Auto Industry Boosts Investment In Spain

Auto Industry Boosts Investment In Spain

Auto Industry Boosts Investment In Spain

Spain’s auto industry is regaining competitiveness and has attracted a renewed investment commitment from European car manufacturers Opel, Renault and Ford to boost production at car factories across the country.

In the first half of this year, Spain new car sales grew 8 per cent from a year earlier, and exports saw a solid rise of 8.8 per cent, according to automobile industry association ANFAC. The outlook for the rest of the year is also encouraging, with ANFAC estimating an 11.11 per cent increase in new car sales in 2013 and an over 9 per cent rise in exports.

This compares with a 13.4 per cent decline in new car sales in 2012.

So what’s revving up the engines at Spain’s car plants?

LOW LABOUR COSTS LURE INVESTORS

Spain’s car industry was traditionally one of the pillars of the economy, but it lost productivity between 2000 and 2007,  a period when a property boom took over the driver’s seat. From 2008, the global crisis hit the sector hard and Spain’s austerity measures, such as a 3-percentage-point increase in value-added tax implemented last September, further depressed business.

Last autumn, the government introduced the Plan Pive, which offers a sweetener of 2,000 euros to buyers of environment-friendly “green” cars. This subsidy scheme, like others before it, has contributed to the recent uptick in car sales, and it was renewed for a third time in July.

But Spain’s auto industry has also benefited from low labour costs. The labour market is an estimated 40 per cent less expensive than those of Europe’s other biggest car-making countries, Germany and France.

So while companies like Ford plan to close factories in the UK and Belgium over the next year, their plant in Valencia in south-eastern Spain will benefit from increased production of both existing and new models.

TESLA MOTORS MULLS SPAIN INVESTMENT

As the big hitters from the European auto industry continue to bet on Spain,  a new investor in the shape of California-based Tesla Motors has appeared on the scene. The company that designs, manufactures and sells electric vehicles worldwide plans to open its first concessionary in Spain over the next year, most likely in Barcelona, according to media reports.

Depending on public response, Tesla Motors will open a showroom in Spain. It already has 12 showrooms in Europe.

The market penetration for electric vehicles in Spain is still relatively small, so Tesla Motors will be in pole position to tap into substantial growth potential in this sub-sector of the auto industry.

For more information on Spain’s auto industry, contact corporate law firm Argali Abogados.

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