the time were it
not for certain difficulties which since then have impacted
companies that had an interest in entering that market.
Luiz Mendonça Filho, founder of LM and a former
member of the National Council at ABLA, says that precisely
because it was a new and completely unknown service in
Bahia (and throughout the Northeast), the challenge was to
find skilled labor and raise the credit necessary. “The banks
were very cautious about this new type of business,” he
recalls. “Any negotiation about credit was very exhausting,
even more so than today, requiring enormous efforts by
companies in our sector,” he adds.
Rental and leasing companies that decided to face these
challenges instead of retreating turned these difficulties
into reasons to learn more and improve the quality of their
services. The path followed was benchmarking - a process
in which a company learns about best practices for similar
functions from others in its own market segment).
As fleet outsourcing clients were already very
demanding, the rental and leasing companies that managed
to win them over were the ones that first of all knew how to
monitor and assimilate practices used by large companies
in the sector. “I myself learned a lot from them and allied
this knowledge to my natural instinct to serve clients more
efficiently,” says Luiz Mendonça Filho. “Only companies that
also developed this expertise and tried their best to satisfy
clients and win their trust in relation to the service provided
gained market share,” he goes on.
Furthermore, knowing how to observe is another
important characteristic of successful entrepreneurs who are
operating in the sector now. This is about picking up tips,
listening to criticism and analyzing what clients do. “After
that, you can expand the business and improve service
delivery,” says the businessman from Bahia.
As an example, he says that in the 1970s it was usual in
the Northeast for people who needed a car for a day or more
to offer taxi drivers a daily rate. This is among the reasons
some entrepreneurs in the region got into the rental sector.
“There was no developed rental market, but we saw there
were business opportunities,” says Mendonça Filho. “And that
came about from observing people’s use of taxis,” he adds.
Vehicle rental and leasing companies in Bahia and
throughout the Northeast had to improve and innovate
quickly, driving the development of fleet outsourcing and
the sector as a whole in the region. “We had to improve
methods, cut red tape and speed up procedures to optimize
the provision of outsourcing services,” Mendonça Filho says.
“Specifically in Bahia, this increased professionalism was
boosted after the Camaçari Petrochemical Complex was
opened,” he says.
From then on, the state and the vehicle rental and
leasing sector began to change, as large clients needed to
outsource their fleets. “The experience with companies in
the Petrochemical Complex was one of the main factors that
really gave the sector a definitive push in the region,” says
the former ABLA councilor.
Thus, many of the rental and leasing companies in the
Northeast, and especially in Bahia, started to dream bigger
and to compete as major operators, providing the quality
needed to the multinational companies in the region. “There
were multinationals that at that time had global agreements
with international car rental and leasing companies,”
recalls Mendonça Filho. “We started to make inroads by
demonstrating that local companies could provide them
with high quality services at a price within the reality of the
Brazilian market,” he says.
Back in the present, based on 38 years in the vehicle
rental and leasing business, Luiz Mendonça Filho says that
fleet outsourcing in Brazil is still very small. “Outsourced
corporate fleets in Brazil account for about 5% to 8% of the
market, while in Europe and the United States it is 50%,”
he says.
Nevertheless, he is optimistic about 2015. “Our
expectation is that the sector will continue to grow with
the expansion of business into new regions based on the
companies’ sales and marketing efforts,” he says. As you
can see, where many only see problems, Luiz Mendonça
Filho can still see good opportunities.
Fleet outsourcing
in the Northeast of Brazil
The challenges of the past were very similar to those in the present day,
especially in relation to skilled labor and problems getting loans