PRLog (Press Release) – Apr 19, 2011 – BMI fears that a change in Spain's autos dealership law, whereby carmakers have to give authorised distributors a full refund on unsold cars within three months of purchase, could negate efforts made by the government in the past to secure much required investment for the auto industry. Such are its implications that the change in the law could put Spain's position as the second largest car producer in Europe at risk, and also threatens the country's sixth position in BMI's Risk-Reward ratings for the autos industry in Europe.
On the back of a slew of investments announced by carmakers in the country between 2009 and 2010, BMI forecasts Spanish auto production to grow an average 2.6% year-on-year (y-o-y) between 2011 and 2015, a significant turnaround from the average annual declines of nearly 3% y-o-y between 2006 and 2010. 2011 Dodge Durango R / T ;
Meanwhile, there is little optimism for domestic vehicle demand. Estimates from Spanish car association Anfac show that new vehicle sales in Spain ended 2010 down 6% y-o-y, to just over a million units, falling closely in line with BMI's estimate of a 7% y-o-y fall. In 2011, BMI believes that high unemployment, falling real wages, a large stock of private sector debt and fiscal austerity from above will keep consumers focused on deleveraging rather than spending for the foreseeable future. As such, BMI believes sales will continue to fall, albeit by a much smaller margin. Although we expect sales growth to average 2.6% y-o-y thereafter, this will not be enough to ensure a recovery to 2005, or even 2008, levels.
In January 2011 Nissan Motor announced it will invest EUR80mn in Spain after it reached an agreement with two labour unions - SIGEN-USOC and MACA-UGT.
In the same month, US carmaker General Motors Company (GM) and German firm Volkswagen (VW) revealed separate plans to increase production at their facilities in Spain this year. VW, the country's largest carmaker, is looking to increase Polo production in Spain, while GM plans to assemble 40,000 more vehicles, to a total of 400,000 units, at its plant in Figueruelas.
However, given that the aforementioned regulatory change could substantially increase carmakers' operating costs in the country, some firms such as Ford Motor and PSA Peugeot Citroen are threatening to withdraw planned investments, clearly putting severe downside risks to our optimist outlook for the country.
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