Used Cars’ Popularity Among Spaniards Nothing New

MADRID – An indoor show featuring shiny used cars might be a novelty elsewhere but not in Spain, where the 20^th annual Used Vehicles Show closed June 5 after a 9-day run here.

More than 5,000 vehicles from 32 brands were shown at the 408,030-sq.-ft. (37,907-sq.-m) Madrid Fair Organization facility. Organizers who financed the event – dealers representing automakers’ official distribution networks – say 47,186 people visited the show and 3,139 vehicles were sold, or about one for every 15 showgoers.

The number of sales will increase as buyers complete purchase agreements reached during the show, says Miguel Aguilar, manager of automotive events held at the Madrid venue. He says he hopes the total will reduce the ratio of cars sold to showgoers to 1:11.

The average transaction price was not available, but Aguilar estimates it will be slightly higher than the average sale price of €15,800 ($18,000) at last year’s show, because the cars sold this year were slightly newer.

Sales between individuals were not allowed.

The event is so popular that shows also were held in autumn 2014 and 2015. Attendance at the just-concluded event was up 1% and the number of vehicles sold rose 19% from last fall’s exhibition.

Bur organizers have not decided whether to stage a show this fall. Aguilar says this is because strong sales at the spring 2014 and 2015 events left dealers with few vehicles to offer.

Buyers were able to finance their purchases at the show. Spaniards typically obtain car loans from the automakers’ financing arms, but increasingly are turning to private banks now that the European Central Bank is lending money to the private banks interest-free.

All the vehicles offered for exhibit first were inspected by Munich-based TUV SUD ATISAE. The independent global testing, inspection and certification service approved or rejected the entries based on about 100 evaluations of body exterior, engines, tires, suspensions, seatbelts, warning lights, brake pressure, hand brakes, steering play and liquid leakages.

Used cars are big business in Spain, with about 1.8 million units sold in 2015, up 11.3% from the prior year, according to Tomas Herrera, manager and general secretary-GANVAM, a trade group representing car dealers, repairers and parts suppliers. Spaniards bought 1.03 million new cars last year, for a ratio of 1.8 used-car sales for every new-car purchase.

About 40 million used cars were sold last year in the U.S., three-quarters of them by dealers, more than double the 17.4 million sales of new light vehicles, according to WardsAuto data.

Most Deals Cut Without Middleman

A survey by GANVAM and the Automotive Studies Institute, a branch of ANFAC, the main Spanish association of automakers, shows 60% of used-car sales nationwide in 2015 were private transactions, 24% were made by auto dealers, 12% were sold by businesses outside the automakers’ official distribution networks and 4% were resales by car-rental companies.

The survey showed 83.8% of used-car buyers in 2015 were private motorists, 14.4% were managers of company fleets and 1.8% of the vehicles were bought by car-rental companies.

The ratio of used- to new-vehicle sales was 1.2:1 at the Madrid show in 2007, the year before the global financial crisis curtailed purchasing power for items including new cars in Spain and elsewhere. Yet Herrera believes used-vehicle demand was more stable from 2007-2015.

At the recent Madrid show 18% of the vehicles sold were at least 3 years old and 52% were at least 10 years old. The GANVAM/Automotive Studies Institute survey predicts increased leasing and car-sharing, in which new vehicles will be retired sooner than privately owned cars, will put a higher share of relatively newer vehicles into the used-car market, resulting in sales of more than 2.6 million units by 2020, double the projected 1.3 million new-car deliveries.

Coincidentally, the average price of a new car in Spain is €16,000 ($18,100), roughly the same average price of the used cars that changed hands in Madrid, ANFAC spokesman David Barrientos says. But that is the new car’s base price. It also is subject to a 21% value-added tax, registration tax and taxes based on carbon-dioxide emissions: 14.75% for cars whose CO2 emissions exceed 200 g/km; 9.75% for emissions of 161-200 g/km; and 4.75% for emissions of 121-160 g/km.  

There is no emissions tax on new cars emitting fewer than 120 g/km of CO2. 

Sales of 'Nearly New' Off-Lease, Retired Shared Cars Spiking

Herrera notes the cars involved in the private transactions that comprised 60% of Spanish used-vehicle transfers in 2015 tend to be older and in worse condition than the dealer-owned lease cars and those owned by car-sharing services that eventually will be offered for resale.

“During the financial crisis, rent-a-car companies and (business) fleets were obliged to extend the use periods for the vehicles they bought,” he says. “And many of those vehicles are now finishing that period and arrive to the used-car market with one or two more years (of use) than before the crisis and, logically, with a lower price.

“Buyers can now be finding vehicles a little older than before the crisis but more affordable.”

From Jan. 1 through May 15 of this year, about 718,000 used vehicles were sold in Spain, up 16.3% from the same period of 2015. But Herrera says that increase has not been adjusted for what can be up to three sales of a single vehicle – from vendor to dealer, from dealer to independent retailer and finally to the consumer.

Herrera projects full-year adjusted sales of 1.85 million used cars, up just 3% from the 1.8 million sold in 2015. And they generally will be newer: In the first four months of this year compared with like-2015, sales of used cars less than a year old were up 34.9%; vehicles 1-3 years old, up 36.8%; vehicles 3-5 years old, up 7%; vehicles 5-10 years old, up 3.6%; and those older than 10 years, up 17.5%.

GANVAM officials say that for younger cars to claim a bigger share of the used-vehicle market, several factors must come into play.

“On the one hand, it is necessary to promote the rejuvenation of the national fleet, which necessarily involves encouraging the scrapping of older vehicles…instead of the current 10 years. On the other hand, we must encourage (sellers)…especially those under the formula of renting, which currently only account for 14% of registrations, to not only guarantee their renewal every four years, but assure impeccable maintenance in approved workshops according to manufacturer requirements.”