Spanish Dealers Hiring, But Still Not Making Money, Group Says

MADRID – Employment grew at official franchised auto dealers in Spain for the first time in a long time, but retailers continued to lose money and more retailers are expected to exit the business in 2014, FACONAUTO, the country’s dealer association, reveals.

FACONAUTO President Jaume Roura says 900 new jobs were created in 2013, following five years of crisis that saw new-car sales fall 65%. Some 50,000 jobs were lost and the ranks of official auto dealers cut down by a third.

Roura says there now are 2,487 official auto dealers in Spain, with 2,290 dedicated to passenger-vehicle distribution and the rest focused on selling commercial vehicles.

Revenue in the sector totaled €24.5 billion ($33.3 billion) in 2013, up 10% from 2012 and accounting for 2.3% of Spain’s gross domestic product, FACONAUTO says. The sector employed 131,313 people directly in 2013.

However, Roura rejects forecasts calling for dealers to return to profitability this year.

A 2013 report prepared by Snap On Business for GANVAM, the biggest Spanish association of auto sellers, retailers and repairers, which also includes many of the auto dealers affiliated to FACONAUTO, estimated losses of 3% for the first nine months of 2013 and predicted dealers would be close to breakeven by year’s end and marginally in the black for 2014.

FACONAUTO had forecast a 5% negative margin in 2013 and earlier this year Roura said new initiatives from automakers demanding showroom upgrades would further pressure profits at a time “when losses accumulated during the crisis years still had not been set off.

“Those new requirements can mean (investments of) about €1 million ($1.4 million) when distributing luxury cars or between €600,000-€700,000 ($816,000-$951,000) for generalist auto dealers for the 2014-2017 period.”

Now, Roura says auto-dealers profitability was even worse than expected, closing 2013 with a negative margin averaging 7%, despite higher revenues than in 2012.

“Our current target is to increase car sales to 840,000 units in 2014 versus the 800,000 units of (2013), trying to recover the 1.3 million units level in the short term,” Roura tells the more than 500 attendees of the group’s convention late last month.