Ay Caramba! Spanish Car Sales Sink 50%
If you think the U.S. auto market is bad, here’s something to cheer you up: it’s not as bad as Spain. November car sales are one half of their former self. Si, muchachos. According to Forbes, Iberian new car sales dipped by 49.6 percent. Explanation? In 2007, Spanish real estate cratered. Then, the country’s industry went anorexic. Spain now has the highest unemployment rate in Europe– 12.8 percent– and it’s expected to rise to 15 percent in 2009. That doesn’t bode well for Spain’s extremely shaky car industry, where another 50k citizens may go on the dole, pronto. Last week, the Spanish government announced a $1b package to resuscitate the nation’s car industry. With buyers on a general strike, it’s too little, too late. As far as brands go, in November VW was first, SEAT second, Ford third. For the year, Ford is leading before Peugeot and Citroen. Still, a perro flaco se le suben las pulgas.
Bertel Schmitt comes back to journalism after taking a 35 year break in advertising and marketing. He ran and owned advertising agencies in Duesseldorf, Germany, and New York City. Volkswagen A.G. was Bertel's most important corporate account. Schmitt's advertising and marketing career touched many corners of the industry with a special focus on automotive products and services. Since 2004, he lives in Japan and China with his wife <a href="http://www.tomokoandbertel.com"> Tomoko </a>. Bertel Schmitt is a founding board member of the <a href="http://www.offshoresuperseries.com"> Offshore Super Series </a>, an American offshore powerboat racing organization. He is co-owner of the racing team Typhoon.
More by Bertel Schmitt
Comments
Join the conversation
And now for something completely different! I read an article (at treehugger) that Spain had broken a world record for the percentage (>40%) of its electrical power generated by wind turbines (it must have been windy all over the country that day) - I wonder if this shift to aleternative energy in some way has disrupted the "traditional" economy, resulting in upheaval or is it a byproduct of an economy that is (like the USA) becoming unsustainable. (?)
Shaker, not sure about your pondering. I do suppose that an excessive rush to green energy will almost certainly make the economy less productive -- to generate the same number of megawatts in a green paradise eats up much more capital and labor and money, so there are fewer resources available for other needs. OTOH I doubt this incremental tax on productivity would cause an imploding car market and economy -- not an expert on Spain, but i think we can blame the same factors we saw in the U.S. -- too-easy credit and a housing bubble. Not sure if the Spanish government did things to distort the market in Spain in favor of consumers assuming too much mortgage debt and buying too much house -- that's certainly a huge and mostly unacknowledged cause behind the U.S. problems.
The Spanish government has directly encouraged home-buying with tax breaks for decades, and it has made renting-out relatively difficult. That interference was pretty constant - there wasn't any change in policy right before the bubble, just a quickly-rising economy and easy credit. But as in the US, those laws partially helped the bubble happen. Like here, middle-class people in Spain started buying second homes as investments because the ROI was higher, even more so because of the government help for home purchasing. That drove prices up very quickly, whereas the old model of people buying a house to live in never caused that kind of upward spiral (in the US too, lower-income families that benefitted from easier home-buying laws have had a better rate of not going into foreclosure, it was people investing with borrowed money that got in trouble, and their neighborhood saw higher price increases too). There aren't as many defaults though - instead of ARMs they have 40 or 50 mortgages that don't surprise anyone but do take all their disposable income. Just keep in mind that Spain's economy had been much higher than it's "natural" state lately. They were hoping the gains were permanent growth, but a lot of it is going to be "corrected" away. A lot of EU development money had come in, and since it helped take Spain above a certain threshold, Spain will now be contributing to the EU instead of being a net recipient. That money went largely to construction (like those wind power plants, and roads for the booming car industry), and also to the construction of more homes than the Spanish housing market can handle. So that industry is going to be dead in the water for a few years to come, hence the unemployment.