Spain's Worsening Economy Reflected In 28.1% Drop In Auto Sales; Companies Cut Production

January 2, 2009 12:49 p.m. EST

Madrid, Spain (AHN) - Declining demand for autos isn't just an American problem, auto sales in Spain plunged 28.1 percent in 2008.

Spain, which has been one of Europe's best-performing economies is reportedly struggling with lower consumer confidence caused by rising unemployment, decreasing disposable income and credit restrictions.

Automobile trade association ANFAC said said only 1.16 million vehicles were sold in 2008, which was a decrease from the 1.61 million vehicles sold in 2007.

Even a government program to try to boost sales by offering buyers grants to enable them to buy new cars if they were replacing one over 15 years old didn't help.

ANFAC has asked the government to try another route to stimulate new car sales next year. Under that proposal to help boost auto sales, the car registration tax would be scrapped and steps taken to improve credit conditions for car dealers.

However, among the auto makers who are being impacted by dropping demand in Spain and who have recently announced factory stoppages there are beleagured U.S. automakers Ford and General Motors, as well as Germany's Volkswagon and Japan's Nissan.