Economic Pinch Drives Used-Car Demand in Spain

MADRID – Spaniards bought twice as many used cars as new cars in first-half 2013, despite the availability of government rebates for new-vehicle purchases.

Data from the Automobile Studies Institute, a branch of the ANFAC auto makers group, says sales of used cars reached 809,160 units through June, a 5% increase from year-ago. New-car demand went in the opposite direction, falling 4.9% to 386,353.

The Effective Vehicle Incentive Program, offering rebates of up to €2,000 ($2,600) to buyers of cars up to 1 year old, not only has failed to stimulate sales but also has kept older, less-efficient vehicles on the roads.

GANVAM, the main Spanish association of auto dealers, repairers and vendors, attributes the growth of the used-car market to low consumer purchasing power, compounded by the scarcity of credit stemming from the 2008-2009 recession.

The Automobile Studies Institute report notes vehicles less than 3 years old accounted for 19.6% of first-half used-car sales, even though they are excluded from the rebate program.

GANVAM President Juan A. Sanchez says the government must consider extending the rebates to buyers of cars less than 3 years old.

“We need to incentive the acquisition of the youngest used cars, which are the kind of cars accessible in this moment to the Spanish buyers,” he says. “We cannot aspire to only renew the national fleet with new-car sales when the forecasted registrations of such cars is just going to reach 700,000 units in 2013.”

The government could further encourage purchases of new cars by allowing private buyers to deduct monthly leasing fees from their income taxes, as is done in the U.K. and the Netherlands, GANVAM suggests.

“In such a way, the car renovation every four years will be promoted, getting a younger and safer national fleet,” Sanchez says.

Used-car demand, however, isn’t likely to diminish anytime soon, especially at current prices.

According to the Spanish subsidiary of AutoScout24, aGerman auto sales website, the average used-car price in Spain was €12,330 ($16,200) in the year’s first six months, compared with €14,100 ($18,500) elsewhere in Europe. Despite this difference, the European average price was almost 4% lower than in first-half 2012.

The AutoScout24 rankings of individual cities show the most expensive used cars are in Paris, with an average price exceeding €25,000 ($32,900), followed by Munich at €18,368($24,100).

Although the average used-car price nationwide was lower in Spain than in other European countries, the list of costliest cities shows two in Spain ranking third and fourth, respectively: Madrid, at €14,986 ($19,700), and Barcelona, at €14,942 ($19,600).

The least-expensive used cars were in Brussels, where average prices did not exceed €10,000 ($13,100).