Spain: Subsidies to Live On, Govt. Grants 40M Euro

The Spanish government has decided to extend the subsidies programme in the country by granting 40 million euro to the scheme which, according to local officials, would support the acquisition of 80,000 vehicles for the rest of the year. Furthermore, the so-called Plan 2000E might be renewed next year, Reuters reported today citing sources involved in the talks.

Spain initially approved 200 million euro for buyers who are willing to purchase new cars, as sales dropped massively to the economic recession and the credit crunch that affected all sectors of the industry.

"With these two decisions, to extend and renew Plan 2000E, the government confirms its commitment to the strategic automobile industry," Industry Minister Miguel Sebastian told reporters. "It's clear that if we want the sector to continue to rely on Spain, we need a dynamic market where cars can be sold. That's one of the objectives of Plan 2000E."

Spain is one of the countries deeply involved in talks with Magna International, the Canadian - Austrian partsmaker who's already seen as the new Opel owner. Opel currently owns a production facility in Zaragoza which, according to various reports, might be affected by a significant job cut when the new owners take over the company.

"In the meantime, work will continue to resolve remaining open points with the Magna/Sberbank proposal—for example, related to labor cost reductions and the government-backed financing package — to document the related understandings, and complete all preparations for the signing of binding agreements should that be authorized by GM’s Board at the November 3 meeting," John Smith, GM group vice president corporate planning and alliances (and GM’s chief negotiator for the sale of a stake in Opel/Vauxhall), said.