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Spain Autos Report Q2 2010
Market |
Automotive and Parts |
Report Type |
Market Research |
Country |
Spain |
Published |
12 March 2010 |
Number of Pages |
55 |
Download |
|
Immediate |
|
Publisher |
Business Monitor International |
The Spanish autos industry is bracing itself for yet another difficult year in 2010, despite the extension of the vehicle scrappage scheme – or the 2000E plan – for the rest of 2010. We point out that the additional EUR100mn poured into the plan is third time the government has topped-up the scheme after an initial EUR100mn in May 2009, followed by EUR40mn in October 2009. This shows just how desperate the government is to boost new car sales, which ended 2009 as low as 952,772 units, down 18% compared with 2008 – the latter being itself 29.7% lower than 2007.
The government expects the extended scrappage scheme to increase passenger sales by 200,000 units in 2010, amid increasing fears that the funding is likely to be used up by mid-2010. This, along with the fact that the vehicle purchases will face a proposed two percentage point hike in VAT, to 18%, from H210, increases our concerns that H210 will prove to be particularly difficult for the autos industry. As such, we maintain our forecast of a near 7% year-on-year (y-o-y) fall in vehicle demand, to1.03mn units, by the end of 2010. Beyond 2010, the government has denied any possibility of extending the scheme, meaning that vehicle demand will remain at the mercy of the overall state of economic activity in the country. By end-2014, we forecast sales to reach 1.17mn units.
On the other hand, we expect production which is primarily export-oriented, to be influenced by the overall recovery in Spain’s key markets such as France, Germany and the UK. With external demand falling 13.5% y-o-y during 2009, carmakers in Spain cut back production by 14.5% y-o-y, to 2.17mn units, during year, a trend we expect to continue in 2010. Given that both the passenger cars and the commercial vehicle segments have suffered losses in export markets, we limit our 2010 production forecast to just over 2mn units in 2010. Over the longer term, we remain concerned that Spain is rapidly losing its position as a competitive manufacturing hub of Western Europe as carmakers look out for lower-cost bases in Eastern and Central Europe.
The Spanish autos market has been one of the worst hit among all the Western European markets and we believe that the economy is equally likely to underperform its major European peers in terms of the overall recovery. This outlook has resulted in a significant reduction in its autos score, to only 56.3 points and its ranking on the seventh position of our ratings for the autos industry in Europe. Although a low car ownership ratio and the imminent recovery in domestic demand are the biggest strengths for the market, we remain sceptical that the about its long term production potential, meaning that there is little room for improvement in its scores and hence, ratings in the longer term.
Early signs of this have already emerged with Japan's Nissan Motor revealing plans to continue working on reduced output at its Avila plant for another three years while Renault seems firm on its decision to stop production of the Clio at its Valalloid facility. Meanwhile, US automaker General Motors Company's (GM) European division General Motors Europe (GME) has announced that it will axe 900 jobs at its factory in Zaragoza.
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