The end of a Spanish government scrappage scheme has led to an increase in the number of older cars entering the used car market during August.
Under the Plan PIVE, owners of older cars could trade them in and receive a government incentive towards the cost of a new car. The exchanged vehicles were then scrapped.
With the end of the incentive scheme, which targeted passenger cars that are 10 years old or more, there has been a substantial increase of vehicles of that age range being traded on the used car market, according to official figures. During August, the number of used cars sold that were in the 10-years-plus bracket rose by 23% year-on-year. This oldest sector of the car market accounts for more than half of used car sales in Spain thus far in 2016.
Demand for older used cars is driven by a combination of cost and availability. There is substantial demand for cheap used cars in Spain and they are plentiful because they were produced at the height of the new car market before the economic crisis.
During the recession, production volumes and sales fell sharply, so there were fewer younger used cars available for buyers to choose from but Spain’s economy is recovering and buyers are returning to the used car market.
This shortage is likely to continue, as Autovista Intelligence analysts believe the new car market will not return to its previous annual sales highs of 1.7m units, with forecasts for the coming years of around 1.3m to 1.4m units.
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