German car scrapping bonus revs up

March 9, 2009 - 0:0

FRANKFURT (AFP) -– A German bonus for scrapping old cars to boost the auto market has lit a fire under domestic sales, with just a few voices dissenting amid general acclaim for the result.

“So far it can be considered a success,” Economy Ministry spokesman Felix Probst told AFP last week after 150,000 applications had been received for a program that offers 2,500 euros (3,200 dollars) for trading in a car at least nine years old.
Buyers must choose a car that is less than a year old, with the government ready to dole out 1.5 billion euros -- enough for 600,000 autos -- as part of a general economic stimulus plan worth 80 billion euros.
German car sales jumped 21.5 percent in February as a result, “the strongest level of February sales in 10 years,” according to Matthias Wissmann, head of the German VDA federation of auto manufacturers.
Auto exports meanwhile collapsed, losing 51 percent in the same month to make the home market figures all the more welcome.
Probst said applications for the bonus were still pouring in and with one quarter of the total already taken, the program “might be finished well before the end of the year,” its scheduled deadline.
VDA spokesman Eckhardt Rotter noted that a lower tax rate on cars that polluted less would kick in in July and said: “We hope in the second half of the year there will be a slow increase in the market.”
His comments came after a French auto boss warned that such plans, which have also been introduced in France and Italy, can cut both ways.