Spain's new-car subsidies to expire in mid-2010: government

(Lane V. Erickson)

The Spanish government's subsidies on new cars -- credited with reversing a slump in sales -- will expire in mid-2010 and will not be renewed, the industry minister said Monday.

The Spanish government's subsidies on new cars - credited with reversing a slump in sales - will expire in mid-2010 and will not be renewed, the industry minister said Monday.

If sales continue at their current level the amount allocated will expire in June and "there is no plan to continue," Miguel Sebastian told a news conference.

"Plans to help purchases only work if they are provisional, because otherwise it's not a stimulus."

Under the so-called Plan 2000E introduced in June, car buyers in Spain get a 500-euro subsidy from the central government, another 500 euros from their regional government and 1,000 euros from the auto maker when buying a new car.

The measure - similar to others in several European countries - had an initial budget of 100 million euros (144 million dollars).

New car sales jumped 37 percent in November over the same time last year, industry data showed this month, the third straight monthly increase, on the back of the government subsidies.

New car sales plunged 28 percent in 2008, the biggest-ever annual decline as the country slid into its first recession in 15 years due to the impact of the international financial crisis on an already weakened building sector.

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