The Government imposes a rise of up to 1,000 euros on the price of new cars

Manufacturers will charge the 5% increase in registration tax on the invoice of cars since the crisis prevents them from assuming the increase in their accounts

Spain will be the only country that will raise taxes on cars from January 1 by increasing registration by 5%. The Executive has not responded to the requests of the sector, which has warned of the serious consequences of this measure, which could cause the loss of 30,000 jobs only in distribution.

This increase is due to the application of the European WLTP standard for measuring emissions into the atmosphere of cars and that penalizes those who equal or exceed 120 grams per kilometer. The increase will affect 70% of new cars -hybrids, electric and alternative fuels are exempt-, which will see their final bill raised between 500 and 1,000 euros.

The increase in this tax has caused clashes in the Council of Ministers since while the head of Industry, Reyes Maroto, was opposed to the increase, the fourth vice president and minister for the Ecological Transition and Demographic Challenge, Teresa Ribera, has imposed her criteria without caring about the consequences on industry and employment.

The motor sector as a whole has asked the Government to establish a moratorium on this rule, as they have done in other EU countries, but so far, the response of the Executive has always been negative. The registration tax is a tax that has almost disappeared in Europe. It is only maintained in Spain, France and Portugal. And these countries have taken advantage of the moratorium.

Blow to the sector

Manufacturers, importers, dealer associations and independent sellers have argued that we are not at the best time to proceed with a tax increase that causes a rise in the final price of cars that, due to the crisis, brands can not assume in their income statements. We must take into account the bad situation in which the vehicle market finds itself in the last year, with a cumulative fall until November of registrations of 35%. For entrepreneurs, “this average price increase of 5% will mean, in such a bad environment of vehicle sales, a worsening of the situation of the sector, making it even more difficult to get out of the crisis and with the consequent impact on both employment and the country’s economy and the automotive value chain”.

According to the calculations of the entrepreneurs, this measure will distance the horizon of the recovery. The first to be affected will be the establishments of the distribution network, which currently have more than half of the staff in ERTE. If the network does not recover, the internal surveys of the employers of these establishments indicate that, when the validity of the ERTE ends, they will have to eliminate a third of the workforce, which would leave about 30,000 people unemployed.

The fall in demand could also have an impact on factory employment in the medium term if domestic demand continues to fall. The cars produced by the 17 Spanish factories are mostly vehicles of the middle and low ranges, the most affected by the tax increase. And a reduction in production would drag down the component manufacturing industry, especially important in Spain since it has a fleet of suppliers of great importance and with strong exports.

Second-hand sales

Entrepreneurs argue that the automotive sector, which accounts for 11% of GDP, employs 9% of the active population and provides 15% of tax revenue, is in a very complicated situation that will be more so in 2021. They believe that it is necessary to specify measures that involve their rapid recovery and reactivation and avoid unforeseen impacts that make it even more difficult to exit. They indicate that a measure such as the increase in the registration tax does not make sense since it harms the purchase of new cars when, on the other hand, the renewal of the car fleet, one of the oldest in Europe, is being sought in order to reduce emissions of gases into the atmosphere. They believe that this rise will cause an increase in sales of the most polluting second-hand cars.

Source: Reason