Spain Offering Fifth Version of Scrappage Program

MADRID – The Spanish government implements the fifth edition of its Subsidies Program for Efficient Vehicles (PIVE) to encourage sales of new cars and light-commercial vehicles.

The latest version offers €175 million ($239 million) in incentives for purchases of energy-efficient LVs and is meant to remove from Spanish roads about 175,000 vehicles comprising cars 10 years or older and light-commercials at least 7 years old. The four preceding versions of PIVE covered about 365,000 vehicles.

The standard incentive will be €2,000 ($2,700), with the cost divided between the government and automakers through their dealers. The same split would apply to subsidies that could reach €3,000 ($4,100) for parents with three or more children buying a car with more than five seats or for buyers of vehicles specially modified for handicapped passengers.

The federal government is acknowledging PIVE’s role in maintaining and even adding jobs in a country where unemployment stood at 26% at the end of 2013, and to reducing the public debt through higher tax revenues and lowering subsidies for the jobless.

This new edition of PIVE has been well-received by the Spanish automotive industry, which has been clamoring for another revitalization of the domestic auto market since January sales fell sharply compared with the final months of 2013.

Juan A. Sanchez, president of GANVAM, the main Spanish association of auto dealers, vendors and repairers, qualifies his support by saying he regrets the program does not include older used vehicles meant to be replaced by others that are younger but also used.

The GANVAM president admits 80,000 of the 175,000 vehicles that will be subsidized by  PIVE5 would not be manufactured without the new round of financial aid. “But excluding the used-by-used alternative, the Spanish authorities forget that an important part of the Spaniards consider the used car as their first acquisition option,” Sanchez contends.

In 2013, more than 1.6 million used vehicles were sold in Spain, up 4% over prior-year.

Past PIVE programs focused on improving the safety and efficiency of vehicles on Spanish roads by eliminating older, less technologically sophisticated vehicles. However, those improvements may have been exaggerated because of two developments: