Car sales in Spain fell by almost 50 per cent last month in another sign that the country’s economy is hurtling further downward.

Anfac, the car trade association, said that 63,068 vehicles were sold in November – a decrease of 49.6 per cent from the 125,206 sold in November last year. This was the biggest year-on-year fall since a 53 per cent decline in January 1993, when Spain was experiencing its last big recession.

Car sales, an important pointer to the health of the economy, are down 26 per cent at 1.08 million vehicles this year. Anfac blamed the credit crunch for the decline because 80 per cent of Spaniards purchase their cars through instalments. “The persistence of severe economic and financial weakness continues to erode domestic demand,” it said.

Until just over a year ago, Spain had consistently recorded one of the highest levels of growth in the eurozone.But the combination of the global financial crisis and the collapse of its domestic construction industry has left the country’s economy heading for recession. In the third quarter, gross domestic product decreased by 0.2 per cent.

As unemployment soars to the highest level in the eurozone – 12.8 per cent – Spaniards are staying away from car showrooms. Ford, Nissan, General Motors and Volkswagen have all announced job and production cuts in Spain in recent weeks. Volkswagen suffered the highest fall in sales – 30.1 per cent against November 2007. Only Dacia, the Romanian sister brand of Renault, recorded a year-on-year rise in sales in November, with 645 cars bought, a 12.8 per cent increase. Amid fears that the sector could lose 50,000 jobs, the Spanish Government announced a €800 million (£680 million) aid package last week.

There may be no let-up for the car industry next year. Germán López Madrid, president of Aniacam, the car importers’ association, has predicted a fall in sales of 15 per cent in 2009.

The regional government of Aragon in northeastern Spain announced a €200 million loan to General Motors Europe last week, allowing the American car group to start production of its new Opel Meriva at its factory in Zaragoza. General Motors has said that it needs €595 million to keep its European factories running.

Source: TimesOnline