Germany's Auto Woes Fix: Scrap That Clunker!

[one...two...tree 2,762]

By Adam Smith / London

Amid the gruesome headlines generated by the world's auto industry these days, it almost read like a typo: new car registrations in Germany rose 21% year-on-year in February, the country's Association of the Automotive Industry (VDA) announced March 3. This, though, was no error. The 278,000 cars put on the road, crowed Matthias Wissmann, VDA's president, amounted to "the highest level of sales in the month of February for ten years."

Why the splurge? German drivers have latched onto a juicy new deal. Under a scheme started in January, car owners who trade in a vehicle more than nine years old for a new, greener model can expect $3,172 from the German government as well as a break from paying road tax for at least a year. Similar "scrapping schemes" have been launched in recent months in France, Italy and Spain. Now motor manufacturers in Britain are pleading with its government to follow suit.

It's not hard to fathom why. Carmakers are grappling with an extraordinary shortage of both credit and customers. Sales in Europe — the $700 billion auto industry there accounts directly or indirectly for one in ten jobs — dropped to a 15-year low last year, with little sign of a pickup in 2009. Toyota announced earlier this week that 4,500 staff at its British factories would see their pay and hours slashed by 10% for a year starting in April. German and British governments are still in talks with General Motors over potential aid for the U.S. automaker's beleaguered European subsidiaries, Opel in Germany and Vauxhall in the U.K. GM says it needs some $4.2 billion to save its businesses in the region.

Amid that carnage, scrapping schemes can offer something for the pain. The aim is to pump up weak car sales while taking older, potentially more polluting vehicles off the road at the same time. And it seems to be working — at least in Germany. With new car orders in Europe's largest car market also rising in February, the VDA expects registrations for the first quarter of 2009 will trump those seen in the same period last year. A more modest $1,300 on offer to French motorists hasn't been enough to prevent car sales there sliding 13% last month. Scrapping schemes in Italy and Spain failed to halt even steeper falls.

more...

http://www.time.com/time/business/article/...1884711,00.html

Edited March 12, 2009 by Mister Fancypants

[Otto 83]

It's not a bad idea.

[one...two...tree 2,762]

It's not a bad idea.

I agree.

[Ban Hammer 13,355]

It's not a bad idea.

I agree.

agreed here too.