Spanish car sales plunge for second straight month: trade data

1st September 2010, Comments 0 comments

New car sales in Spain plunged 23.8 percent in August, after a similar double-digit drop in the previous month, due to a sales tax rise and the end of government subsidies, a trade association said Wednesday.

A total of 44,578 new cars were sold in August, the lowest number for that month since records began being kept in 1989, down from 82,167 a month earlier and 58,509 in August 2009, automakers' association Anfac said in a statement.

That follows a 24.1 percent fall in new car registrations on a 12-month basis recorded in July, the first drop in 10 months.

Anfac blames the sharp drop in car sales on a sales tax increase of two percentage points that came into effect on July 1 and the end that month of government cash-for-clunkers subsidies which had boosted sales.

The plunge in new car registrations will fuel doubts about the ability of the Spanish economy, Europe's fifth largest, to maintain its timid recovery from its worst recession in decades when government stimulus measures end.

Spain's gross domestic product expanded by an annual rate of 0.2 percent in the second quarter, following growth of 0.1 percent in the first quarter when the country emerged from recession.

The government predicts the economy will contract 0.3 percent in 2010, after shrinking 3.7 percent last year, and then expand 1.3 percent in 2011.

Spain entered its worst recession in decades at the end of 2008 as the global financial meltdown compounded a crisis in the once-booming property market.

The government has responded to the downturn by adopting one of the largest stimulus plans in Europe based on tax cuts and industry subsidies.

But with the government under pressure to rein in its ballooning public deficit, many of these measures have come to an end or are about to.

© 2010 AFP

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