Consistent growth is a key metric for any business, and fuel card and fleet service operators are certainly no different. In many established markets, growth in this industry is increasingly hard to find as vehicles become ever more efficient; markets have become saturated with suppliers and sales of traditional fuels are static or even declining in some regions. All this means that heavy investment is needed to differentiate from the competition and attract new customers, or just retain existing ones.
As discussed in the previous blog ‘Does the future of fleet smell like diesel?’, opportunities to grow are out there, but are more likely to come from offering customers new innovative services. Mobility, telematics, financial services, broader energy offers and leveraging a marketplace of partners are all central to becoming an aggregator of services to the existing customer base.
There is however, another way to find growth by looking beyond the current established geographies and moving into new regions of the world.
Asia, Africa, Central and South America have many nations with rising prosperity, significant investment in transport infrastructure and an increasingly mobile workforce. This is leading to huge demand for all types of vehicles, mobility services and higher fuel usage in markets previously untapped by fleet service operators.
There are markets, which may have previously been considered uneconomic due to low volumes and high complexity but are now seeing significant growth and moves towards standardisation. For example, Vietnam’s Industrial Policy and Strategy Institute predicts up to 800,000 vehicles will be sold annually by 2025, up from just under 300,000 in 2018. Sri Lanka saw a 75% growth in road vehicles between 2010 and 2019 and vehicle ownership in Nepal has doubled in the last 10 years. Today many of these markets have what might politely be called “basic” fleet offerings if any are available at all.
Another opportunity is to enter large, previously locked markets that open up due to deregulation of the fuel sector. A number of countries where fuel retail has been monopolised by a state operator are now inviting in foreign energy companies and service providers. Mexico is a great recent example; here the government decided to deregulate the previously state-run fuel market to encourage foreign investment, support modernisation of infrastructure, ensure fuel supply reliability and bring general efficiencies driven by healthy competition. The oil majors have already flooded into Mexico and have very quickly taken over many Pemex stations or built new ones and now account for approximately a third of the 13,000 total sites. This market has quickly generated great opportunities for those launching fuel cards, mobility and fleet service offerings as well as giving customers more choice and better services.
However, entering these markets isn’t always simple as they often have localised, complex, and in some cases antiquated, fiscal and regulatory processes, meaning they can be difficult to penetrate. Customer needs can also be different in these markets with a range of challenges and pressures for those operating fleets to navigate. Incorporating elements of local solutions developed for the specific market can help to enter at a reasonable cost and timescale as well as helping guarantee you are offering services that actually meet the customers’ needs.
At CGI we’ve been helping our customers launch and modernise fleet service businesses for over 25 years and have experience in nearly 50 markets worldwide. What we have learned is that the key to success is a combination of the right solutions, flexibility to adapt and to work with the right local partners. Doing your homework on the regulation and compliancy requirements up front is also vitally important, as is understanding your potential customers’ business needs. The way people carry out business, travel, buy and pay for things varies from country to country and so local knowledge of the people and their culture is essential.
They say that “fortune favours the bold” and moving into new geographies to launch a fleet offering is a bold step, but it could be the enabler to unlocking huge growth in a challenging industry. Having the right approach, proven solutions and partners at your side are key to being successful.
Contact me to discuss how CGI can support your business as it expands or for more information on this topic.
Vietnam automobile industry briefing report 2020
Cambodia Ministry of Public Works and Transport (MPWT)
Nepal Department of Transport Management Report 2019