BARCELONA -- Spain has not done enough to spark demand in its depressed auto sector and should immediately offer consumers direct financial assistance, Citroen Managing Director Jean-Marc Gales said Thursday.
"Spain has reinforced its 'Plan Vive,' which offers some aid to consumers, and Citroen is taking advantage of that, but we think they need to go further, by offering direct aid to consumers," Gales said during a presentation at the Barcelona auto show.
"We are in favor of scrapping incentives, which have been used with much success in Germany, France, and Italy, and which have been approved in the United Kingdom," Gales said.
Gales said the continuing slump in the Spanish market, which has been much harder hit than other major European countries, is directly linked to the government's failure to launch scrapping incentives.
In April, Spains new-car sales declined by 45.6 percent to 67,215 units. In the first four months of 2009, Spanish new car sales were down 43.7 percent to 265,210 units.
A success in other markets
April and four-month sales in Germany are up sharply because of the countrys scrapping plan while similar subsidies for trading in old cars for new ones have prevented the collapse of Frances and Italys new-car registrations.
The U.K.s scrapping incentive was approved last month and is expected to stop 11 consecutive months of sales declines in the country.
Gales said Spain should quickly follow these examples.
"It is clear that what works is a simple, visible program, something like a 1,500 euro rebate for scrapping an eight- or 10-year-old car, and buying a new one that has low CO2 emissions," he said. "People understand this system, and if it's time-limited, as is the case in Germany, consumers react quickly, to ensure that they are included.
Gales recognized that time-limited scrapping incentives may have adverse impacts on future sales, but he said the benefits to automakers and dealers far outweigh the downside risks.
"We are attracting people into dealerships to buy new cars who would have previously bought used, we're creating future service business for dealers, and governments are collecting value-added tax. Everyone wins," he said.