Car sales in Spain, Europe’s third largest market, are set to plummet 18% in 2008, down from a previous 3.5% estimate and worse than the first half performance, when sales fell to their lowest level in 15 years.
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Spain will sell 1.32m cars this year, dealer lobby group Faconauto said on Tuesday, adding that a 31% fall in June and a similar estimate for July signal the trend for the rest of the year.
June and July sales usually account for 20% of the entire year’s sales.
Spain is suffering from a major recession. The economy is expected to grow a meagre 1.3% this year, down from a 5% average in the past decade.
This scenario, triggered by a collapsing home market and exacerbated by the global credit crunch, has resulted in higher interest rates, unemployment and the inevitable decline in consumer spending.
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By GlobalData“High oil prices and the spectre of rising interest rates continue to threaten the market,” Faconauto said in a statement, adding that a sales rebound is unlikely.
To industry disappointment, the state last week approved a new subsidies programme called Plan VIVE to help retire old vehicles. The scheme, which replaces the more generous Prever plan (scrapped last year), offers EUR1,040 to drivers who swap their older car for a new, less-polluting vehicle with CO2 emissions under 140g/km. the first five years of financing are interest-free.
Prever offered EUR720 for those trading in for all types of vehicles.
Echoing other industry lobby groups, Faconauto said the plan won’t rev up sales as it’s limited to ‘eco-friendly’ vehicles. Along with others, it had hoped the state would launch a more ambitious Prever sucessor.
Spaniards bought 702,368 new cars in the first half, down 17.6% from the same period last year, and the lowest total since 1993.
Ivan Castano Freeman
