As Spain’s car sales and the manufacturing sector shrank again in July, this only means that the recession will affect the third quarter too.
Markit Economics announced that monthly index of manufacturing activity was up 42.3% from 41.1% in June, but the reading is still under 50, which shows a fall in activity month-to-month. Anfac, the country’s car manufacturers association, reported a decrease in new car registrations of 17.2% in July.
The July figures only show that Spain hasn’t found yet the exit door from recession, after two consecutive quarters of economic contraction. Statistics show that in the second quarter Spain’s economy contracted faster this period than it did between January and March.
Although car exports have increased over the past years, auto makers complain that foreign sales are not enough to keep them afloat and Anfac said that the government’s plan to increase Spain’s value-added tax from September will only worsen things. July’s new registered cars accounted for 65,322, compared to 78,914 in the same period last year.
”The higher VAT on car sales will bring with it an average increase in prices of 650 euro ($798) that will psychologically impact consumers, reducing registrations for this year in another 25,000 units and reducing annual forecasts to under 700,000 cars sold, which will distance us even more from the principal European markets,” said Juan Antonio Sanches Torres, chairman of Spain’s car-dealer association.