Spain's Prever trade-in programme, which spurred the retirement of 3.3m (well) used cars since 1997, will cease to exist and the government has no plans to renew it, despite the automobile industry's impassioned appeals for a more ambitious successor.

The news came as car sales here fell 1.2% in 2007 and new estimates predicted a 1%-2% decline this year.

The auto industry had hoped the government would heed its pleas that a new Prever plan was the best way to cut CO2 emissions from cars. However, the state has opted instead for a new CO2-based tax that rewards drivers of eco-friendly models and penalises those who drive more polluting SUVs.

"The battle has been lost," said an industry official in Madrid, requesting anonymity. "We don't expect the state to renew or launch a new Prever."

In 2006, the Prever scheme offered EUR480 to those trading in a 10-year-old, or older, car or commercial vehicle of over 3.5 tonnes. Between 2004 and 2006 the reward was higher: EUR720.

Overall, the Prever programme helped remove 4.2m tonnes of CO2 from Spain's atmosphere during its decade of operation.

According to auto lobbyists, 23% of cars on Spain's roads are well used and fail to meet environmental directives, causing much more pollution than if they were replaced by newer models.

Meanwhile, car sales declined 1.2% to 1.61m units in 2007 (in line with expectations), though the SUV and luxury segments gained 40% as drivers raced to buy their favourite models before the new eco tax started on 1 January.

Dealer groups are at odds over this year's sales outlook. On Wednesday, Anfac said sales could fall 1%-2% in 2008. Last month, the Ganvan association predicted sales would fall 2.5%-3% as consumers feel the pinch from higher interest rates and an uncertain economic outlook.

Larger group Faconauto said sales could rise 2%, helped by the eco tax, while some analysts consider that the economy will grow more than expected, easing interest rates.

Ivan Castano