Government to renew car-purchase subsidy scheme with increased budget

The government will extend a subsidy scheme to encourage consumers to scrap existing vehicles for new, more efficient ones, doubling the amount of funds, assigned to the fund, Prime Minister Mariano Rajoy said Friday.

Speaking to reporters in Santiago, Chile where he is on an official visit, Rajoy said the move would help extensively renew Spain’s pool of motor vehicles. “It has served to save many jobs in the automotive sector,” Rajoy said.

The first so-called PIVE plan, which expired this month, had funding of 75 million euros and was open to those scrapping vehicles over 12 years old for more environmentally friendly ones. Some 75,000 old vehicles were taken off the roads under the plan. This time around the program has been given 150 million euros, which could cover about 150,000 vehicles.

Earlier this week, the National Association of Automobile and Truck Manufacturers (Anfac), estimated the first PIVE, which was in place from October of last year, had increased automobile sales by some 25,000 units and boost tax revenues by 296 million euros. It said it also helped save 4,500 jobs in the sector.

The PIVE helped save the sector from what would have been a dire year in 2012. Nonetheless, the number of new passenger vehicles sold last year still dropped 13.4 percent from a year earlier to 699,589 units, the lowest level since the current statistical series was introduced in 1989.