Spain Offering Third Round of Scrappage Incentives

MADRID – Responding to pressure from auto makers, the Spanish government offers a third round of incentives for new-car purchases linked to the disposal of older, less-efficient vehicles.

 The Efficient Vehicle Incentive Program (PIVE) that took effect July 29 is funded with €70 million ($92.7 million) from the government and a matching amount from auto makers. It offers rebates of €2,000 ($2,650) or more for purchases of new cars accompanied by the scrappage of a car or light-commercial vehicle more than 12 years old.

The first two versions of the program are credited with helping Spain’s auto industry recover from sales levels that had reached a 20-year low, contain unemployment rates currently at roughly 26%, raise more government revenue and reduce carbon-dioxide emissions.

The original PIVE, funded with equal contributions of €75 million ($99.3 million) by the government and auto makers, launched Oct. 1. It offered subsidies of up to €2,000 to buyers of cars or LCVs priced below €25,000 ($33,100), excluding a 21% value-added tax. A €3,000 ($3,980) rebate is available to buyers with large families who presumably will purchase larger vehicles.

The program’s popularity indicated the funding would be exhausted well before the scheduled March 31 expiration date. That prompted the announcement in February of a second version of PIVE, again funded by equal contributions of €75 million by the government and auto makers, with €2.77 million ($3.7 million) in unspent PIVE 1 funds carried over.

Under PIVE 2, the age of vehicles to be scrapped was reduced to 10 years for cars and seven years for LCVs. The program was to run for 12 months, or for as long as funding for subsidies was available.

In lobbying for a second extension of PIVE, ANFAC continues crediting the program for stimulating auto sales and employment, adding to government revenues, improving air quality and even enhancing highway safety by taking older vehicles off the roads.

Overall June light-vehicle sales rose just 1.3% from like-2012 to 81,509 units, WardsAuto data shows. But according to the Institute of Automotive Studies, a branch of ANFAC, the association of auto makers operating in Spain, new-vehicle registrations in July totaled 75,024 units, a 14.8% increase over prior-year, including 22,974 obtained with PIVE 2 subsidies.

Higher sales and their booster effect on other sectors of the economy have generated millions of euros in value-added tax revenues for Spain’s depleted treasury, ANFAC contends.