MADRID – Analysts expected the Spain’s new-vehicle market to slow this year, but results thus far suggest a more difficult landscape than anticipated.

The first warning came in January, when the Spanish Federation of Auto Dealers Associations (Faconauto) reported a 22% drop in car sales, including SUVs and cross/utility vehicles.

Sales to rental companies slightly improved the overall results, but the month’s 12.8% drop to 101,514 units marked the worst January in five years.

Thanks to one more working day this year than last, plus a whopping 81% increase in rental sales, February managed a slight recovery, as deliveries gained 0.6% overall.

But the market plunged again in March, as sales fell 30% from year-ago levels, and first-quarter demand was off 15% from like-2007.

The overall economic malaise here is being blamed for the sudden, bigger-than-expected decline.

“At the end of March 2008, the level of the Spanish Stock and Exchange Market was 12.6% lower than in the first quarter of 2007,” says German Lopez, chairman of the Spanish Association of Cars and Trucks Importers (Aniacam) and CEO of Volvo Cars Spain.

“An inflation of 4.6%, a fall of 27% in the new-home market and a Euribor (inter-banks interest rate) of 4.7% have situated the consumer confidence in historical minimums, in a similar level to that of 1993.”

Lopez forecasts gross national product growth of less than 2%, while the Spanish government still is estimating 3.1%.

Dealers, which had been self-registering vehicles for several months to hit sales targets, largely ended the practice in March, Lopez says, because weak market demand is making it difficult to sell the inventory already on lots.

Aniacam still is expecting a bit of a recovery as the year goes on, predicting sales for the year will decline 6%-8% from 2007.