Car production ( 94,65 KB )

 

Spain’s motor vehicle industry at the crossroads

  The motor vehicle sector, until recently considered the flag-ship of Spanish industry, is not now going through one of its brightest moments. In fact, in the first nine months of the year, motor vehicle production in Spain showed a cumulative drop of nearly 10% compared with the same period last year. If we limit our view to passenger cars, the line of greatest volume (more than three-quarters of total production), the drop was even greater with a decrease of more than 12.5% (200,000 units less than in 2004).

  Is this a passing phase or does it reflect a more deep-seated crisis? In fact, the causes are of various kinds – the weakness of foreign demand is one of the main reasons but, as a background to this, there is the excess capacity of the world motor vehicle industry within the current competitive framework characterized by supply pressure from the Asian block. As may be seen from the following table, the total production share of the European Union (EU-15), United States and Japan has dropped by nearly 10 percentage points in the past five years, mainly to the benefit of the emerging countries of Asia. Nor has Spain been able to escape this trend and has shown a loss of share amounting to nearly a half percentage point in the period under consideration.

  The drop in Spain’s exports of passenger cars (more than 12.5% as of September) was partly due to the stagnation in its main export markets but note should be taken that the drop is far greater than would have been brought about by containment of demand. It should be pointed out that, in the first nine months of 2005, the increase in passenger car registrations in the EU-15 was very limited (it did not reach 1% year-to-year) but still held to an increase in contrast to the decrease in Spanish sales abroad. No doubt the specialization of Spain’s motor vehicle industry in the medium and low-range segments means that it is more sensitive to market swings, as has been evident on previous occasions, but this time around this effect has turned out to be much sharper. In industry circles it is felt that the age of some models, now at the end of their market cycle, may also have contributed to these poor results.

  In the Spanish domestic market, demand remains buoyant but the tendency in recent years also points to a progressive loss of market share by the national industry (at present nearly 80% of passenger cars registered are imported, twice the figure at the beginning of the previous decade). All of this certainly makes up a very complex picture. If we limit ourselves to very recent events, in the United States (with a very flexible economy offering easy labour force adjustment processes) General Motors made an agreement with the unions for a 25% cut in non-wage benefits and announced the firing of 25,000 employees. Ford has gone into losses and is preparing a broad restructuring plan that includes significant plant closures and the wiping out of jobs. In Spain, SEAT is threatening to open a labour force regulation process (certainly less dramatic than simple firings) if the work-day and wages are not cut by 10%.

  Without becoming alarmist, we shall have to carefully follow trends in this sector on which, it should not be forgotten, one out of every ten jobs in Spain depends and which contributes nearly 6% to the GDP. While, according to widespread opinion, the 18 production plants operating in Spain enjoy a proper technological and competitive level, it will be necessary to reconsider certain aspects such as labour flexibility, taxation, professional training and investment in research, development and innovation in order to ensure a future without major setbacks.

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