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Spain to Provide 4 Billion Euros to Struggling Automakers

Similar to various countries around the world, the Spanish government today agreed to provide 4 billion euros ($5.1 billion) to local automakers that may require financial aid following the massive drop in sales. Just like all the other governments across the globe, Spain required automakers to protect jobs and avoid as much as possible other cost-cutting measures that may affect the country's economy, Autonews wrote.

Spanish Industry Minister Miguel Sebastian said today the local automotive sector urgently needed support because the collapsing sales could push them to an unprecendeted number of cost-cutting measures that may also include job layoffs.

About 350,000 jobs are involved in the automotive industry in Spain, with this particular sector accounting up to 6 percent of the country's economic growth, the aforementioned source added. Auto manufacturers represent more than 20 percent of new car exports, it wrote.

More specifically, the Spanish government will direct around 800 million euros to the country's automakers to upgrade production facilities and modify their production schedules. 950 million euros will be used for improving rail, road and sea distribution networks while 320 million euros will go towards research projects.

Spain will also provide around 100 million in tax breaks while the remainder of the 4 billion euros package will include credit lines for the new car industry.

New car sales in Spain decreased by 41.6 percent in January 2009 compared to the same month of the previous year. Approximately 59,835 new cars were sold in the first month of 2009, according to Autonews.

As mentioned, several other governments took similar actions, providing multi-billion funding packages to local struggling automakers. Beside the much-debated American soap-opera, the German authorities also approved a 2 billion euro program while the UK announced 3 billion euros will be offered to auto manufacturers.

 
 
 
 
 

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