Spain’s car industry, Europe’s fifth biggest, is facing a sales slump as high interest rates prompt highly-indebted Spaniards to tighten their purse strings.
Go deeper with GlobalData
Discover B2B Marketing That Performs
Combine business intelligence and editorial excellence to reach engaged professionals across 36 leading media platforms.
Average vehicle spending is forecast to fall below a 0.8% gain to EUR20,677 last year, a spokeswoman for top dealership lobby group Faconauto told just-auto, without providing precise estimates.
She said Spaniards are starting to feel the pinch from several recent hikes in interest rates, which are expected to increase again by 0.5% this year, and are becoming more cautious about buying ‘big ticket’ consumer items like new cars.
Despite the slight gain in 2006, average spending fell 5.5% on-year in December and the trend is likely to continue, the Faconauto spokeswoman said.
“There has been a steep fall in car prices after September as people have opted to buy smaller cars with less engine power,” she said. “This country has huge debt levels [stemming from a housing boom] and with the higher interest rates, many people can’t afford to spend a lot on a car.”
Consequently, car sales are projected to fall 1.3% to 1.47m units in 2007, extending a 1.7% decline in 2006, and continuing the reverse trend after big gains in 2004 and 2005. SUV sales, which soared 15% in 2006 should increase just 5.4% this year, Faconauto forecast.
Last year’s 0.8% spending rise pales in comparison with average increases of 5% in 2005 and 2004, according to Faconauto.
Ivan Castano
