MADIC in the context of the fuel industry in Mexico

The fuel market in Mexico is at a critical stage of concurrent challenges caused by the interaction of several factors: the consolidation of the business in a competitive market, the evolution of energy sources and their environmental challenges and the new customer service culture.

Never before has the petrol entrepreneur had to adapt, with such speed, to such abrupt changes in a market that enjoyed great stability until not so long ago.

In this environment, MADIC group decided to participate through its subsidiary MADIC Mexico, to offer the solutions of the parent company, adapting them to the needs and business culture of the local market.

MADIC group is a French leader with international subsidiaries in the motive power sector, bringing together an expertise that allows the complete operation of a gas station, from storage and fuel distribution to integrated management systems and marketing at the point of sale (customer journey).

1. Consolidation

Hereby some data that help us to have an overall picture of the industry situation:

Mexico has a fleet of 50,594,282 vehicles (April 2021), mostly with fossil-fuelled internal combustion engines
There are 13,282 service stations in the country
Even so, the number of gas stations per inhabitant is lower than in many other countries: 10,027 inhabitants per gas station (Brazil 5,158; Italy 2,857 and USA 2,677)
The national average consumption of gasoline is estimated at 124 million litres per day.
The average attendance per station is 2,600 vehicles with an approximate sales volume of 10,000 litres per day.
Only 56% of the municipalities have petrol stations and, of these, only 34% have 3 or more service stations.

In this particular context, MADIC Mexico offers new fuel dispensing typologies, such as the NANO STATION (small gas station with two assisted or unassisted filling positions, with advanced design and cutting-edge features, such as built-in digital signage) or the MOBILTANK service station (compact and mobile gas station consisting of a tank and a dispenser, with no need for excavation, highly customisable and with minimum installation time). This type of modular service stations allows both fuel dispensing in small towns and in non-traditional business locations for the sector, such as the car parks of large shopping centres.

MADIC in the context of the fuel industry in Mexico — © MADIC group

As for the process of market consolidation by the participating groups, let's look at the data:

Of the existing gas stations, in addition to Pemex, there are 168 other new brands with around 6,115 Economic Interest Groups (EIGs), each having a variable number of permits.
Among these EIGs, there are 26 leading EIGs with 2992 permits (between 45 and 495 permits each), although the majority of permits are held by single-station owners (5,027).
Among the leading EIGs, the following are standing out:

— OXXO GAS: 495 permits
— PETRO SEVEN: 241 permits
— HIDROSINA: 234 permits
— CORPOGAS: 234 permits
— MI GASOLINA: 185 permits

Among the brands dispensed at petrol stations, PEMEX remains the leader with 70.4%, followed by BP, G500, EXXON, REPSOL, TOTAL, SHELL, ARCO, MOBIL and GULF which together account for 21.2%.

The Convenience Store became of central importance in the economic balance of service stations, as can be seen by the presence of self-service chains (OXXO and SEVEN ELEVEN) among the leading groups.

In addition to the fact that demand projections for gasoline have changed in 2020 due to the global recession, the fall in GDP in Mexico, the decline in investment and consumption, as well as changes in consumer behaviour, a gas station operator's strategy is not complete without the consideration of additional sources of revenue.

2. Evolution of energies

On this point, the discussion is dominated by two conflicting visions of the future of the market, between those who analyse the evolution of historical data and those who are attentive to disruption.

Experts on the subject in Mexico, supported by data from the National Institute of Statistics and Geography (INEGI), claim that the total switch from fossil fuels to alternative forms of energy, such as electricity, will not be completed until after 2050 or 2060. They also state that the highest peak of fossil fuel consumption is estimated to be between 2030 and 2035.

The calculation is based on a simple linear projection of the current situation. There are currently 46 million combustion engines on the road in Mexico. Electric vehicle sales are only 1.9% of the total. Thus, they estimate that in 2034 they could represent 7-10% of the vehicle fleet, out of a total of 50 million cars on the road (with a demand of 1,200,000 barrels per day). By 2050 the number of electric cars would reach 30-40% in a vehicle fleet of 70 million vehicles for 160 million inhabitants (45 million would be combustion engines, with a demand of 850,000 barrels per day).

