This sector lived very tense moments before. Among other reasons, due to the purely political campaign to discredit traditional combustion: diesel and gasoline. This pre-covid government maneuver has been absolutely devastating for dealers. Because even then, people were not buying cars, because they did not know if the vehicle they wanted to buy was going to be able to circulate in cities like Madrid or Barcelona.
And with the pandemic?
The coronavirus is a shock, accelerates the disaster. Demonizing diesel and gasoline policies led to uncertainty that was compounded by the spread of the virus. All this as a consequence of the closure of factories, and, in general, of more than 5,000 facilities, such as car dealerships. It must be remembered that during the state of alarm it was the only Spanish industry that was completely paralyzed. In addition, the usual combustion models continue to be rejected, and the sustainability that is pursued would go through encouraging the renewal of a mobile fleet that, in Spain, represents almost 13 years of average age.
What are the consequences of the crusade against combustion?
Electric cars are a great option, but for those who can afford them, since only 19% of families can afford one of these cars. Furthermore, the Spanish infrastructure is not ready. We are the country in Europe with the fewest charging points, and many of those that exist do not respond as they should. Likewise, the autonomy of this type of vehicle, although it is already reaching 400-450 kilometers, in some cases, is still not enough and without offering safety to those users who need to make longer journeys.
What evolution do you foresee for this market in the coming months?
The forecast is not good. There are several factors that are hitting, sometimes without any sense, a sector of vital importance for the business fabric of Spain. Behind the hotel industry and tourism, this industry is decisive in the recovery of the country. However, purchasing power has fallen and the lack of incentives to consume does not help. The Government has promoted a Plan Renove, which has been in place since October and which will be in force, in principle, until this year, although it could be extended. However, individuals, freelancers and entrepreneurs do not find a way out in this project.
Currently, given the economic situation, changing vehicles is not easy, even with this plan. In addition, it is not only an economic matter, because also the perimeter closures make that people cannot go to the dealerships. In recent years, to lower costs, many of them, which were previously in city centers, have moved to peripheral areas that cannot be accessed with mobility restrictions.
What concerns do the employers’ association FACONAUTO and the Spanish Association of Automobile and Truck Manufacturers (ANFAC) have?
FACONAUTO is a tremendously involved employer. It proposes a model of tax incentives that helps to renew the fleet. It cannot be that a new vehicle pays the same taxes as an old one and, consequently, more polluting. In this way, the double objective is being achieved: the economic and the ecological. On the other hand, the employers send a message of strength that translates into alliances between concessionaires or mergers, so that they optimize costs and, ultimately, become stronger. ANFAC, for its part, constantly reminds us that the automotive industry will be key to the Spanish and European recovery. However, the production of vehicles, in Spain, accumulated a decrease of 25% last month. Spain is the country with the greatest decline, compared to Germany, the United Kingdom, France or Italy, which are the main European automotive markets, along with Spain.
What does the sector ask the Executive?
Much more involvement. We all understand that, in an emergency like the one we live in, it is health that takes priority. However, the Ministry of Transport, Mobility and Urban Agenda must deal much more with the issue when thinking and taking measures.
How does the government respond?
The Government is listening to the bosses. They have hosted their president several times and support plans that could have a long-term impact. However, there is no real translation that really encourages the purchase of vehicles. From Moncloa, the focus is on modernization, decarbonization and digitization. There are no tangible and real measures that promote consumption significant enough to speak of recovery. For this reason, I think it is necessary to recall a maxim that, in the midst of the plague, Emperor Marcus Aurelius pronounced while 2,000 people died a day in Rome: “Don’t do it if it’s not convenient, don’t say it if it’s not true.
Should Spain emulate the measures adopted by other countries?
Of course. In line with the fiscal stimulus I was talking about, for the production and purchase of vehicles, Spain is the only European power that does not lower taxes to avoid an economic relapse. From Brussels, what is asked is a reduction in taxes. Germany has already done so, with a tax cut of more than 40,000 million euros, and support for SMEs and families that will greatly benefit sectors such as the automotive industry. However, Moncloa ignores the recommendations and actions of neighboring countries. The only way to reactivate an economy is to encourage consumption and investment, and this always goes through a fiscal strategy. If taxes are not lowered, consumption and investment are stifled, resulting in an economic depression.
How are auto dealer restructurings?
It is a very difficult sector to restructure, because the accumulated liabilities of companies are often in the hands of the brands themselves. In other words, when a dealer owes a lot of money to a brand, he is owing money to someone who, in reality, is comparable to a partner. For this reason, when we establish negotiations with creditors in other types of companies, we detect less fear on the part of the employer than we notice in the case of dealers. So the negotiation with brands must be very subtle, without being able to offer them advantages that the legislation does not allow. Likewise, recoveries are more effective when, without losing respect for the brand, the entrepreneur becomes aware that the decisions in his business must be made by him.
What problems are common to entrepreneurs in the sector?
Before, when a dealership was in trouble, they would come to us with current issues, at the time, and they wanted an immediate response. Now wait. They wait for the vaccine, for the ICO loans, endorsed by the State, to run out and renew, among other things. Therefore, today, many of the businesses that we are seeing work, because they are still open, are not generating enough to keep up. Because what many of them are experiencing is the anesthesia that the Government has given: ICO loans. A tool that can be very useful, and that we defend, but that would have to be granted once the viability of the business has been studied.
What is the danger in waiting?
The risk is that the company ends up literally drying up. If we understand money as a liquid concept, when it runs out, the company dries up.
How to avoid this outcome?
The recovery of a company goes through one of these four ways. The first is operational restructuring, that is, an analysis advised by lawyers and financiers to adapt the cost structure to the current reality. The second is out-of-court refinancing, in which businessmen, advised by professionals, propose deductions and waits outside of a judicial proceeding to their creditors. A much more effective performance within the regulated framework known as pre-contest, which is not a contest in itself and does not have to end in one. Third, we find the bankruptcy of rescue creditors, legally known as bankruptcy of agreement. In this case, we would find ourselves before the regulated, judicialized framework, in which both the operational restructuring and the financial restructuring are undertaken, in order to give the company viability. Finally, in the worst case, there is the possibility of having to accept that the business is not viable, and that is when the liquidation would take place. Normally, people associate bankruptcy with liquidation and this is not the case. The bankruptcy is designed to strengthen the business fabric and to respect the equal treatment that creditors deserve. Although a very high percentage of the contests end in liquidation, what is not said is that 80% of the companies that arrive at the contest on time are saved. So arriving on time to the contest is a guarantee of success in the viability of a company, even more so if it is a dealer.