Millions in Losses in the Automotive Sector After the DANA

Cars accumulated in the streets, garages, and roads are a true reflection of the destruction caused by the DANA. The high population density in the most affected municipalities by the DANA (ground zero) also implies the existence of a high number of passenger vehicles located in that area.

Individuals and companies suffer the loss of their means of transport, with the consequent economic damage. However, within the automotive sector, the losses are in the millions. Dealerships, vehicle repair workshops, distributors, the aftermarket sector, component manufacturers, and plants like Ford in Almussafes will need resources to resume their activities.

According to the data available so far and pending the final balance, in the areas affected by the floods in the Valencian municipalities, there are almost 459,000 vehicles registered, 28% of the provincial total, according to Solera.

Of all of them, 61% are over 10 years old, meaning vehicles that normally only have third-party coverage, although the Insurance Compensation Consortium will cover any vehicle with a policy in force, regardless of whether it is comprehensive or third-party.

However, especially in newer vehicles (which are 17% of the fleet in the affected areas in the province of Valencia), policyholders must check if they have any improvement clause in the contracts. This means that a vehicle, which depreciates every year, can recover part of that lost value, up to 20-30% depending on what is signed, in addition to the valuation made of the car according to the tables of the corresponding entities. Up to 93% of the vehicles registered in the municipalities most affected by the DANA in the province of Valencia are in the hands of private owners, compared to 4.4% of companies, 2.3% of leasing, and 0.4% of rent a car.

According to the statistics of the General Directorate of Traffic, in the 15 municipalities of ground zero (and not counting the affected districts of Valencia), the fleet of passenger cars amounted to 120,000 in 2023, of which one-third were less than 8 years old. It is in this area where the percentage of affected passenger cars is the highest.

The number of registered vans and trucks exceeds 18,000. Although not all would be parked or mobile in the affected areas.

This figure should be added to the vehicles affected on the major roads (A3, A7, V31, and CV36) and in the dealerships. Being a working day and at 7 pm, the number of vehicles affected by customers of the shopping centers in the area has not been very high, according to data provided to ABC by the Association of Automobile Repairers of the Province of Valencia (FEVAUTO).

Although it is still early to quantify the total damage caused by the DANA for vehicles and distributors, the federation of official dealerships, Faconauto, estimates that the figure for sellers could exceed 490 million euros. The sales points in Valencia are divided into three large areas: Avenida de las Tres Cruces in the city center, which has barely suffered damage; Quart del Poblet, with some damage; and Pista de Silla, which is the most affected area. According to data from the Ministry of Innovation, Industry, Commerce, and Tourism, there are 40 sales points affected by floods and mud, with about 18,000 stock passenger cars damaged.

Raúl Palacios, the president of Ganvam, who represents the interests of sellers, is also at the head of the Valencian regional branch of the association. "We are trying to coordinate humanitarian aid and support the entrepreneur," he says. "We have activated a device to provide immediate support to affected entrepreneurs, whether they are members or not, including, among other measures, the free valuation of the inventory stock of damaged used vehicles." In addition, the organization has created a legal advisory service to help in the processing of contingencies.

There are certain particular cases for dealerships. For example, new cars without registration are usually valued based on their invoice. Those financed with a credit policy from a financial institution usually require an insurance policy for the facilities or fields where they are deposited. This is similar to what happens for those that were in workshops or in third-party fields.

Faconauto points out that they value the proposal of the Valencian Generalitat to allocate 200 million euros in aid to alleviate the damage in sales points, as well as the proposal to launch an aid plan of 864 million for 80,000 affected passenger and commercial vehicles, and 400 million to renew 10,000 industrial vehicles.

The automotive supplier industry is spread throughout Spain, with a special concentration in places where a vehicle production plant is installed. The DANA has directly impacted many factories and facilities of automotive suppliers, with the corresponding impact on workers, their families, and the competitiveness of businesses. According to the General Director of the Spanish Association of Automotive Suppliers (Sernauto), José Portilla, "it is still early to quantify the direct losses, as some facilities are at the epicenter of the tragedy and access has not been possible."

