Spanish Auto Dealers Get Taste of Black Ink in 2015

Despite the government cash-for-clunkers program’s goal of replacing older vehicles with lower fuel economy and higher emissions with new models, older cars generated an average 9.1% profit compared with 8.8% for new ones.

Jorge Palacios, Correspondent

April 20, 2016

2 Min Read
Repair business slows as warranties expire insurance coverage diminishes
Repair business slows as warranties expire, insurance coverage diminishes.

MADRID – Spanish auto dealers barely finished in the black again in 2015 but showed marginally better results than in the prior year.

A survey performed by Snap-on Business Solutions for GANVAM, the Spanish association of auto dealers, vendors and repair personnel, shows profitability rose from 1.03% in 2014 to 1.8% last year.

GANVAM sources credit the government’s often-extended PIVE cash-for-clunkers program for the uptick. Despite the program’s goal of replacing older vehicles with lower fuel economy and higher emissions with new models, older cars generated an average 9.1% profit compared with 8.8% for new ones.

New- and used-car sales accounted for 51% of dealers’ total profitability in 2015, up from 48% a year earlier, while aftermarket profits accounted for the remaining 49% last year – 36% from parts sales and 13% from repair work.

Newer cars generate higher aftermarket profits, but cars less than 5 years old account for only 15% of the current national fleet, GANVAM says.

Franchised dealers tend to lose return business as cars age and warranties expire, according to Audatex, a company that develops digital solutions for risk management in the auto industry’s aftermarket sector. The typical new-car warranty in Spain is for three years, “So, during these first years of life, about 60% of the repairs are performed by the official dealers and only 40% in multi-brand workshops,” the consultancy says.

However, among cars on the road four or five years official dealers perform only 45% of repairs and multi-brand workshops get the remaining 55%, a share that reaches 60% on cars 6 years old and 75% on cars at least 10 years old. The decline results in part from insurance coverage that gradually is scaled back.

Official dealers are trying to reclaim the market for repairs of cars 6-10 years old by lowering prices and developing customer-loyalty strategies.

 

About the Author(s)

Subscribe to a WardsAuto newsletter today!
Get the latest automotive news delivered daily or weekly. With 5 newsletters to choose from, each curated by our Editors, you can decide what matters to you most.

You May Also Like