US carmakers woo buyers in Spain
The Iberian peninsula (Spain and Portugal) is viewed as the last major underdeveloped car market in Western Europe. Seeing the potential, US carmakers are staking out their claims. Ford Motor Company has been operating a car-assembly plant near Valencia, south of Barcelona on the Mediterranean coast of Spain, since 1976; and General Motors has just launched a new automobile plant in Zaragosa in northern Spain.
Ford also is debating a plan to build a car-assembly plant in Portugal with a capacity of up to 200,000 cars a year.
Both US auto giants see not only a big market in Spain and Portugal in the late 1980's and beyond, but other major benefits as well:
* Wages are still low as compared to wages in other European nations;
* Other European small-car markets are not too far away;
* Both Spain and Portugal expect to join the European Common Market by the mid- to late-1980s and thus win tariff-free entry into the richer markets of northern Europe; and
* A potential rising demand for new small cars, particularly in Spain, even though the market now is delayed by the worldwide downturn in consumer demand.
Spain now has an ownership ratio of 212 cars per 1,000 population, compared to 391 per 1,000 in West Germany.
This glowing prospect was enough to persuade GM, which, while profitable, isn't exactly laughing all the way to the bank, to spend more than $2 billion to develop its all-new Opel Corsa, plus a new assembly facility in Zaragosa in northern Spain, new engine and transmission plants in Austria, and new components facilities in other parts of Europe.
None of the Zaragosa output is scheduled to come to the US.
Spain has used a hefty 36 percent tariff on imported cars to force companies to build cars in the country instead of importing them.
Ford Motor Company saw the ''Spanish opportunity'' a long time ago when in 1976 it opened its car-assembly plant in Valencia to build the Ford Fiesta. In 1982 Ford captured 16.5 percent of the Spanish car market. Last year the US company built some 200,000 Fiestas in Valencia, plus 100,000 Escorts, with the majority shipped to other markets in Europe. [Spain requires that carmakers export two-thirds of all output.]
Despite its underdevelopment, Spain today is the fifth largest car market in Western Europe and ''offers the greatest potential for growth,'' says Roger B. Smith, GM chairman, who adds that ''Spain is, or soon will be, the fourth largest producer of cars in Western Europe.'' GM made the decision in 1979 to significantly boost its car-production capacity in Western Europe, which indicates GM's plan to do battle with Ford Motor Company in a region in which Ford has long beaten ''Mr. Big.''
Ford, in fact, had for some time been as dominant over GM in Europe as GM was over Ford in the US.
The new highly automated GM plant in Zaragosa was sufficiently important in job-short Spain to persuade King Juan Carlos I to cut the ribbon.
''At full production the plant will produce 75 Opel Corsas an hour, or 270, 000 units per year,'' reports GM chairman Smith.
SEAT, the Spanish auto manufacturer with about one-quarter of the Spanish new-car market, is owned by the Spanish government but since 1950 was jointly run by Italy's Fiat till it recently pulled out of the deal because of internal problems of its own.
Now SEAT is tied up with West Germany's Volkswagenwerk AG and will build the VW Polo, smaller than the Rabbit and not sold in the US, as well as the 4-door Quantum.
The rest of the Spanish car market is controlled by the imports. France's government-owned Renault has one-third of the market and Ford Motor Company 16.5 percent.
SEAT will continue to build 80,000 Fiat Pandas a year in Spain, at least till 1986, despite the fact that Fiat has withdrawn its technological support. The cars will be shipped to Fiat dealers in Western Europe.
SEAT also will begin selling its midsize Ronda hatchback automobile throughout Europe.
Looking ahead, GM's chairman, Mr. Smith, expects the European new-car market to rise from its current sales rate of 10 million units a year to 11.5 million in 1985 and 13 million by 1990.