The Spanish government, which is coming under pressure from the country's ailing economy, has announced another scrappage scheme as part of its new budget that it hopes will cut the number of high emission vehicles on the road, as well as incentivise demand and raise tax revenues.
IHS Automotive perspective | |
Significance | The Spanish government has announced another scrappage scheme as part of its new budget that it hopes will reduce the number of high–CO2-emitting vehicles from the country's roads. |
Implications | There should also be positivity for the troubled Spanish automotive sector and the government's purse. |
Outlook | IHS Automotive anticipates a net improvement in the number of vehicles sold and the country's coffers, despite the payback effect. It would also come as little surprise if a decision was taken to extend funding further to catch some of the strongest sales periods of the year. |
The Spanish government has announced another round of scrapping incentives for the light-vehicle market in the country, reports segoviaudaz.es. Following a meeting of ministers last week, Deputy Prime Minister Soraya Saenz de Santamaria revealed the measures, to be known as Plan Ecological Industrial Vehicle (Plan Industrial del Vehículo Ecológico: PIVE) at a press conference. The move, which has the support of the Ministry of Industry, Energy and Tourism, is said to have the objective of getting customers to remove older vehicles from the roads and replace them with new, more efficient models.
The key points of the plan are as follows:
- The discount on offer will be EUR2,000 (USD2,571) of which EUR1,000 will come from the Spanish government and the remaining EUR1,000 will come from the automaker.
- In order to get the discount the customer will have to exchange a passenger car that is more the 12 years old or a light commercial vehicle (LCV) that is more than 10 years old.
- The new vehicle will have to emit less CO2 than the vehicle it replaces. It must also cost less than EUR25,000 excluding value-added tax (VAT).
- The scheme will begin today (1 October) and will carry on until 31 March 2013 or until the budget of EUR75 million is exhausted.
Outlook and implications
The Spanish government has sought to emphasise the positive environmental implications that the scheme will have as part of its announcement. According to Saenz de Santamaria, the reduction of the number of older vehicles that are then replaced with more efficient vehicles should save 26.1 million litres of fuel per annum and reduce CO2 emissions by 54,000 tonnes per annum. Added to this are the financial implications from having to import less fuel, which are said to amount to savings of around EUR16 million per year.
However, the measures, which come as part of the 2013 budget, are expected to be beneficial to the country's purse as well, particularly given the increase in VAT which is expected to have stalled demand when market data for September is released later today (1 October). IHS Automotive's latest forecast sees a net gain from the scheme in 2012 of around 35,000 units, although we anticipate that the payback will be just over 2,000 units in 2013 and 7,400 units in 2014. This will also take into account the customers who would have been in the market to buy a car anyway. We also anticipate that the scheme in its current form will be exhausted by the end of January 2013. Financially, the Spanish government would see a spike in revenues of EUR74.6 million despite the cost, if the average vehicle sold under the scheme was around EUR20,000, although the payback effect would see this fall to just EUR33.9 million between now and 2014. It remains to be seen whether the Spanish government will seek to further extend this programme, particularly when taking into account that April, May and June are traditionally the high points for this market.