Spanish car sales will fall 2.5% to 1,501,719 units this year, as rising interest rates cripple demand from a heavily indebted consumer base, dealers' federation Faconauto told just-auto.

There will be "a change of pattern to lower sedan sales compared to 2005, mainly because of falling demand from the private and business sector, which will decline 4.3% and 4.75% respectively," Faconauto said.

However, the federation expects sales to the fast-growing daily rental sector to jump 17% and SUV purchases to rise 4.6% to 125,308 units.

Spain's base interest rates are set to increase to 2.5% this year, raising the cost of borrowing money, and hurting consumer purchases of cars, Faconauto noted.

Spaniards are Europe's most indebted citizens, with credit and mortgage payments often accounting for up to two-thirds of household wages.

In 2005, 1,512,889 cars were sold in Spain, up 1% from 2004, and setting a new annual record, Faconauto said.

Renault's Megane was the top-selling car, followed by Ford's Focus and Peugeot's 307, according to manufacturers' association Anfac.

By brand, Renault, Citroen and Peugeot led sales, an Anfac spokesman told just-auto.

Fiat group cars experienced the worse year-on-year performance, with sales plunging 18.8% to 34,770 units, the spokesman noted.

"The brand has not been renovated enough and the group's financial problems have tarnished its reputation in Spain," said an industry expert, who requested anonymity.

Spanish dealers posted an 8.4% sales hike to EUR29.5bn in 2005, as aggressive discounting and low interest rates fuelled consumer purchasing, Faconauto said.

However, sales were down from a 17% gain in 2004, the group added.

Faconauto added that Spanish car prices will fall 0.5% this year after rising 5.2% in 2005.

Ivan Castano