Car sales in Spain, where the government has launched tough reforms to correct a debt crisis, surged 25.6% year on year in June, trade data showed on Thursday.

Sales have been strong in recent months as consumers brought forward intended purchases ahead of a 1 July VAT sales tax hike of two percentage points (the UK is hiking its VAT 2.5% on 4 January).

Today is also the end of 'cash-for-clunkers' subsidies introduced during the recession in Spain to support the auto industry.

The auto industry expects monthly sales of new vehicles now to decline over 30%, AFP reported.

This is "because of the economic situation, the fall of private consumption, restrictions on credit availability, the rise of VAT and the end of the car-scrapping scheme," said trade association Anfac which published the data.

June data showed a slowdown from a rise of 39% to 63% month by month in the last four months.