Spain approves fourth cash-for-clunkers plan in a year image

Spain’s government introduced the fourth scrappage scheme in a year, extending state incentives for new car sales to fortify an economy recovering from a two-year recession.

Deputy Prime Minister Soraya Saenz de Santamaria announced today the Cabinet approved a 70 million-euro ($97 million) program, offering a 1, 000-euro subsidy, which must be also matched by a discount from dealerships, with the scheme available for new cars priced at 25,000 euros or below.

The previous three programs, all of which finished their funding, contributed to the purchase of 300,000 cars, Saenz de Santamaria said. The latest incentives will have a six months length or until the money is exhausted.

Car sales in Spain jumped 29 % in September, the steepest surge among Europe’s five biggest automotive markets, thanks to the earlier state-backed discounts. The delivery growth contributed to the region’s strongest monthly car sales increase in more than two years.

Auto manufacturers are counting on Spain, the only big European country currently offering a scrappage program, to help boost slow demand across the region, where sales are at a two-decade low and are forecasted to decline in 2013 for the sixth straight year.

Spanish authorities strive to support the auto motive industry both to spur consumption and to sustain manufacturing in an economy severely hit by the collapse of a debt-fueled housing boom.

Via Bloomberg