Spain’s car industry has slowed down so severely that output is expected to plummet 25% in the 2007-09 period, bringing the industry back to 1994 production levels, according to top manufacturers’ federation Anfac.

It said 2009 would be a “very complicated year” for the industry as there were no visible recovery signs following December’s 50% year-on-year sales plunge and a “very negative” 2008.

The gloomy data came as sales were forecast to fall at least 10% this year after dropping 28% in 2008 (to 1996 levels) though some observers branded the fresh projections as too optimistic.

As sales to key European markets in Germany and France plunge on the back of the steep global recession, the sector has begged the Spanish government to help boost sales by removing registration taxes, launching a new and more robust used car trade in programme and introducing EUR10bn in credit subsidies to help dealers and consumers finance purchases.

According to Anfac, output could fall 13% to 2.2m cars in 2009 after declining 12.3% last year to 2.53m vehicles. The sector effectively ‘lost’ 680,000 units in the two-year period, 25% less than the 2.88m churned out in 2007.

As production falls, car makers are scheduling deep layoffs.

This week, the Spansih labour ministry approved a 10,311-worker temporary redundancy scheme for Renault while Ford hopes to idle 4,577 workers for 16 days this quarter. Seat has followed through with another scheme to temporarily dismiss 5,300 workers in the February-June period.

Ivan Castano Freeman