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Spanish Car Sales Recorded Biggest Annual Decline in 2008
Feb 05, 2009

Sales of new cars in Spain fell 28% in 2008 as tight credit conditions and increasing job cuts due to economic recession have reduced the consumer demand.

As per the Spanish automobile manufacturers’ association ANFAC, new car sales in Spain declined 28% in 2008 on a YOY basis, the steepest annual decline ever, as reported by Reuters.

December 2008 witnessed the biggest monthly decline of the year, with sales falling 49.9% to 72,377 Units from 144,441 Units sold in December 2007. Throughout 2008, 1.16 Million cars were sold, which is the lowest figure since 1998 and the biggest yearly decline ever recorded. In December 2008, private car sales slumped around 27% to nearly one million unit.

MPV sales continued to be the most severely affected, facing 83% YOY decline in December 2008. Sports and luxury cars also witnessed a setback.

The key reason for this downturn is that Spain, regarded as one of the best performing economies of Europe over the last decade, is experiencing a sharp economic downturn due to global recession. This has led to the collapse of Spain’s leading industries, including auto industry.

Credit crunch is also responsible for declining car sales. Tight credit conditions have made it tough for the people to purchase new cars.

Moreover, increasing unemployment is another reason for the decline in car sales. Due to job cuts, people are unable to purchase cars. Decreasing disposable income is also reducing the car sales.

If the similar market conditions prevail in 2009, then the registrations for new cars are expected to decline by more than a million. To address the falling demand effectively, car manufacturers have reduced working hours as well as extended holidays. Some of them are even closing down factories and cutting jobs to bring down the output.

The association asked the government to include crisis measures in its car industry plan, such as scrapping car registration tax and improving credit conditions for the car dealers.

According to a Research Analyst at RNCOS, “Improved credit conditions and proposed tax reduction is expected to boost domestic car demand in Spain. However, the current economic scenario is indicating towards the similar outlook in 2009.”

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