Spanish automobile dealers' federation Faconauto has warned that a prolonged car manufacturing slump in Spain could eat into the sector's profits.

Car production in Spain, Europe's third-biggest supplier, is sagging on the back of weakening demand from key European markets. Manufacturers' lobby group Anfac expects production to drop by 300,000 units this year.

So far in 2005, production has dipped 8.7% to 1.8m vehicles.

Spanish dealers saw revenues rise 9.5% to €22bn in the January-September period. However, the sector is worried that a continued slump, coupled with a growing threat of factory exodus to Eastern Europe, could have a negative effect on its long-term health.

"So far we are not experiencing any problems, but if this tendency consolidates we are obviously going to," a Faconauto spokeswoman told just-auto.

General Motors Spain has lost all hope (after a botched labour deal) that the new Meriva minivan will be built at Figuerelas and observers are sure that assembly of the car assembly will move to Gliwice, Poland.

Renault recently announced that it will halve Modus output at Valladolid.

If other manufacturers follow GM and leave Spain, dealers will have to start importing cars and parts, a process that will increase their costs, squeeze their margins, and hurt sales because vehicles will have to be priced higher, the spokeswoman said.

To avert this situation, Faconauto has repeated the broader industry call for local unions to become more flexible when they negotiate future labour accords.

This is on top of many appeals from Anfac to the government requesting that it intervene to boost the industry's competitiveness.

Ivan Castano

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