Spanish car production fell by 49.4 percent in August compared to a year ago and output will fall by 5.5 percent for the whole year due to a steep economic slowdown, according to car industry association ANFAC.

Production in the first eight months of the year fell 3.6 percent over last year to 1.85m vehicles, ANFAC said.

Car sales in Spain should fall by 25 percent this year, ANFAC said, as the country's economy slows sharply.

The very poor state of the Spanish economy is taking a very heavy toll on car demand - the Spanish market was 41% down in August and a fall of up to 25% now looks highly plausible for 2008, with a further double-digit decline anticipated for 2009.

Car producers in Spain, including Ford, GM and Volkswagen, are also reducing employment levels in line with lower output.