Scroll back a few years and the outlook for the Spanish company car market was a highly positive one. Despite being a relatively immature sector, the market had grown fast from just a few players 20 years ago to more than 30 specialised companies, financial and automotive brands that help the outsourcing and management of fleet vehicles. 

And leasing – known as renting within the Spanish industry – had developed as an essential service, particularly for larger fleets. According to Fleet Logistics, around 66% of large companies in Spain opt for operational leasing.

Fast-forward to autumn 2011 and it’s clear that the fleet market in Spain has experienced a tough few years, as the economic downturn has struck at organisations and their investment capabilities.

According to carmakers association ANFAC, new car registrations in October were down 6.7% to 57,278, the worst reading for this month since the figures began. Fleet sales for the first half of the year were also down at 485,770, which was 3.2% lower than in the first half of 2010. And according to ALD Automotive, Spain, the current level of leased 

has been reduced by more than 10% in the past three years.

The most significant effect of the global economic crisis was a major drop in residual values, as Pedro Malla, general manager, ALD Automotive, Spain, explains: ‘In 2009, renting lived a very negative moment due to the collapse of the value of second-hand vehicle, primarily for the profitability of all fleet management operators. This led to a very strong adjustment mechanisms sale of these vehicles.’

The main result of this was a pronounced move within the industry to extend vehicle contracts in an effort to ride out the storm.

Mr Malla explains: ‘The various leasing companies have endured these early years of the crisis, offering to customers who needed it, or they asked for it, an extension of the contracts. For our customers, the vehicle is an essential tool for their business and is often unable to work without it. The contract extensions we have made in previous years, including 2011, have allowed us to reduce fees. Thus, many companies have not had to dispose of this working tool like the car is, but we must also say that they have helped us to control our stock of used cars.’

Fleet Logistics also notes the change in tactics for Spanish fleets.

CEO Peter Soliman says: ‘In recent months, the fleet management advice to Spanish clients has often focused around the extension and adjustment of lease contracts or on change management that has allowed companies to focus more on TCO reduction.

‘These have included initiatives such as downsizing to a more sustainable and efficient fleet or modifications to the car policy that allow a tighter control and a reduction in operating costs.’

Such changes in strategy have altered the landscape of the current Spanish fleet market, as Carlos Garcia, country sales manager for Spain & Canary Islands at JATO Dynamics, explains.

‘Organisations have started to review their company car policies and job titles don’t automatically equate access to a company car in Spain anymore but is now evaluated case by case and based on a certain level of business mileage,’ he says, adding: ‘Extensions of renting contracts are now up to approximately 45 months, which is the longest amount of time we’ve seen in the Spanish fleet market in many years.’

The changes have led to a re-evaluation of the sector by leasing firms. Jose Luis Criado, managing director, LeasePlan International, says: ‘Local banking companies and captive leasing companies have been forced to rethink their strategies and position in the market. This has resulted in a number of them of them pulling out of the market. However on the positive side, the crisis has forced leasing companies to strongly improve their efficiencies and has resulted in total outsourcing developing a more consultative approach with a far greater focus on personalised driver services. 

There has also been increased take-up of flexible renting as noted by JATO Dynamics, with Mr Garcia attributing the popularity of such schemes to the fact that they can be adapted to the increased turnover of employees within an organisation.

LEANER CARS FOR LEANER TIMES 

Another marked effect of Spain’s economic problems has been a distinct move by fleets towards greener and leaner vehicles 

JATO Dynamics’ Carlos Garcia says: ‘Choosing more efficient fleets has also become an economic imperative as well as an environmental one with organisations looking to save on fuel costs and reap benefits of reduced taxes, maintenance and insurance costs. However, the adoption of alternatively fuelled vehicles such as EVs is still a long way from becoming mainstream as challenges such as making them more affordable, increasing the amount of charging sites and developing a wider model selection need to be overcome.’

Fleet Logistics also says that environmental initiatives in Spain have begun to assume greater importance within fleet policies, as with many European countries, and are often directly linked to cost-cutting measures.

Government incentives and a carbon-based vehicle tax system have also fuelled the move to greener vehicles, so that for the last three years there has been a gradual reduction in average CO2 emissions across the Spanish new car market. On the other hand, different government initiatives to reduce carbon emissions, such as limiting driving speeds, have had no impact.  

Average emissions for 2010 were recorded at 139.7g/km, a 2.7g/km fall on 2009. However, average emissions in the fleet market were slightly higher at 143.3g/km, a fall of 5% on 2009. 

‘This is due to company cars being typically larger than average retail vehicles and having higher emissions. But, the overall trend in carbon emissions is definitely downward,’ adds Peter Soliman of Fleet Logistics.

Although Spain may lag behind other countries when it comes to EV take-up, Fleet Logistics highlights one marked environmental trend, which is an increased movement towards hybrid vehicles. These have seen a 12% increase in registrations in the last year as a result of incentives from Institute for Energy Diversification and Saving of Energy to encourage their uptake, while there have been increased levels of discussion about electric vehicles. 

BUILDING FOR THE FUTURE

Although the Spanish economy may remain on its knees, there have been some more positive effects of the country’s troubles, as firms turn to the experts for fleet specialism.

Commenting on the effects of the economic downturn, Mr Garcia says: ‘This has also led to a growing trend in the Spanish fleet market to outsource the fleet management role to increase cost optimisation, better allocation internal resources and develop globally integrated solutions.’

Such a need for additional fleet management services and support from international clients who operate in Spain has led Fleet Logistics to open its second office in Spain.

Peter Soliman says the new office in Barcelona provides a more complete coverage of the region. ‘We feel that with offices in Lisbon, Madrid and now Barcelona, we are well placed to provide our international clients with the support levels they require throughout the region. We celebrated the occasion with more than 30 fleet decision-makers in our brand new offices at the end of last month.

‘This allows us to provide local support services to the drivers of those companies which have a regional strategic approach. Our management and service teams are composed of experienced people with many years of experience in the fleet market,’ he adds.

And while, Pedro Malla of ALD Automotive, Spain is clear that there will be continued challenges for the leasing sector, he is hopeful that leasing firms and their customers will continue to work together to come up with solutions.

He comments: ‘Today, the market’s recovery time, as the containment of used car prices and falling stocks finished cars from leasing companies has been achieved. The worst is over and the market is stable now.

‘Many large corporations have become to renew their fleets, in a timid and slow way, but it helps us to see the light at the end of the tunnel. The leasing companies are increasing the investments to purchase new vehicles and we hope the automotive sector in Spain does not fall further.

‘We now have a new challenge, and it is in the short and medium term, the Spanish economy to rebuild trust in business, especially in SMEs and freelancers. Our goal is to see “renting” as the perfect partner for your business that it always has been. Then, when we have a more favourable financial situation we must extend our services so that they can enter even individuals to enjoy the benefits we offer.’

He concludes: ‘The coming years will be hard for the leasing sector in Spain. While credit is not increased, and companies, large or small, cannot easily access to better funding, our industry will not grow up. However the fleet management operators continue to work to serve the customer and to help the market returns to the figures we had the years before the crisis.’