Spain offers subsidy for new auto purchases

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Motorists in Spain who want to buy a new car will receive a EUR 2,000 subsidy.

Madrid – Spain announced Tuesday a subsidy of EUR 2,000 for motorists wanting to buy a new car, one of several new measures to revive the recession-hit economy.

"We will propose a plan of direct aid for the purchase of a car," Prime Minister Jose Luis Rodriguez Zapatero told parliament during an annual "state of the nation" debate.

The measure is similar to others already in operation in several European countries.

The subsidy is being provided by three different parties – EUR 500 from the central government, another EUR 500 from Spain's regional governments with the remaining EUR 1,000 being provided by car manufacturers.

During the first four months of the year, new car registrations in Spain plunged 43.7 percent to 471,299 compared to the same period in 2008.

In 2008, new car sales plunged 28 percent, the largest-ever annual decline as the country slumped into its first recession in 15 years.

Spain's auto manufacturing sector is the third-biggest in Europe and accounts for just under 10 percent of the country's economic output and 15 percent of exports.

The economy, the fifth largest in Europe, entered recession at the end of 2008. Unemployment rate has nearly doubled over the past year to reach 17.4 percent in the first quarter, the highest level in the 27-nation European Union and double that of the United States.

Zapatero also unveiled other measures to revive the battered economy, one month ahead of European elections.

They included a reduction in taxes for small businesses and a EUR-20-billion fund to finance sustainable development projects in a bid to end the economy's reliance on the battered construction industry.

Even though the battered construction must still have a major role, the government plans to "support the development of other sectors" and especially the "green economy."

The fund will be managed by state credit agency Instituto Credito Oficial which would be operational from 2010, the government said in a statement.

The fund would finance renewable energy, restoration of buildings, non-polluting transport and recycling.

He also promised a further reduction of EUR 1 billion in spending for 2009 in a bid to reduce the burgeoning public deficit.

AFP / Expatica

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