If you think the U.S. auto market is bad, here’s something to cheer you up: it’s not as bad as Spain. November car sales are one half of their former self. Si, muchachos. According to Forbes, Iberian new car sales dipped by 49.6 percent. Explanation? In 2007, Spanish real estate cratered. Then, the country’s industry went anorexic. Spain now has the highest unemployment rate in Europe– 12.8 percent– and it’s expected to rise to 15 percent in 2009. That doesn’t bode well for Spain’s extremely shaky car industry, where another 50k citizens may go on the dole, pronto. Last week, the Spanish government announced a $1b package to resuscitate the nation’s car industry. With buyers on a general strike, it’s too little, too late. As far as brands go, in November VW was first, SEAT second, Ford third. For the year, Ford is leading before Peugeot and Citroen. Still, a perro flaco se le suben las pulgas.
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I…. have… to… say… it. Can’t… help… my… self….
Nobody expects the Spanish Implosion!
*whew*
Bless you, yankinwaoz. It was a tough job but someone had to do it. This car market is dead, I tell you, d-e-a-d.
“People cut down on non-essential spending, the old clunkers will be driven longer.”
And that is the same problem here in the USA, except the average car here is quite new and–as never before in history–cars now can last quite a long time. 150k miles is expected and 250k miles isn’t that unusual. How few cars would the USA need in the next 3 years if nobody even thought about junking their car before 200k miles?
And with the domestics no longer leasing, you are losing out on all of the 3-year and done buyers.
This car market is no more!
It is an Ex-Car market.
I haven’t studied the Spanish market so all I can offer is anecdotes, having spent part of my life there.
10 years ago, there weren’t nearly as many cars. Sure, every family had one, but they were for weekend trips and things like that. During the week you went shopping on foot and rode to work on your scooter. Scooters were everywhere, all the kids hoped to get one shortly after turning 14, everyone had lost a friend to a motorcycle accident, and MotoGP was the racing series that everyone watched (they like WRC too, but MotoGP was what the kids all wanted to emulate).
Then insurance rates for motorcycles and scooters skyrocketed. The real estate bubble saw people move to the outskirts of town. People had the credit to buy a car. My aunt started driving my cousins to school and driving to the grocery store. The city I was in (pop. 70,000) was suddenly choked by cars, and City Hall started adding lanes to 200-yr old streets by making them narrower. Parking became impossible. Fewer young people die, though now it’s more common to lose someone in a head-on crash between two cars carrying a few people each on a divided highway.
Tonight when I get the chance, I should look up the stats, but I’d guess that sales are down partly because they were unusually high the last several years. And they weren’t high just because the economy was good, but also because there was a fundamental shift in personal transportation towards cars. If the shift reverses itself (which I think would be beneficial in those dense environments, but I don’t expect it to happen), then the market will settle to its previously low rate. If it doesn’t, then cars will be back in several years but they’ll be cheaper than before. Parents will lose their shirts during the inevitable real estate correction, and their kids will then be able to afford their own place (finally!) but they’ll choose to stay at home and rescue their parents instead. I think it will be a slow recovery.
And now for something completely different!
I read an article (at treehugger) that Spain had broken a world record for the percentage (>40%) of its electrical power generated by wind turbines (it must have been windy all over the country that day) – I wonder if this shift to aleternative energy in some way has disrupted the “traditional” economy, resulting in upheaval or is it a byproduct of an economy that is (like the USA) becoming unsustainable. (?)
Shaker, not sure about your pondering. I do suppose that an excessive rush to green energy will almost certainly make the economy less productive — to generate the same number of megawatts in a green paradise eats up much more capital and labor and money, so there are fewer resources available for other needs.
OTOH I doubt this incremental tax on productivity would cause an imploding car market and economy — not an expert on Spain, but i think we can blame the same factors we saw in the U.S. — too-easy credit and a housing bubble. Not sure if the Spanish government did things to distort the market in Spain in favor of consumers assuming too much mortgage debt and buying too much house — that’s certainly a huge and mostly unacknowledged cause behind the U.S. problems.
The Spanish government has directly encouraged home-buying with tax breaks for decades, and it has made renting-out relatively difficult. That interference was pretty constant – there wasn’t any change in policy right before the bubble, just a quickly-rising economy and easy credit.
But as in the US, those laws partially helped the bubble happen. Like here, middle-class people in Spain started buying second homes as investments because the ROI was higher, even more so because of the government help for home purchasing. That drove prices up very quickly, whereas the old model of people buying a house to live in never caused that kind of upward spiral (in the US too, lower-income families that benefitted from easier home-buying laws have had a better rate of not going into foreclosure, it was people investing with borrowed money that got in trouble, and their neighborhood saw higher price increases too). There aren’t as many defaults though – instead of ARMs they have 40 or 50 mortgages that don’t surprise anyone but do take all their disposable income.
Just keep in mind that Spain’s economy had been much higher than it’s “natural” state lately. They were hoping the gains were permanent growth, but a lot of it is going to be “corrected” away. A lot of EU development money had come in, and since it helped take Spain above a certain threshold, Spain will now be contributing to the EU instead of being a net recipient. That money went largely to construction (like those wind power plants, and roads for the booming car industry), and also to the construction of more homes than the Spanish housing market can handle. So that industry is going to be dead in the water for a few years to come, hence the unemployment.
I read an article (at treehugger) that Spain had broken a world record for the percentage (>40%) of its electrical power generated by wind turbines
It´s about 4%. That 40% is pure fantasy.
20 years ago in this country (Spain) keep cars until they were junk. In the last 10 years (too) easy money made people to buy cars (and SUVs) they could not really afford.
Spanish exterior debt is second only to the United States´ debt.
https://www.cia.gov/library/publications/the-world-factbook/rankorder/2187rank.html
(Americas´ per capita debt is still higher, nonetheless)
We have been living well above our means and now we are facing a recession. We deserve it.
I expect to see our socialized “free” Healthcare and Pensions down the same drain than GM´s employees.