An ongoing battle for competitiveness

Over recent years, mobility, in its widest sense, has revolutionised the environment in which the automotive industry works. Private vehicles as individual possessions now form part of an ecosystem in which on-demand mobility is hugely important, where the way in which we travel depends on our needs and circumstances at the time. Mobility is a right for the public - it is their right to move when, how and where they want. But the definition of this does not depend solely on governments, vehicle manufacturers or providers of technological applications. This definition is the responsibility of all of us, as a society. We have to define the type of mobility that is most appropriate for Spain, and under what conditions. Here at ANFAC, we believe mobility has to be smart, emission free, accessible and affordable, with a common model applicable to the whole of Spain in a consistent and orderly way.

The world is changing, and we are changing with it. For our part, manufacturers are fully committed to this change. We are already adapting our offering to the changing demands of the public for more efficient technologies that reduce emissions and increase connectivity, safety and comfort. In this new environment, the concept of linear production (design, manufacture and selling of vehicles) is disappearing, and being replaced by an ecosystem of different suppliers and services, in which new components and technologies play a leading role. The car of the future will be a “smartphone with wheels”. This opens up a range of challenges, but also offers new business possibilities in which vehicle manufacturers have to be involved.

Spain is one of the leading manufacturers of vehicles in Europe and the world. It has to position itself robustly in this new environment, so as not to lose its 3% share of global car production or its position as the second largest European producer. We are Spain's biggest export industry. We account for 10% of GDP with a widespread geographical presence of 17 factories in ten autonomous communities. This has fostered the creation and growth of a substantial supporting industry for components, the closeness of which is very positive for our competitiveness.

The Industry minister, Reyes Maroto (in the centre), with ANFAC's management board

The key to protecting this robust presence is to fight ceaselessly to enhance the competitiveness of our factories. Just doing this once is not enough, because this is not a sprint but a never-ending relay. We need to attract the investment and models to meet these new needs and consumer demands. This means more efficient vehicles with better technological equipment, but also mobility services that give the user greater flexibility and meet their transport needs. We are doing our duty, with more than €10 billion invested over the last five years. Over 60% of the models that will come onto the market over the coming months will have electric or hybrid versions, together with the most advanced and efficient combustion engines.

But as I said at the beginning, the definition of mobility that we want as a country will not be decided by the manufacturers alone, and, in our multi-faceted environment, neither can we work on the competitiveness of our factories in isolation. Today, more than ever, we need administrations, social agents, workers and society as a whole to retain this presence . We need a flourishing market and demand for electric vehicles if we want to consolidate the manufacture of such models in Spain. If the penetration of electric vehicles in Spain is only 0.5%, it is very difficult to attract models to be made here. We need to increase our recharging-infrastructure exponentially, and commit to scrappage and purchase plans to refresh our vehicle stock. We are not going to manufacture just for export, and demand will not arrive if we do not facilitate the conditions.

We need industrial reforms to reduce logistical and energy costs to the levels of the countries around us. We are a creative and dynamic country, but we struggle to make decisions that are structured and stable over time. We need to make progress on implementing these solutions. This is why ANFAC is working on a Strategic Plan for 2030, which will be a constructive value proposal for society as a whole in the definition of mobility and the commitment to competitiveness. This will help Spain to maintain its leadership in an industry that is of the utmost importance for the country, and the future.

José Vicente de los Mozos
Chairman of ANFAC

Strong in the face of a changing and challenging future

For ANFAC, 2018 has been one of the most challenging years since the crisis. We have been working in a changing scenario, where environmental protection, trade wars between geopolitical blocks and local and regional politics in Spain have become even more important, if that is possible. We have been working as an association to help Spain retain its leading position in European car manufacturing against a backdrop of changing conditions, while the industry undergoes the most demanding transformation in its history.

The main element that has affected sales and production at the Spanish and European levels has been the effect of the new WLTP (Worldwide Harmonized Light-Duty Vehicles Test Procedures) and RDE (Real Driving Emissions) regulations coming into effect in September 2018. These new tests are stricter and more complete that their predecessor, the NEDC, as they set forth a much more precise basis for calculating the actual fuel consumption of a vehicle and its CO2 (WLTP) and particle (RDE) emissions. Manufacturers are fully committed to de-carbonising our vehicle stock. They have worked hard to adapt to these new accreditations, but the transition has not been easy. These regulations coming into force led to sales of vehicles accredited under the NEDC being brought forward to the summer months, with a resulting fall in registrations in the following months to offset this effect.

2019 Mobility Forum and VEA Committee in Zaragoza

As a result, sales grew in the year as a whole by 7%, to 1.32 million vehicles. However, this growth cannot hide the fact that sales started to fall in September due to the WLTP effect, and have not yet returned to a stable growth path. This downward trend - which is more pronounced in the individuals channel - is influencing the current uncertainty of consumers, who are not clear about which car to buy, and who see the economic outlook for the coming months as being less promising than in the past. These decisions are further complicated by: more technologies being available to power vehicles, but with no uniformity in driving restrictions because of pollution; public demonstrations against diesel and petrol (going as far as a ban under the Climate Change Act in the Balearic Islands, against which ANFAC has appealed); and the lack of adequate recharging infrastructure and stimulus plans for purchases of electric and alternative vehicles. It will be very difficult to reverse this trend if a scrappage plan is not approved in the coming months to foster consumer confidence when purchasing a vehicle, which will enable the renewal of the more than 15 million vehicles that are over 15 or 20 years old. If we want to improve the air quality in our cities and safety on our roads, these vehicles need to be replaced.

Vehicle production in Spain has also been impacted by the WLTP and RDE coming into effect. The difficulty of accessing engines approved under the new regulations, together with distortions in demand caused by the weakness in production, has also been compounded by lower sales in some major export markets, such as Turkey and the UK, because of their own particular difficulties. This resulted in a 1% fall in production to 2.82 million units, losing eighth place in the rankings of global vehicle manufacturers. This is worrying, but not desperate. Spanish factories are now adapting, not just to these geo-political difficulties, which affect a sector that is highly export driven, but also to the changes affecting the industry in general, towards shared, connected, autonomous electric vehicles. ANFAC is working on its strategy as a sector and industry for the coming years, with a route map that will keep us strong in a future that is challenging but also replete with opportunities, in which we hope to achieve the agreement of the government, the autonomous communities, local administrations and society in general.

Mario Armero,
Executive Vice-chairman of ANFAC