Spain Again Ranks Second in Europe in Vehicle Output

MADRID – With an expected 2.3 million units to be produced by year’s end, Spain will close 2011 as the second-leading vehicle-producing nation in Europe.

The performance will mark the third year in a row Spain has controlled the No.2 position, having wrested it away from France in 2009.

However, based on survey published by Euler Hermes, a consultancy that is part of Germany’s Allianz, and data provided by international auto maker association OICA, only Germany has returned to its pre-crisis production level.

Spain output is down 20.7%, while France production has declined 36.7% and Italy is off 38.5% from 2007 levels.

In addition to the negative impact from the economy, French and Italian output has suffered from a relocation of production to lower-cost countries, Euler Hermes says.

As a whole, car sales in Europe have continued a decline in 2011, particularly in the southern region.

“The European automobile market is unfortunately still far below its pre-crisis level by at least 15%,” says Ludovic Subran, Euler Hermes’ chief economist.

“Economic reality has naturally caught up with the market. With stimulus measures at an end and austerity being now the watchword in most European countries, the automobile industry can only continue its slow agony and can be expected to contract by another 3% to 5% next year,” Subran adds.

No rebound is expected in the U.K., Italy and Spain during 2012. In Germany, Euler Hermes believes car demand will stabilize at close to 2008 levels, with 3.1 million registrations forecast for 2012, about 1.5% shy of 2011.

Even though the French market continues to benefit from numerous incentives in 2011, Yann Lacroix, head of sector research at Euler Hermes, underlines that difficulties remain.

“We are currently seeing a sharp downturn in order books, which is expected to result in a 10% drop in growth in 2012, the sharpest fall in Europe,” he says. “Moreover, profitability is low for French car makers at 2.2%, one third of the German level.”

Regarding emerging markets, Euler Hermes points out that China paused in 2011, with a 4%-5% growth rate well below the 30%-40% tallies in 2009 and 2010. But given its low 5% vehicle-penetration rate, the country continues to enjoy huge growth potential.

India is starting to suffer from interest-rate increases and the disappointing showing for super-low-cost cars, such as the Tata Nano, the analysts say. A slight decline to below 2 million units is forecast for 2012.