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Spain's car sales drop 24% in July

  • Source: Xinhua
  • [08:10 August 03 2010]
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New car sales in Spain dropped 24 percent in July as government subsidies for car purchase came to an end and sales tax rose, said an auto association Monday.

Monthly sales figures published by the association of auto producers ANFAC show that 82,167 new cars were sold in July, ending a sales increase for 10 consecutive months.

Under a government plan, both central and regional governments have given cash incentives to buyers of new cars in an attempt to offset the impact of the economic crisis on auto industry.

However, the money began to run out in late spring and the government's measures to cut down the public deficit meant that no further cash can be injected into the plan.

The situation was made even worse by the fact that sales tax in Spain has risen from 16 to 18 percent as from July.

Due to the tax rise, many prospective car buyers had brought their purchases forward to the spring and as a result the number of new cars sold during the first six months of 2010 was artificially high.

Higher sales tax has had a clear effect on private buyers, with only 41,863 cars sold to individuals in July, falling 45.7 percent from June, according to ANFAC.

The setback implies that after a promising opening in 2010, the Spanish auto industry is going to face a difficult second half.