Car sales drop further in Spain and France

Sales of new cars, for many households the most expensive outlay after a house, dropped further in Spain and France as the bleak economic outlook dents consumer spending and weighs on carmaker's earnings.

Spanish car sales fell by 41.6 per cent last month versus a year earlier to leave car makers desperately in need of aid similar to that announced in other European countries, industry association ANFAC said.

In France, new car sales were down 7.9 per cent to 149,385 vehicles after a 15.8 per cent drop in December, the French auto industry body CCFA said. Based on the same number of working days, sales were down 3.5 per cent.

Sales of French brands dropped 14.8 per cent and took their combined market share to 50 per cent. PSA Peugeot Citroen had 11.2 per cent fewer sales and group sales at Renault fell 20.9 per cent.

Spain's rate of sales decline slowed from December's 49.9 per cent drop, but in absolute terms, last month's sales were considerably worse than those of the preceding month.

A total of 59,835 cars were sold last month, down by over 12,000 from December, as Spain's recession mauled spending by heavily indebted consumers.

ANFAC said government measures announced so far, including loans for people who want to buy new cars to replace older, more heavily polluting models, were insufficient.

"The industry urgently needs measures to boost demand," ANFAC said in a news release.

"In countries such as the UK and Sweden, which have lower production than Spain, they have taken measures to support the industry in the form of guarantees for €2.5 billion and €3 billion respectively," ANFAC said.