Spain’s fleet automotive sector faces challenging times in the wake of the coronavirus pandemic. TraXall examines the state of the market, current trends and what the future has in store.

The market in focus

When the coronavirus pandemic hit Spain in March, the government imposed one of the strictest restrictions on mobility in Europe. The economic impact was deep and far-reaching, with GDP shrinking by 18,5% in the second quarter.

Business uncertainty prevails – and the impact of this is being felt among fleet operators and the wider automotive and vehicle leasing marketplaces.

Flexibility and ingenuity have proved key pillars to business survival across all sectors, and the fleet automotive sector has been no exception.

Spain’s new-car market had taken its time to recover following the financial crisis of 2008, but the pandemic came as a body blow. Thankfully, the government’s Plan RENOVE initiative to incentivise new car purchases has gone some way to mitigating the impact of Covid-19 on vehicle registrations.

According to Trend News Agency, the three associations of the Spanish automotive industry, ANFAC, Faconauto and Ganvam, reported sales of 117.929 cars and off-road vehicles in July, a one per cent increase on July 2019.

Most recently, the government approved the ‘Plan de impulso de la cadena de valor de la indústria de la automoción, hacia una movilidad sostenible y conectada. This €3.75 billion aid package includes 20 economic, fiscal, regulatory, logistical, competitiveness, training and professional qualification measures, sustainable public procurement and strategic planning covering the entire value chain of the Spanish auto industry.

Short-term impact measures will be implemented and executed this year, while medium-term strategic measures will be implemented and executed from 2021.

“The automotive industry is a strategic pillar for our country and this government is not going to leave it behind,” Prime Minister Pedro Sánchez announced.

Navigating a post-Covid route for fleets

The Spanish leasing sector is also a big player, responsible for around 18% of all new vehicle registrations. Leasing companies, for their part, have been formulating new, customised solutions for clients in need of support, in a bid to help them weather the financial storm.

In some cases, corporate fleet sizes have been maintained due to the lengthening of contracts. Elsewhere we have seen business restructuring result in a decrease in corporate fleet registrations, as companies retreat into survival mode and look to introduce contingency plans.

The importance of fleet strategies taking account of the motivational significance of car provision to employees should not be underestimated however. Employers should remain mindful of their longer term business productivity objectives when making fleet decisions.

The marketplace remains volatile and the future unclear. The Spanish Association of Vehicle Renting (AER) has suggested that the efforts of government and industry, combined with further deterioration of the macroeconomic environment, may ultimately impact future residual values.

We can expect the decrease in the overall sales of new vehicles – figures for the first seven months of 2020 reveal a year-on-year drop of 43%  – less volume of used vehicles from fleets and higher demand from the consumer, to strengthen the competitive position of the used car market. A significant drop in residual values ​​can be expected this year, and their growth is unlikely until 2021 at the earliest.

A greener future

Road transport sustainability is high on Spain’s agenda – but the country has a long journey ahead.

According to the EAFO (European Alternative Fuels Observatory), of the 25 million vehicles on Spanish roads at the end of 2019, only around 40.000 were electric vehicles (EVs). Sales, meanwhile, only accounted for 1.25% of new EV registrations (including both battery and plug-in hybrid EVs).

Despite these metrics, there is reason for optimism with foundations for change being put in place.

Demand for EVs is growing and both Madrid and Barcelona have now introduced low emission zones. Furthermore, in May, the Spanish government approved the ‘proyecto de Ley de Cambio Climático y Transición Energética’ bill. This sets out targets for Spain to be neutral in carbon dioxide (CO₂) emissions by 2050, and for the Spanish electricity system to be 100 per cent renewable by this date.

Additional national targets include a legal obligation to reduce greenhouse gas emissions by 20%, compared to 1990 levels, by 2030.

Sustainability measures will consequently be adopted to gradually reduce the emissions of passenger cars and light commercial vehicles to 0g CO₂ / km by 2040.

This transition is set to be a challenging undertaking, particularly given the relatively high price of EVs as things stand, but fleet operators will increasingly be expected to adapt to electrification.

To help support the country’s green ambitions, the Efficient and Sustainable Mobility Incentives Program (MOVES II) was recently approved – a commitment to sustainable vehicle subsidies and to the installation of electric vehicle charging points.

Over recent months, a spotlight has also shone on the new WLTP emissions testing regime and the impact that higher registered CO2 emissions will have on vehicle registration tax requirements.

In the wake of WLTP, fleet decision-makers are being advised to review their car policies. Indeed, the Spanish Association of Automobile Fleet Managers (AEGFA) recommends that companies assess their vehicle options to help minimise their environmental impact.

Safety in the spotlight

Road traffic deaths in Spain have fallen dramatically, from 4.104 in 2006 to 1.806 in 2018. These improvements have been attributed to better education, heavier punishment for road safety failings and improved road transort infrastructure.

Safety awareness is increasing among fleet businesses and drivers, and the opportunities for safety management have been improved by the availability of driving behaviour data from telematics systems. The advent of the coronavirus pandemic has also had a role to play in pushing the safety of business drivers higher up the corporate agenda, with vehicle hygiene, in particular, paramount.

Spanish companies are advised to ensure that risk management is an integral part of their fleet policies and their wider company cultures.

Technology and the new world of mobility management

The global trend towards smart, connected technologies is infiltrating Spanish business – and more specifically the world of fleet transport. Software systems, such as telematics, that focus on optimising and converging fleet data to drive efficiency gains and improve decision-making are becoming more and more prevalent.

Although the company car remains at the fore of corporate transport, investments are also increasingly being made in new mobility technology systems, incorporating integrated apps.

These advanced mobility management tools are enabling employees to select the modes of transport, and journey routes, which best meet their needs. Furthermore, they are also helping companies to make significant cost savings, while improving service standards.

Public transport in Spain remains among the best in Europe, and is relatively inexpensive, particularly in the major cities. International car sharing operators, meanwhile, have become established in both Madrid and Barcelona.

Madrid has been notably proactive in exploring mobility solutions. Last year, the council authorised 18 shared electric scooter providers to operate across the city. More than 8.500 scooters are now available for public use, regulated by the council’s Sustainable Mobility Ordinance.