A SPANNER IN THE WORKS

Spain’s car industry is in trouble which puts it on a par with the rest of the industrialised world.
In January the number of car sales plummeted by 41.6 per cent compared with the same month last year, the second worst fall in history. A total of 59,385 vehicles of various styles were sold. Surprisingly the worst year wasn’t that long ago, it was back in 1996 when just over 53,000 cars were moved.

The car manufacturers and traders say that unless the government steps in with an aid package the industry is in for a very bad period. Well Germany and Britain have recently done it - now it appears that the Spanish government is indeed studying plans to help its struggling car manufacturers, including postponing social security payments for up to five years.

The news was reported in Cinco Dias last Friday although a spokesperson for the Ministry of Industry would not comment on the contents of the report. However he did admit the ministry was studying measures to support the car manufacturers.

These could also include increased unemployment benefits for workers affected by factory closures or redundancies but no mention has been made of copying the German tactic of offering the owners of old vehicles a cash incentive to purchase new ones.

This tactic was excluded from the British package. Commentators in the media stated that the UK based car industry was largely an export operation. Hence if you made it easier for people to buy cars they would be imported from elsewhere in Europe and the manufacturing sector in Britain would not benefit.

Maybe they are right – but the fact is that unless you have ready cash and lots of it – you can’t buy a new car. In Spain the second hand market has been holding up as those wishing or needing to change their car have traded down. Not surprisingly it’s the banks that are key to this problem because until car loans are again widely available there will be a large financial spanner in the motor industry’s works.