Auto Makers Ask for Subsidies Extension in Spain

MADRID – Auto makers are increasing pressure on the Spanish government to extend its 2000E Plan scrappage incentive.

Dealer sources say the 2000E Plan, which provides cash incentives to consumers who trade in old, less-fuel-efficient models for new cars, could run out of money by late June.

The mini-boom in new-car demand is being fueled not only by the scrappage incentive but by the 2-point increase in the Value-Added Tax set to take effect in July.

New-vehicle sales during the first four months of 2010 reached 379,804 units, a 43.2% gain from like-2009, according to ANFAC, the association of local car manufacturers.

ANFAC sources say the scrappage plan helped increase registrations to 1,067,369 vehicles in the 12 months ended April 30, up 17.4% from the year-ago period.

The group, which is behind the push to convince the government to pump more money into the incentive program, says the 2000E Plan boosted first-quarter production 46.8%.

That has had a positive impact on jobs, ANFAC says, estimating the Spanish plan and similar scrappage incentives elsewhere in Europe restored 32,200 temporarily suspended jobs in Spain and allowed an additional 2,300 people to dodge layoffs.

Spain saved €292 million in unemployment subsidies in 2009 as result of 2000E Plan, group says.

“If the 2000E Plan were to be maintained for the full 2010 year, the auto makers could avoid about 1,000 layoffs,” says an ANFAC source.

Including suppliers, ANFAC says the subsidies preserved nearly 30,000 jobs. A full year of the 2000E Plan could keep 16,400 people working, the organization estimates.

That translates into savings for the government, ANFAC points out, because it would not have to dole out unemployment benefits.

It estimates €292 million ($370 million) in unemployment subsidies was saved in 2009 as a result of the 2000E Plan and another €170 million ($216 million) will be pocketed even if the incentive program expires in late June as expected.