Automakers, dealers say Spain's VAT hike will further depress car sales
Automakers and dealers said an increase in Spain's value-added-tax (VAT) to 21 percent from 18 percent will hit the country's flagging auto sales.
Car manufacturers estimated they would sell between 20,000 and 25,000 fewer vehicles in the next five months after the tax rise was implemented on Wednesday.
Dealer representatives said car retailers will struggle to be able to afford an extra cost estimated at an average 650 euros ($798) per car.
"The raise will be an obstacle impossible to overcome for many dealers that are already in the red," the Asociacion Nacional de Vendedores de Vehiculos a Motor said in a statement.
The Spanish Association of Carmakers (ANFAC), which represents the local divisions of companies including Mercedes-Benz and Ford, said the sales tax hike "will undoubtedly cause consumers to delay purchases at a time of little confidence."
Prime Minister Mariano Rajoy implemented the tax hike as part of a scaled-up austerity program imposed under pressure from European partners and designed to slash 65 billion euros from the public deficit by 2014.
Spanish new-car sales are slumping as the country struggles with a recession and an unemployment rate of 25 percent, more than double the euro-zone average.
ANFAC said that six-month vehicle sales fell 8.2 percent to 406,070, adding that the full-year figure was unlikely to top 750,000, compared with more than 1.6 million seen five years ago.
Reuters and Bloomberg contributed to this reportContact Automotive News