Spain’s automobile industry and the government continue to trade blows about the best strategy to boost sales which plummeted almost 50% in February and are set to fall to Europe’s lowest levels this year.

“EUR4bn is not enough,” said Juan Antonio Sanchez Torres, president of trade lobby Ganvam, describing the country’s fresh aid package, which the EU has described as one of the most ambitious in Europe.

“Most of the plan is to help manufacturers, not dealers. What we need is a plan to boost demand. There are too many cars out there and no buyers.”

Sanchez echoed the sector’s embittered request for a more aggressive successor to the much-revered Prever used car trade-in plan to match more ambitious schemes approved in Germany and France recently.

“We need something that’s that aggressive or sales won’t take off and many SMEs will disappear,” Sanchez warned.

Importers’ lobby Aniacam on Monday urged the state to launch “direct and efficient” measures to bolster sales in the industry which accounts for 20% of Spain’s exports.

It said Madrid’s new Plan Vive , which provides up to EUR2,000 in financing aid to drivers who trade their used car for an eco friendly model, is not boosting sales or helping solve consumers or companies’ financing problems.

Sanchez said Vive gives the aid to financing companies and not the consumer directly –  making it hard for consumers with bad credit to finance a new car.

In contrast, by offering up to EUR2,500 of direct aid, as many as 50% of German consumers are now using the country’s trade-in scheme, Aniacam said.

The aid has helped restrain a sales free-fall in France and Germany where registrations fell 7.9% and 14.2% respectively in January compared to 41% in Spain which expects sales to plunge up to 25% in 2009.

“You can bet we will be the worse performer of the EU-25 this year,” Sanchez said.

But the government says Vive is good enough. “We believe that the problem is in the credit markets which is why we are helping finance companies lend for the purchase of new vehicles, especially eco-friendly ones. We aren’t going to help sell just any car and we believe the recent measures are enough to help the industry.”

The spokesman said 20% of January sales came through Vive, adding that “the plan is obviously working.”

However, Ganvam said Prever helped boost January sales up to 60% before it was removed two years ago.

But the government is unconvinced. “We are not going to reconsider Prever. It’s not and has not been on the agenda.”

Ivan Castano Freeman

See also: SPAIN: Car sales plunged 48.8% in Feb