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<p><strong style="font-size: 12.8px;">Showrooms await customers lured by improving economy, low interest rates. </strong></p>

Spanish Dealers' Profit on Track for Slight Gain in 2016

Industry sources say the nearly flat result in second-half 2016 profitability may be linked to purchases made ahead of expiration of the government&rsquo;s cash-for-clunkers program in July.

MADRID – Spanish auto dealers eked out profits averaging 1.7% in first-half 2016, up from 1.4% year-ago, according to a survey commissioned by GANVAM, the country’s main association of auto dealers, vendors and repairers.

Snap-on Business Solutions, which conducted the survey, predicts full-year profitability will average 1.8%, up from 1.75% in like-2015, on sales of 1.15 million units.

GANVAM sources indicate the nearly flat result in second-half 2016 profitability may be linked to purchases made ahead of expiration of the government’s cash-for-clunkers program in July.

The increase, however slight, reflects an improving economy and consumer confidence, falling oil prices and low loan rates.

The survey shows car sales accounted for 54% of dealer profits in first-half 2016, up from 52% year-ago and the best result since 2008. New-car deliveries contributed 45.3% and used-car sales hit a 2-year low at 8.7%.

“The problem is that an important part of the used-car sales during the first half of 2016 were vehicles more than 10 years old, and sales of those increased 37% (from prior-year) 2015,” a GANVAM source says.

The survey also shows other dealer-profit sources were repair work (12% compared with 13% year-earlier) and parts sales (34% against 35% in like-2015).

Cars older than 10 years represent 53% of Spain’s national fleet, according to the trade group.

“Against what is commonly thought, older cars visit the workshop less than cars younger than five years – all of them covered by the automaker’s warranty and with comprehensive insurance policies – and when they visit the workshop their repairs are cheaper,” the GANVAM source says.

TAGS: Retail
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