Spain new car registrations plunge 40% in January

MADRID – New car registrations showed no sign of steadying in January as they plunged 41.6 percent to 59,385 as Spain struggles in its first recession for 15 years, the Spanish automakers’ association ANFAC said Monday.

"The economic slowdown has led to a strong reduction in private consumption," ANFAC said in a statement, adding that tighter credit conditions and rising unemployment had led to a sharp drop in consumer confidence.

New car registrations dropped 49.9 percent in December compared with a year earlier and for all 2008, were down a record 28 percent.

Last week, ANFAC predicted that new car registrations would fall 23 percent this year to 900,000 and announced that its members would not take part in an annual auto show in Barcelona in May due to the slump.

Spanish automakers, who have already taken steps to reduce production, are demanding that the government follow the lead of other European nations such as Germany and France and provide financial aid to the sector.

France’s PSA Peugeot Citroen, Europe’s second-largest carmaker, said Monday it wants to reduce output at its plant in Madrid in a move which could affect all 2,800 employees at the factory.

The automaker said it was discussing with unions three possibilities – a temporary closure of the plant, a system of rotating temporary layoffs or a voluntary staff reduction programme.

PSA has a larger plant in Spain in the northwestern city of Vigo which employs 9,000 people.

Spain is the third-biggest car producer in Europe after Germany and France, with the majority of its production destined for export, according to the Brussels-based European Automobile Manufacturers Association.

The country’s once-buoyant economy, the fifth-largest in Europe, has suffered as the global financial crisis has added to the difficulties of the key real estate sector, which was already weakened by oversupply and rising interest rates.

The Bank of Spain estimated Wednesday that the country had entered a recession at the end of last year.

It estimates the country’s gross domestic product (GDP) shrank by 1.1 percent in the fourth quarter of 2008 compared with output in the previous quarter, when it contracted 0.2 percent.

The generally accepted definition of a recession is two consecutive quarters of economic contraction.

[AFP / Expatica]