Renault's Spanish president Jean Pierre Laurent has warned Spain's car industry has lost its competitive edge in Europe and that three of its factories could become redundant if the government doesn't do more to boost labour flexibility and cut logistic costs.

"There could be two or thee factories of the five or 10 that are in excess in Europe," a company spokesperson confirmed Laurent as telling financial daily Cinco Dias.

Laurent said Spain should sell 1m cars this year as a second-half sales plunge offsets big gains in the first. "From a market perspective, I am pessimistic. To buy you have to have money and consuming enthusiasm and you are only going to have this if you have work. If you don't have money the bank will have to loan but as long as there is no work there won't be any credit so things will remain complicated."

Mired by a deep recession, deep spending cuts and a highly controversial labour reform, Spain's unemployment has risen to 20% in recent months to some of Europe's highest levels.

The industry, Europe's largest, expects consumption to decline in the second half, triggering a big fall in car sales that won't be averted unless "huge sales and promotions" can be launched which is unlikely as these are already stretched to the max, Laurent noted.

However, he said Renault's performance will remain strong with sales rising in 2010. He said Renault will roll out a "very interesting" automobile portfolio in the next three years and that its Valladolid factory should stay busy with the new Clio and a new car that will be assigned in the Clio segment. Renault will also flesh out its Dacia brand and bring its new Zoe and Twizzy models to market.

Still, Laurent did not discount new layoffs. Its Palencia site is likely to cut production starting 25 October, triggering temporary redundancies and, depending on local and international demand, the company may announce more temporary layoffs at year end.

Laurent added the government is unlikely to introduce new sales subsidies this year as it struggles with a tight budget though it will maintain its electric vehicle subsidies.