In addition, since they are part of the automotive sector supply chain, the director explains to ABC "it is estimated that it is also having a strong indirect impact on customers and suppliers of all kinds. The Renault Valladolid and VW Navarra plants have already announced that they will have to stop temporarily due to having suppliers in the affected area." This is also being felt especially in the spare parts market, with distributors and workshops heavily affected by the floods and floods of these days.

The passage of the DANA has been a new setback for the Ford factory in Almussafes (Valencia), in the midst of a negotiation process between management and unions to adjust the workforce volume to market demands. This factory plans to restart activity at its engine plant next Monday, November 11, when it was initially planned to resume activity yesterday, Wednesday, according to the UGT union. The effects of the DANA last Tuesday in Valencia forced a halt to production that was also already affected by a temporary layoff. UGT explained that the return to activity at the engine plant was planned but "the current circumstances of mobility restriction and road conditions, as well as the impact on some suppliers, make it impossible."

Vehicles accumulated in streets, garages, and roads after the storm in Valencia are beginning to be removed by crane services and local scrapyards, which, however, will need help from other autonomous communities to complete their work. 69 points have already been enabled, including scrapyards and fields, so that the more than 400 insurance appraisers already in the area can identify vehicles and owners to process, if applicable, possible compensations or write-offs, and so that owners can recover their vehicles.

According to the coordinator of the Roadside Assistance Companies Network (REAC), Sonia Luque, there are about 70 cranes and 100 personnel in the area, who act once the teams of the Military Emergency Unit (UME) clear the ground. Scrapyard companies also act, removing cars from the roads and taking them to a field in Valencia Sur, as explained by the technical director of the Association of Scrapyards of the Valencian Community (Adecova), Pere Anrubia. However, he warns that new spaces will need to be enabled.

In this case, the General Directorate of Education and Environmental Quality of the Valencian Community has issued a resolution to expand, without limits, the limits of vehicles that scrapyards can receive. Under normal conditions, this figure is capped based on the capacity of each scrapyard company. The measures adopted are valid for six months (until 30/04/2025) and must be applied exclusively to vehicles damaged in the geographical areas affected by the DANA, considering the objective storage capacity of each center.

Anrubia has warned that the scrapyard positions in the Valencian Community do not have the capacity to manage all the damaged vehicles, so help will be requested from the Spanish Association for the Environmental Treatment of End-of-Life Vehicles (Sigrauto), which includes manufacturers and importers, scrapyards, and shredders (scrap companies).

Once the vehicles are removed from the public road, appraisers and owners must act to decide if they are repairable or should be scrapped. The economy has specified that each car will have a file that will allow the opening of a file to be expedited and to advance as quickly as possible with the payment of compensations.

Passenger cars, motorcycles, vans, trucks. Countless people have been left without a vehicle in Valencia, with an operation to remove them that could take between one and two months. The severe floods will have multiple direct consequences in the automotive market and the aftermarket sector, specifically in workshops and spare parts dealers. In the most affected areas, there are 442 vehicle repair businesses quantified, with an annual turnover of more than 206 million euros and employing 948 people, according to figures provided by Solera.

From FEVAUTO (Association of Automobile Repairers of the Province of Valencia), they are collaborating with the College of Technical Industrial Engineers COGITI VALENCIA to help with cleaning and vehicle removal tasks in areas where the DANA has caused damage.

The Association of Vehicle Repair Workshops of the Province of Valencia (FEVAUTO) emphasizes alerting the public about the importance of not starting vehicles, whether internal combustion or electric, that have suffered damage due to the DANA to avoid engine breakage and being declared a total loss. From this organization, they are working to help with cleaning and vehicle removal tasks in areas where damage has occurred, as the machinery collaborating in cleaning and debris removal tasks urgently needs repairs on-site, such as tire replacement due to punctures, and therefore they call on those workshops that have assistance workshop vehicles to come and collaborate.

According to Mª José Lladró Pérez, Technical Secretary of FEVAUTO, "we are managing machinery and other types of aid to all areas so that workshops, industries, and people can move forward. Together with Aselec and Aseif, plumbers and electricians, we are working at 200% to clean and restore everything as soon as possible."