MADRID – 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 Spain’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 body’s floor-planning costs at €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 region’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 Spain’s dealer network, which registered a considerable decline in the same timeframe. New-car sales garnered the dealer body revenues totaling €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 country’s falling demand for new cars, rising interest rates and unfavorable terms from the auto makers that supply them with vehicles.