Auto sales in Spain increased 14.8% in July, thanks to the government’s subsidies for new vehicle purchases.
According to car manufacturers’ association Anfac auto sales in Spain last month reached 75,024 units, up 14.8%, as the subsidy scheme implemented by the government was extended in July. This move is expected to lead to sales of more than 700,000 units by the end of this year.
Analysts predict that the improvement in the second quarter from a drop of 0.5% in the first quarter is only temporary as it was based only on seasonal gains in tourism. According to National Statistics Institute, retail sales dropped 5.1% in June.
“It’s no secret that domestic demand remains very weak because spending is massively impaired by unemployment and austerity,” Gilles Moec, analyst at Deutsche Bank, said. “Whenever the economy starts breathing, you’ll have additional pressure to start cutting the deficit, so we get in to additional austerity and spending will fall. It’s going to be a choppy ride.”
Spain saw its auto sales falling 2.6% in May, after an increase of 10.8% in April. Although the government’s subsidy scheme has improved sales to individuals, it did not offset the loss in fleet sales to companies. Renault fell 46% and VW 17.3%.