Spain Government to Extend New-Car Subsidies image

Spain’s government plans to extend last year’s car-buying subsidy program to increase auto sales affected by the recession and the September tax hike.

“The plan we have in place now has been a success and the government is studying extending it. But first we will need to find the necessary resources for it, ” said Energy, Industry and Tourism Minister Jose Maria Soria.

The high unemployment, one in four of the workforce is jobless, the economic uncertainty and austerity measures have severely affected new car sales in Spain last year. In 2012 new car sales in Spain dropped 13.4% to 700,000 units according to car manufacturers’ association Anfac, the lowest level since Anfac started collecting data in 1989.

“It has been a tremendously tough year,” said Jaume Roura, chairman of Faconauto, a car dealer association. “Car dealers are suffering with particular virulence [from] the lack of economic activity and the lack of financing.”

On October 1st, the government introduced the new-car subsidy scheme, which slowed the car sales fall after the September tax hike. Still, new car registrations fell 23% in December and 20% in November, while total European market dropped 16% last month.