16 Jan 19

Fight for the ‘small’ customer heats up in Portugal

As the Portuguese economy slows, fleet and lease players will have to fight harder to expand their market share. In 2019, they’ll focus on private and SME customers, says Hugo Jorge, Editor in Chief of Fleet Portugal. 

Last year was a very good one for the automotive market in Portugal (pictured: Lisbon): with sales of around 230,000 units, the market has achieved a near-peak condition in 2018. The flipside: the Portuguese automotive market this year will experience only minimal growth – and will perhaps even be a zero-growth market. 

External factors
Beyond the market’s inherent capacity limits, two external factors will contribute to a slower market, Mr Jorge explains: “There will be elections this year, and that will have a dampening effect on investments. Also, the economy is slowing down”. 

This year will also see the end of SIVA, the Portuguese-owned distributor of VW cars and vans, Audi, Skoda, Lamborghini and Bentley. Suffering from financial difficulties, SIVA’s parent company SAG negotiated its sale to Porsche Holding Salzburg, the largest vehicle distributor in Europe and wholly owned by Volkswagen. 

The manufacturer hopes to turn around the Portuguese fortunes of its various brands in 2019, which suffered a sales dip of late – not unrelated to SIVA’s aforementioned difficulties.

Faster growth
The Portuguese fleet and lease industry will continue to show faster growth rates than the overall market, Mr Jorge predicts. “Operational leasing – in Portugal we use the term ‘renting’ – will continue to grow, as will (financial) leasing. The main trend will continue to be the selling of lease products to SMEs and to the private customer, both still a small fraction of the wholesale market”.  

The field of competitors in Portugal grew significantly over the past year, with the arrival of Europcar operational leasing, Athlon’s commercial comeback and, most recently, PSA Group’s introduction of Free2Move. “These new players will enter into strong competition with each other and with the established players, especially for contracts with SMEs and private consumers,” says Mr Jorge. So, 2019 will be the year in which the fight for Portugal’s ‘small’ customers will start heating up. 

Petrol resurgence
As far as fleet and mobility management trends are concerned, Portugal is in line with Europe’s more advanced markets, says Mr Jorge. Safety and electrification are major issues – but at the same time, the decline of diesel is leading to a resurgence of the share of petrol cars in big fleets. 

As elsewhere, SUVs are taking an ever-larger share of the fleet market, to the detriment of station wagons – a particularly Portuguese preference. However, when it comes to mobility alternatives, all is quiet on the Portuguese front: “We have no offer from the public transportation companies, but we don’t have any demand for such products either”.

In conclusion, Mr Jorge thinks 2019 will be a good year for the fleet industry in Portugal: “It’s a market with a lot of opportunities, open-minded customers, and problems looking for a solution. The Portuguese branches of multinational fleet companies are very proactive, and often figure in case studies at their international HQs”.

Authored by: Frank Jacobs