What is the relationship between the COVID pandemic, vaccines and the dealership and workshop business?

Since the 2008 crisis, the age of the Spanish park has not stopped increasing, it is on its way to 13 years, and the measures proposed by the concessionaires’ employer, FACONAUTO, continue to be ineffective in going to the root of the problem, the economy.

Spain It has a car fleet that keeps aging. It was already a problem before the COVID-19 pandemic, and it will continue to be. It is the reality, we may like it more or less. The distribution and after-sales sector is going to suffer as a result: fewer new cars are sold, there are more transfers of used cars and they go through the garage less.

Let’s look at this data: at the end of 2020, the Spanish dealer network ended with 464,300 used cars in stock, of which 438,626 are traditional internal combustion and 25,674 are hybrids and electric. Compared to 2019, the stock has grown 18% in numerical terms, according to Sumauto data.

Part of the problem was accentuated with the flood of self-registrations in December, when dealers had to license thousands of cars to meet brand targets, and in turn you are with Brussels, to reduce average CO2 and avoid fines (or that were less important). They are cars without an owner in the short term.

Spain, 2021

As we are recovering from the effects of the third wave of the pandemic and health data returns to some ‘normality’, there is already an economic damage done: more than 600,000 jobs destroyed, confinements and travel restrictions, less labor mobility due to teleworking … and that in practice what is paid for the registration tax has increased.

Of those muds, these muds. During the Congress & Expo of Faconauto, a virtual event focused on professionals, more data has appeared to contextualize the situation. The new passenger car market started the year with a decline of more than 50% compared to January 2020, which was a “normal” month.

The dealers’ employer, FACONAUTO, has requested various measures to increase sales this year by up to 100,000 units. Briefly, they are these:

Speeding up the vaccination campaign Supporting hybrids as transitional technology A new Renove Plan that supports the purchase of traditional gasoline / diesel A scrapping plan not linked to the purchase of another car Lower purchase taxes, especially the VAT of plug-in and electric hybrids Plus taxes on vintage car forks

Synthesizing, FACONAUTO wants the public authorities to help them sell more cars, and that those that are accumulating years are being withdrawn from circulation for various reasons: they are more polluting, they are less safe … and another weighty, that after-sales makes little money with them.

In the graph above, made by Solera Spain, we see how the first and second waves of the pandemic caused fewer cars to pass through the workshops. During the third wave, predictably, the same will happen. Several are the factors that explain these falls.

There is less daily, sporadic, and long-distance mobility. In addition, the private vehicle is being used less in general (although public transport has fallen more and this causes the use of private vehicle), maintenance is stretched to the essential for economic reasons, etc. Essential use, essential maintenance.

I very much doubt that the solution to the problem comes from making life more difficult for those who cannot afford a new vehicle. It also does not happen because whoever can buy a new one and whoever does not throw his own and go by public transport or walking, or by bicycle. It doesn’t seem like a realistic approach to me.

As I said on another occasion, the situation will last for several more years, and the renovation of the park will be linked to the economic recovery. For this, mass vaccination is essential, that the coronavirus stops conditioning the economy, and that people stop getting infected, getting sick and, in the extreme, dying.

Vaccination right now does not depend on the Government if they are not going to enter more doses from the pharmaceutical companies. The economy is fatal of its own. You have to take another approach, the economically unfavorable situation will last a long time, and you have to live with it. Therefore, new vehicle sales have to coexist with the correct maintenance of older cars.

Cars with more than 20 years parked on the street – Photo: Nacho (Flickr) CC BY

Given that more than two-thirds of Spanish passenger cars are more than 10 years old, and that we are talking about cars that are usually insured to third parties and go through the necessary workshop (since the diminishing value leads to spending less money as it is worth or no) we must promote the culture of correct maintenance.

If it is inevitable that we keep older cars because there is no money for a new one, then at least they are well maintained. ITV, as they are raised (and that for those who pass them), are not enough. You have to tighten the nuts a little more to improve the maintenance of the park, in other words, tougher MOT.

And what about expired ITV as a synonym for stocks and the municipal deposit?

That model works very well in Japan. The dreaded shaken or security checks make the Japanese only keep old cars if they are well cared forIf not, they are scrapped or exported. You could be a win-win for everyone: more business for workshops, lower accidents, dangerous scrap to dismantling … without the need to increase motorist taxes, whatever you use.