Spanish car sales plunge for third straight month

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New car sales in Spain plunged 26.9 percent in September, the third straight monthly decline, a trade association said Friday, warning the downturn could spur new job losses in the sector.

A total of 56,595 new cars were sold in September, slightly more than in August but down from the figure of 77,373 in the same month last year, automakers' association Anfac said in a statement.

"We have returned to the level of 1995," said Anfac, which warned of "very negative figures in the coming months."

The fall follows a drop of 23.8 percent in August and 24.1 percent in July, which was the first decline in 10 months.

Two factors are blamed for the reverse -- 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.

Anfac also warned of a "risk of job losses, in the (auto) distribution sector as well as in that of production."

Spain's auto manufacturing sector is the third-biggest in Europe, although it has no national automaker besides Seat, which is now owned by Germany's Volkswagen.

Anfac estimates the industry employs more than half a million people.

The association warning came as PSA Peugeot Citroen's factory in the Madrid region plans cutbacks that would affect 2,150 employees, according to a company spokesman.

"The economic situation in the country, as well as weak household spending and the high rate of unemployment, are weighing significantly on (auto) sales to individuals," Anfac said.

Spain emerged this year from its worst recession in decades, which began at the end of 2008 as the global financial meltdown compounded a crisis in the once-booming property market.

The recession has sent the unemployment rate soaring to more than 20 percent this year, the highest in the euro zone.

© 2010 AFP

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