Spain Autos Report Q4 2012

The ongoing gloom in the Western European markets is falling heavily on the Spanish autos productionsegment, with the first four months of 2012 autos production declining 16.5% year-on-year (y-o-y). Withexports accounting for as much as 90% of Spain's vehicle production in 2011, it is not surprising that amore than 20% y-o-y fall in export demand between January and April 2012 has made Spanish carmakerscautious about stepping up their production. In view of this pessimism, BMI has revised down itsforecasts for both the export and production segments to contract nearly 10% y-o-y and 12% y-o-yrespectively in 2012.

Passenger car sales in Spain fell 8.5% y-o-y to 472,393 units in the first eight months of the year. In lightof these sales figures and ongoing downward pressure on consumer sentiment in the country, we revisedour 2012 sales forecast in this segment to a more bearish 10% decline in 2012, from 7.1% previously.Furthermore, light commercial vehicle (CV) sales fell by 25.2% y-o-y during this period and heavycommercial vehicles declined by 21.3% y-o-y, to 7,211 units. BMI forecasts a 1.8% decrease in the CVsegment in 2012.

Leading indicators, particularly unemployment and house prices, have deteriorated significantly in 2012.With the rest of the eurozone caught up in a pronounced slowdown, we hold on to our forecasts of a morethan 6% y-o-y fall in vehicle sales in 2012.

Depressed domestic demand and lacklustre production growth have meant that Spain has slipped to tenthposition in BMI’s Risk/Reward Ratings, down from eighth last quarter. The country also lost points dueto depressed domestic demand for vehicles.