Recently published research from Business Monitor International, "Spain Autos Report Q1 2013", is now available at Fast Market Research
Boston, MA -- (SBWIRE) -- 03/18/2013 -- In the first 10 months of 2012, passenger car sales in Spain decreased 11.9% year-on-year (y-o-y), to 600,231 units, according to the Spanish Association of Car and Truck Manufacturers (ANFAC). BMI maintains a bearish view on consumer sentiment in the country, predicated on rising unemployment, deflation in the housing market and stringent fiscal cuts. This has partly informed our forecast for a 10% decline in passenger car sales in 2012.
In an attempt to boost sales and also to increase the fuel-efficiency of vehicles on the road, the Spanish government has been running the PIVE plan (Programa de Incentivos para los Vehiculos Eficientes), a vehicle scrappage scheme. It will provide a rebate of EUR2,000 (US$2,600) to those who trade in their old car (over 12-years-old) for a 'low consumption vehicle'.
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Cars powered by natural gas, hybrids, plug-in hybrids, and extended range electric (fully or partially powered by internal combustion engines and electric petrol or diesel) qualify for the scheme. The scheme started on October 16 2011 and will run until March 31 2013.
Despite these incentives, car sales are declining heavily in the market, and hybrid, electric, and other alternative-fuel vehicles hold a very small share. Diesel engines dominate the market.
In August 2011 passenger car sales increased 3.4% y-o-y ahead of a VAT increase from 18% to 21% on September 1. We believe this modest increase in sales does not reflect a resurgence in demand. Indeed, sales in the remaining months may be negatively impacted by consumers bringing forward their vehicle purchases to avoid the VAT increase. We expect passenger car sales to remain subdued in 2013, before returning to moderate growth over the remainder of our forecast period to 2017. Some of this will be a result of the pent-up demand, as consumers delay their purchase decisions.
BMI believes that the Spanish economy will remain mired in recession, and is likely to endure a further year of negative growth in 2013. Substantial deleveraging pressures in the private sector following the real estate bust will continue to eat into wealth and spending power, pinning down inflationary pressures. In addition, the effects of worsening double-digit unemployment and structural joblessness will take years to tackle, conspiring against any sustainable rise in prices.
Furthermore, the government needs to employ wrenching fiscal austerity to gain the public finances under control. We believe that these pressures will impact construction and industrial activity, the key drivers of commercial vehicle (CV) sales. This has partly informed our bearish outlook for sales in this segment. In 2013, we expect to see a small resurgence in growth over 2012 figures, but much of this is from low base effects, and a result of pent-up demand in the market.
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