New car sales remain buoyed by subsidy scheme

New automobile sales continued to pick up in October, riding the wave of a direct government subsidy that has recently been extended.

According to figures released Monday by the industry associations Anfac, Faconauto and Ganvam, new car registrations – a proxy for sales – climbed 34.4 percent last month from a year earlier to 60,301 units. In the first 10 months of the year, purchases advanced 1.1 percent to 606,736 units.

Sales have fallen for the past three years in a row. But the sector is hoping to close this year with sales of around 715,000 units, up from 699,589 in 2012. Last year’s figure was similar to that of 1986, when 689.076 vehicles were sold, and well below purchases of 1.6 million units in 2007 before the current crisis broke.

After an extension approved at the end of last month by the Cabinet with a further injection of 70 million euros in public funds through to the end of the year, the PIVE subsidy scheme is now in its fourth phase. The sector has received 400 million euros in assistance since the program began, but industry associations note that the additional sales generated by the scheme have increased revenues from value-added and registration taxes worth 1.5 billion euros.

Industry sources say it is too early to tell if the sector has turned the corner. “Domestic consumption in Spain is still showing problems, but there are some signs of an improvement,” David Barrientos, the communications manager of the car and truck manufacturers’ association Anfac said.