MADRID â€“ The Federation of Spanish Car Dealers Associations (Faconauto) is predicting as many as 15,000 dealer-network jobs could be lost this year, mostly sales staff, as Spainâ€™s car market continues to contract.
Dealers are being hit by higher financing costs for their bulging inventories as interest rates continue to climb, reaching 4.25% in July as part of a move by the European Central Bank to tame inflation in the euro zone.
Faconauto President Antonio Romero-Haupold estimates the dealer bodyâ€™s floor-planning costs at â‚¬900 million ($1.4 billion) on an annual basis. He says the average time a new car stayed with the dealer was 45-55 days in 2007, but this year, as sales collapse, it has increased to 110 days.
As a result, dealers are paying auto makers in advance for the vehicles they order, often at a higher price than they can charge customers. To make matters worse, due to the regionâ€™s shrinking economy, dealers are finding it difficult to procure loans from banks and other lenders.
Hinting at the considerable profits being enjoyed by some foreign auto makers operating here, Romero-Haupold suggests the car companies should do something to help their dealers.
Faconauto, formed by 2,500 car dealers and 500 commercial-vehicle dealers, underlines positive first-half financial results just announced by some European auto makers, such asAG (up 31%), Volvo Car (up 20%) and Automobiles SpA (up 6%).
This contrasts sharply with Spainâ€™s dealer network, which registered a considerable decline in the same timeframe. New-car sales garnered the dealer body revenues totaling â‚¬11.6 billion ($17.9 billion), down 23.5% from like-2007.
Faconauto warns dealers may be forced to make massive cuts in their sales staffs in the coming months in order to adjust their workforce to the countryâ€™s falling demand for new cars, rising interest rates and unfavorable terms from the auto makers that supply them with vehicles.