Car output in Spain, Europe’s third-biggest producer, could fall 4% or roughly 120,000 units by 2009 amid the threat that the country will lose business to lower-cost competitors in Eastern Europe.
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The statistics were unveiled in a research note from consulting firm PriceWaterhouseCoopers (PWC) Automotive Institute.
They add gloom to an already alarmed sector which is forecasting that output will decline 10% to 2.7m units this year from 2.9m in 2004. Seat, Renault and PSA Peugeot Citroen have already announced big cuts.
Spain is suffering from slumping demand in key European markets such as Germany and France. There is a growing possibility that big manufacturers will shift assembly to cheaper factories in Eastern Europe if Spain does not cut labour costs and bolster competitiveness.
While respective manufacturers’ and dealers’ lobbies Anfac and Faconauto make desperate appeals for the industry to improve its act, PSA Peugeot-Citroen has emerged as the latest car maker to judge the market’s situation as “very worrying.”
PSA Vigo factory director Javier Riera said that unless the plant “sharpens up” to streamline production and lower costs, management will have make some “ugly decisions” which could include layoffs.
Vigo’s car output fell 34% in the first nine months of 2005.
Ivan Castano