On the other hand, it has been noted globally that the evolution of the private transport industry is forcing the redefinition of energies and, consequently, of gas stations.

In 2018, the global fleet of electric cars exceeded 5 million, 2 million more than in 2017.
In cities, the average car stays idle for 95% to 99% of the day.
Improvements in ridesharing technology could reduce the number of car trips by 40%, thereby reducing congestion, emissions and saving people time and money.
Shared mobility in cities could result in up to four out of five private vehicles being taken off the road.
The reduction of car use in large cities, the design of "15-minute cities" (where all necessary activities are within a very restricted area around the house), the emergence of a new way of life due to the global pandemic, which has acted as a black swan of definite relevance to our way of life, change expectations based on historical linear figures.

Some global gas companies, as well as automakers committed to the evolution of their electric cars, have moved ahead with the installation of electric charging stations on their own. In Mexico, the Energy Regulatory Commission (CRE) approved rules for the sale of electricity between private individuals that enable the installation of more independent electric chargers in locations not predetermined or defined as "electric vehicle charging stations".

For 10 years, MADIC group has been developing PULSE, a wide range of charging terminals for electric cars with integrated payment systems, adaptable to different environments and customer expectations for this mobility.

3. New customers, new services

Although service stations have been constantly evolving in terms of technology and services, they have recently undergone an unprecedented revolution, largely due to the emergence of the Internet.

The contemporary customer is a "hyper-connected" person, living a life split between the face-to-face and the virtual ("hybrid") world and, through the skills this state has developed - and with the accelerating irruption of the pandemic - has made them "hyper-demanding". According to a study by Hootsuite and We Are Social, published on Statista, the global average time spent online in Mexico per day is an average of 9 hours and one minute. The customer who arrives at a gas station is still connected. They use their smartphone to pay if the gas station allows it, get their bill and leave a comment on social networks.

If it has a Digital Signage system, the petrol station will be engaging in a dialogue with the customer through large bright screens at the charging position. With these digital screens, the aim is to ensure a relevant customer experience guiding the customer's journey during their stay at the gas station: it will make their filling experience pleasant by providing useful information, offering products from the convenience store and more, inviting them to visit the car wash center and to make use of the loyalty programme, if any. This experience is prolonged with in-store displays.

As we have seen, the highly competitive conditions of the fuel industry have given the Convenience Store a central role in profitability. Therefore, the technological integration of operations between the filling position and the shop offers has become paramount.

CRM has moved from being a practical customer agenda to a data organisation method with predictive potential, in the so-called "algorithmic marketing" approach that allows large amounts of data to be interpreted through self-learning processes, in order to create more relevant and timely interactions with customers.

Petrol stations no longer just sell fuel. They provide an experience to hyper-connected customers. The decision to focus business on the customer, who has more choices and demands non-traditional services, changed the way gas stations do business. The transformation in customers’ lives has redefined service stations. Everything that is deployed will be aimed at providing the abstract satisfactions that the gas station customer demands: speed, fluidity, security, comfort, interactivity, amazement, innovation.

For this reason, MADIC Mexico offers an integral solution for the customer's digital journey, which involves:

On-site communication and dynamic advertising (TITAN: digital marketing system)
Collection and management of data supplied by the customer during the operation
Payment terminals
Unified management of the shop and fuel dispensing, with an integrating back end and front-end system
State-of-the-art car wash systems that enrich the service experience

This evolution is a paradigm shift and an interesting growth challenge. In a few years' time, service stations leading this transformation will look little like they do today: they will be experience centres, consumer ecosystems where cars will receive all the necessary services (charging, washing, maintenance) while customers connect to wifi, drink coffee, meet in lounges or consume entertainment specially designed for these short waits.

Mexico is no exception in this regard, and thanks to innovations such as those offered by MADIC group, it can be at the forefront of solutions applicable to the world of energy.

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