For the eighth and last time, the Spanish government is renewing its auto scrappage program (Programa de Incentivos al Vehículo Eficiente or PIVE) to continue to boost new-car sales in the country. This program has been very helpful in boosting growth in the car market in Spain for the past 20 months after it suffered a very bad recession. For this latest batch of subsidies, the Spanish government has prepared EUR225 million.
When buyers exchange their old vehicle for a new unit, they get a discount of as much as EUR2,250. This discount is given to families with at least three children that are getting the seven-seater vehicles. Compared to the previous subsidy, this discount is EUR750 lower. A discount of EUR1,500 is given for other models – which is EUR1,000 lower than the previous subsidy.
The government and the automakers each fund half of the discount amount. This announcement of the extension was welcomed by the Spanish car industry lobby group ANFAC; however, Jose Luis Lopez-Schuemmer (its president) warned against being complacent and asking everyone in the industry to still work to raise efficiency and profitability.
Schuemmer is the top official at Mercedes-Benz Spain. Since the program was launched in 2012, approximately 900,000 cars have qualified and have been bought, according to Spain’s ministry of industry. Through April, new-car sales in Spain have increased by 24 percent to 349,857 units.
According to industry analysts IHS Automotive, sales for the entire year are expected to reach 966,000 units this year, standing for a 13 percent increase from last year. Meanwhile, the market is expected to grow to 1 million by 2017.
These levels are much lower than the peaks achieved before the recession. Industry minister Jose Manuel Soria emphasized that this will be the last extension. However, no information was given by the government on how long this extension will take effect.
The eighth and final edition of the PIVE – also dubbed as Plan PIVE 8 -- provides subsidies on the purchase of new cars aimed mainly at reducing the number of older cars on the road. Reception of applications to avail of part of the EUR225 million allocated for Plan PIVE 8 commenced on May 16, 2015 and will last until funds have exhausted.
To qualify for Plan PIVE 8, an applicant must be resident in Spain and have a NIE number. The car to scrapped must be at least 10 years old (seven years for vans or similar), and the owner must have it in his or her possession for a least a year. Likewise, the vehicle must have passed the official ITV inspection.