The Spanish government has announced a hefty stimulus package of €3.75bn ($4.24bn) aimed to support its struggling auto sector in the wake of the global pandemic. The financial aid includes auto scrappage scheme and greener initiatives. Prime Minister Pedro Sanchez declared the stimulus package on Sunday but details were unveiled on Monday. He announced that €1.5bn will be infused in 2020 and the rest, by mid-2021.
Spain’s stimulus package is a two-year scheme which includes subsidies to increase investment in the industry, push for electric vehicles and spur demand for vehicles.
During the lockdown period, car sales tumbled with just 34,337 units sold in May and 4,163 units sold in April. Japanese car maker, Nissan Motor also announced shutting down of its plants near Barcelona. In a response, the central and regional authorities planned to convince Nissan to reverse the decision.
Spain’s auto industry contributes 10pc to its GDP and 19pc to the country’s exports. Germany is the only country in Europe to top Spain’s auto production. Spain’s auto industry is of strategic importance for the country.
The government has directed 70pc of €3.75bn to aid Spain’s value chain and the rest 30pc for electric vehicles and scrappage policy. Spanish scrappage policy will reward motorists for trading their old vehicles for new zero-or-low emission replacement. An immediate €230mn is earmarked for the scrappage scheme. Cars that are older than 20 years will be approved an extra premium, also, low income households are eligible for the same.
For the greener purpose, €1mn is invested to prevent emission of upto 716,000 tonnes of CO2 every year. Electric vehicle manufacturers are expected to increase EV output by 700,000 units annually. Spain’s financial aid also includes for the facility of more charging points.