Germany extends auto trade-in bonus
The programme helped boost German new car sales in February while they fell almost everywhere else across the euro zone – although some claim this robustness is superficial in the long term.Frankfurt -- Germany will extend a programme that pays a 2,500-euro bonus for trading in an old car, buoying sales for the struggling auto industry at least temporarily, government sources said on Wednesday.
The government offers the equivalent of 3,400 dollars to buyers of a car not more than one year old if they scrap one that is at least nine years old.
Chancellor Angela Merkel and Vice Chancellor Frank-Walter Steinmeier, who head the two parties in Germany's ruling coalition, have agreed in principle to extend the measure, with cabinet approval expected soon, the sources said.
They plan to wait, however, until most of the 1.5 billion euros earmarked for the initial tranche has been paid out before making the decision official, the sources added.
The scheme was introduced to help automakers badly hit by the worst global slump in years.
In two months, 347,000 of the 600,000 places have been snapped up, official figures showed last week.
The programme helped boost German new car sales by 21.5 percent in February while they fell almost everywhere else across the 16-nation euro zone.
Smaller models have proven especially popular, with Volkswagen and Opel reporting strong orders, while luxury brands like BMW and Mercedes-Benz have benefited less.
"Importers' market share has increased with the wreckage premium," in particular that of Asian, French and Italian brands, a spokesman for the VDIK federation of German auto importers told AFP, while welcoming the prospect of an extension.
On Wednesday, however, Daimler chief Dieter Zetsche forecast that once "the wreckage bonus is eliminated, there will be the same plunge in sales that we have seen in other countries."
Daimler owns Mercedes-Benz.
Sceptics believe many consumers have simply moved up car purchases to take advantage of the bonus and warn that a long stretch of weak sales is waiting farther down the road.
The auto industry is crucial to the German economy, with one in every seven jobs directly or indirectly dependent on it.
Germany, the biggest European economy, is also home to the continent's biggest automotive market.